Our society is witnessing a transformation of the global economic model. In its classical form, capitalism is undergoing decay, which has a negative impact on democratic processes. These changes have affected many countries and led to the recent calamities in global financial markets. This idea was present in the lecture entitled “The Crisis of Capitalism and the Degradation of Democracy,” (-)given by one of the most renowned scholars and consultants in business and international relations, member of the Roman Club, academician of the International Academy of Management and the World Academy of Art and Science, director of the supervisory board of the International Institiute of Management-Kyiv (MIM-Kyiv), honorary consul of Ukraine in Geneva, Bohdan Havrylyshyn.
Close to 50 persons gathered to listen to his talk given at the World Bank’s mission in Ukraine. Among them were scholars, researchers, NGO representatives, students, and other people who cannot ignore global problems and tendencies.
According to Havrylyshyn, one can single out several reasons for the crisis of capitalism. The first is that company management tends to focus excessively on immediate results. Such shortsightedness in business could be accounted for by the managers’ desire to increase, over a rather short time, the price of the company’s shares and earn huge bonuses. Allocations for research and development decrease, which also reduces the success of the business’ long-term growth.
Capitalism also changed due to the stockholders’ over-expanded rights in business management, and their lack of responsibility for the business’ future. Thus, stockholders can sell their shares any time, without giving a second thought to the fate of the employees.
According to Havrylyshyn, this negative transformation of capitalism leads to a persistent growth of inequality. Thus, in the 70s and 80s in Switzerland, the ratio of minimum wages compared to maximum wages was 40 to 1, now it is 740 to 1.
In addition, he says that the global economic system is drifting further and further away from the real economy. Havrylyshyn explained that added value is created at the cost of various financial instruments, rather than the accumulation of savings and subsequent investments in real business.
“That is to say that traditional capitalism is gradually morphing into its Darwinian version,” Havrylyshyn summed up. He is sure that in such a form it will not be able to exist much longer.
In his view, the degradation of democratic processes is manifested through a whole set of signs which tend to be detrimental to the country and its population. In particular, Havrylyshyn is worried about the low qualification demands required of aspirants for high state administration positions.
“In some countries, aspirants to presidency only have to satisfy minimum requirements, like a certain age and citizenship, while the issues of health, quality of their education and qualifications, and experience in management are never raised,” Havrylyshyn said. According to him, they were replaced with money, political advertisement, TV debates, etc. “Thus, many democracies are now led by unqualified individuals,” he added.
The next sign of degradation is the transformation of politicians in democratic nations into populists. “As a result”, explained Havrylyshyn, “before launching an election campaign, politicians do not have a clear-cut program and mechanisms of its implementation, they only have promises.”
Another sign is the opposition’s lack of understanding of its role and place. Havrylyshyn believes that its mission is to monitor the government and make constructive alternative proposals concerning the solution of vital issues in the nation’s life, rather than mere criticism.
Havrylyshyn is convinced that politicians of all walks and ranks should become aware of all these slips of democracy before it is too late, and do their best to ensure political freedom, economic efficiency, social justice, and environmental wisdom in every nation.
How is the crisis of capitalism manifested in Ukraine? How will it transform? Which way is our nation going as it builds a democracy? This is what Havrylyshyn told The Day in his exclusive commentary:
“The crisis of capitalism is manifested through excessively large numbers of oligarchs, the way they established themselves in business, the fact of these few people own billions of hryvnias while millions of Ukrainians are very poor, and through the collossal discrepancy between minimum and maximum wages.
“The difference between Ukrainian and, let’s say, American oligarchs is in that the American ones came into existence in the late 19th – early 20th centuries. They were mostly building metallurgy complexes, but did that with the money they had earned in an honest way. To gain social legitimacy, they would open social foundations and help their communities.
“At present, the socialization of big Ukrainian business is underdeveloped. Only a few of rich business owners have their own social foundations. It would be good if more of them got this message.
“However, I am relieved to see that MIM-Kyiv, which I founded, has already produced 4,500 graduates, and at the 20th anniversary of the institute they spoke of two important things. First, that studying at MIM-Kyiv changed their worldview. And second, that there already were enough of them in order not to merely make money for themselves but also help society change and upgrade.
“I think Ukraine has to survive this capitalism. There is light at the end of the tunnel on the way to real democracy, but the tunnel is very long. In my view, the Ukrainian experience on its road to democracy is comparable to that of South American countries. Now, their economic situation is on the mend, and the same can be said about their democratic credentials.”
The talk left the listeners filled with impressions. “I liked Mr. Havrylyshyn’s optimism regarding Ukraine’s future,” said Hanna Hopko, activist in the campaign For Ukraine Free from Tobacco Smoke. “I also share his vision of the development of the crisis of capitalism around the world and in Ukraine in particular. His thesis about the ruin of the system which only aspires to increase the profits of a handful of individuals, rather than the number of happy people, is also very appealing.”
n Hopko’s view, the importance of this lecture for our country is in its message for domestic capitalists whose fortunes are several times bigger than Ukraine’s budget, despite a population of 46 million. They should realize that there is no avoiding a western scenario in the development of capitalism. Overexploiting the country without making any effort to improve the lives of their fellow countrymen is a road to destruction. “I think it’s time for Ukrainian capitalists to realize that the pursuit of personal enrichment without just remuneration and fair supervisory boards will sooner or later destroy its creators, and the crisis of capitalism will break out in Ukraine as well,” remarked Hopko.
