We have come a long way from the subsistence fishing of our forebears and many of the values and social norms that served us well have changed. We are facing different challenges now- environmental threats due to global warming and sea level rise, an illegal drug epidemic, appalling living conditions in the capital Male', a highly polarised political atmosphere, religious extremism and intolerance are some of the major problems.
Our forefathers should be lauded for the manner they endured the rigors of harvesting the sea to thrive on a livelihood dependent on fishing. Fishing was the principal industry which was the mainstay of our national economy until the development of the tourism industry which started in the early 1970s. Thrift was the way of life for our forefathers. For them, living by the values of thrift meant that they earned more than what they spent. Our society's needs at that time were the basic necessities relevant to living a simple life.
Just like other capitalistic countries of the world that embraced consumerism through the process of industrialisation, eventually Maldives made consumerism as an integral part of its economy. The Maldives economy depends heavily on foreign imports and the major portion of the country’s revenue is derived from: import duties, tourism tax, dividends from state-owned enterprises and land lease rent. All of these revenue sources are influenced the development of tourism. Tourism is the main driver of our economy today.
As is the case with other capitalist consumer based economies of the world, Maldives too has become a consumer obsessed society following an unsustainable economic model. The more our society consumes, the better for our economy. Globalization has also made it possible for goods and services previously out of reach in developing countries to be much more readily available. Items that at one point in time were considered luxuries—from cars, air conditioning, televisions to cell phones,—are now viewed by many people as necessities. Some of them have have become fashion accessories and status symbols. Scientists have now warned the global community that our environment faces catastrophic consequences due to our excessive consumption leading to global warming and sea level rise. Our planet is in peril and radical changes in our industrial development and in our social behaviour of consumption habits are necessary to create sustainable economic growth.
The Maldivian government has declared its intention to make the country carbon-neutral within a decade. British climate change experts Chris Goodall and Mark Lynas are working to develop a package of measures that aims to eliminate the use of fossil fuel in Maldives by 2020.
The plan includes a new renewable electricity generation and transmission infrastructure with 155 large wind turbines, half a square kilometre of rooftop solar panels, and a biomass plant burning coconut husks. Battery banks would provide back-up storage for when neither wind nor solar energy is available.
The cost for the package of low-carbon measures is estimated to be about $110m a year for 10 years. The scheme should pay for itself quite quickly, because the Maldives will no longer need to import oil products for electricity generation, transport and other functions. If the oil price were to rise to $100 per barrel, the payback period would be as short as 11 years. At current prices, it would take roughly twice as long to break even. (Link)
Carbon dioxide is the main greenhouse gas produced when fossil fuels (oil, gas and coal) are burnt. Presently almost all aspects of our lifestyles from transport, power generators to household appliances rely on oil and that creates the the greenhouse gases detrimental to our environment.
In the past people lived within their means, accumulating individual savings, planning for education and a better future. Now it has become a feature of the capitalist economies to make consumer credit available to to buy houses, to start small and medium businesses or to take student loans. Maldives is following this path of economic development. The ability to borrow money can help to improve the livelihood of people by providing them access to financial resources which they do not possess. But as economists like to point out that consumer credit is a double-edged blade: It can lead to greater opportunity and freedom, but, if promoted deceptively and used recklessly, it can lead to disaster, as has so painfully been revealed by the American subprime loan crisis. The unprecedented loan defaults of the subprime home mortgages, which caused the collapse of the US housing market at the epicentre of the recent financial crisis triggered the current global recession. Click here for a multimedia guide that illustrates cause, and implications of the current financial crisis.
While financial advisers in advanced economies still emphasize the timeless principles of thrift, planning, and living within one's means, they also say the use of productive credit, or credit used to enhance one's financial future, as wholly acceptable. In their view, productive credit included debt incurred in purchasing a home or even such goods as sewing machines, or furniture. In contrast, the use of consumptive credit, or credit which satisfied an immediate need or wish that had little to no future value, is unacceptable.
This is turning out to be only a feel-good theory. By the time American students leave college, many of them often come out with twenty or thirty thousand dollars in debt even before they start a career.
The capitalist world's consumer conformism mentality creates artificial needs promoted by a multi-million dollar advertising media who work for powerful corporations only interested in making more profits. Every individual is made to become a perpetual consumer who is hungry for more.
While the International Monetary Fund (IMF) often quotes the principle of privatising state owned companies as a standard prescription to developing countries who need their assistance, developed countries have now shown us that the state has to intervene to save the private companies, many of them too-big-to-fail. Recent financial crisis in US and Britain has revealed that a number of their top banks and corporations cannot stay afloat due to the shortage of 'liquid cash' and the only way to save these too big-to-fail corporations is to nationalise them. These corporations and banks demand that the state should bail them out. The state is being forced to bail these enterprises out on condition that they shall sell the bulk of their shares to the state. This means that these capitalist states are being forced to move in the direction of central planning and management of the economy of the socialist model.
This course of action is just the opposite of what the IMF prescribes to the developing countries.
Amartya Sen who has won the Nobel Prize for Economics has written some thoughts on the limitations of the market based capitalism in an essay in the New York Review of Books.
He wrote: "Historically, capitalism did not emerge until new systems of law and economic practice protected property rights and made an economy based on ownership workable. Commercial exchange could not effectively take place until business morality made contractual behavior sustainable and inexpensive—not requiring constant suing of defaulting contractors, for example. Investment in productive businesses could not flourish until the higher rewards from corruption had been moderated. Profit-oriented capitalism has always drawn on support from other institutional values.
The moral and legal obligations and responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments. A subprime lender who misleads a borrower into taking unwise risks can now pass off the financial assets to third parties—who are remote from the original transaction. Accountability has been badly undermined, and the need for supervision and regulation has become much stronger.
And yet the supervisory role of government in the United States in particular has been, over the same period, sharply curtailed, fed by an increasing belief in the self-regulatory nature of the market economy. Precisely as the need for state surveillance grew, the needed supervision shrank. There was, as a result, a disaster waiting to happen, which did eventually happen last year, and this has certainly contributed a great deal to the financial crisis that is plaguing the world today. The insufficient regulation of financial activities has implications not only for illegitimate practices, but also for a tendency toward over speculation that, as Adam Smith argued, tends to grip many human beings in their breathless search for profits."
While capitalism has swept aside other economic systems like the feudalism, socialism and communism and has enormous potential for positive change, it has not solved problems of inequality and poverty. Infact, while capitalism continues to provide opportunities for creating more wealth, the gap between the rich and the poor is also widening.
Social entrepreneurship is an emerging business trend, where the creative vision of the entrepreneur is applied to today’s most serious problems: feeding the poor, housing the homeless, healing the sick, and protecting the planet. This is the world of social business.
Creating a World Without Poverty tells the stories of some of the earliest examples of social businesses, including Mohammad Yunus’s own Grameen Bank. It reveals the next phase in a hopeful economic and social revolution that is already under way—and is the worldwide effort to eliminate poverty by unleashing the productive energy of every human being.
Among the several challenges we face in Maldives; playing our part to avoid further destruction to the environment has now become the imminent priority on the world stage.
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