Weakness of The Capitalist Economic System
Capitalist system as a substitute for the communist system gives a very bad impact for the development of world economy. Capitalist derived from capital, can be interpreted simply as the ‘capital’. In the capitalist system, the supreme power is held by the owners of capital, which in the modern economy of capital owners in a company are its shareholders.
Shareholders as the holder of supreme power company disebuah will bestow the power to the top management who are appointed by the Shareholders’ General Meeting (AGM). Not uncommon in a company’s largest shareholder or majority can double as top management.
This is not directly led to top management will work for the interests of shareholders and not for the interests of employees or workers who are also part of the company, because they are appointed and dismissed by shareholders through the AGM. This situation will encourage top management to make employees or workers as a ‘cash cow’ in achieving its goal, which is at the heart of management science.
Weakness In System In Modern Company
What interests of shareholders? The answer, of course, the ever-increasing profits that will be followed by rising stock prices and dividends. In the current system increased corporate profits can only be enjoyed by the shareholders and does not have a significant impact on the welfare of employees or workers. Many companies that make profits and continue to increase every month, quarter, semester and year. Does this benefit increase will be followed by an increase or an increase in employee salaries or the workers? Of course, her answers are not. Especially in Indonesia, where most employees and workers is not a permanent employee and contract only six months or a year. Are they going to feel the benefits of increased corporate profits? Once again, of course not.
If the capitalist system is like the human body, where the pain suffered by a single finger will be mislead by the pain throughout the inner and outer Tubu. Compare if the finger is pinned cincing diamonds, whether other parts of the body will feel the effect directly? Does eye at all times keep a finger so as not to wound, burn and so will feel the effect? Is your nose at all times maintain a finger through the sense of smell will feel the effect? Is the mouth which is a tool to enter the energy source for the finger will feel the effect? Likewise with other body parts.
Capitalist system is an interrelated system of globally integrated. Disuatu crisis events in which the company or any other country that has relevance is directly or not directly with the company or our country, could not help as part of the capitalist system will feel the domino effect is very significant. On one side of their profits will not provide a significant impact, in other words the effect of losses received a society with a capitalist system is not comparable to the effect that profits will be accepted.
Illustration above illustrates how the capitalist system unfairly treats shareholders and employees or workers who are part of a company. The advantage is felt only by shareholders, while losses will be felt by all parts of the company, including employees or laborers. Then how is the system fair? According to the author, a fair system is making employees or workers as the sole shareholder. Gradually this system will make a company will be owned and by the employee. In this case the people outside the company’s internal prohibited from owning shares of the company, this is not directly will reduce the dependence of a company globally as liaison point between the company and the outside world globally through stock ownership has been lost.
Weakness In System In Banking Financial Institutions
The next fundamental weakness of the capitalist system is the system of interest. Capitalist system positions the money as something that has value based on time, so the money will have different values for the time difference. This situation will force financial institutions particularly banks provide financial aid to the expected return rate, so the flowers can be defined as ‘no help without reward’. This is contrary to the principle once a Muslim, because Islam is the largest religion in Indonesia, where help is given with sincerity and let God Almighty who returned his way.
Whether we realize it or not interest is one of the main factors causing the 1997 monetary crisis and the global financial crisis today. All financial institutions, both banks and non banks withdrew funds from the community with the lure of flowers and channeled back to the community by getting rewarded with flowers. Greed will encourage financial institutions to channel funds to any party on a large scale, occurred akibanya bad debts that have a major impact on the institution itself. This happened in Indonesia before the crisis and monetary crisis spur, while in the United States was spurred housing credit crisis that caused the global financial crisis. On one side if the government or the central bank will conduct strict regulation is also bad for the economy because it will happen phenomenon called credit crunch. Where financial institutions are reluctant to distribute credit for tight regulation so that the economy does not work, especially the real sector to absorb more workers.
Imagine, a system that provides alternative ‘forward hit back hit’ this is the current definition. How foolish we are, to create a system in such a way that no solution to overcome it. Then what is the solution? The solution will not be easy, because it’s not an easy job to change a system that is applicable for centuries. Slowly and surely, the system of interest can be removed, separate the first step of credit loans and productive consumption. Instead of flowers for consumption credit could be drawn ‘donations’ which is the willingness of customers without coercion. This can happen if communicated well. Persoalnya, financial institutions are not the foundation of life from donations and no cost of money, whether the cost of money can be covered by ‘donations’? Of course you can! Two-way communication that will make both creditors and debtors as colleagues and mutually beneficial. Replacement rate of productive credit course for the results, such as the concept of Islamic economy.
Weakness in the Exchange Rate System
Capitalist system as a majority system is applied in many countries, including Indonesia, putting the value of money as something different because of differences in time, place, power of purchasing power, and so on. This difference would encourage speculators to take advantage as much as possible without regard to the fate of many.
In general there are two exchange rate systems, ie fixed exchange rate system and the system of floating exchange rates. Fixed exchange rate system requires governments to maintain foreign exchange reserves remained stable exchange rates and are at the expected position, while a floating exchange rate system, the forces of demand and supply in the market for foreign exchange (forex) will determine the value of a currency terhadaap other currencies.
Both systems are still implemented in some countries. Actually, Indonesia during the new order uses a fixed exchange rate system, although in theory the system used is a floating exchange rate system under control, because the government determines the upper and lower limit value of the rupiah against other currencies and the government can intervene to support the rupiah keposisi expected. Post-financial crisis, because the government via the Bank Indonesia was not able to resist the attack of speculators and keep the exchange rate remained stable, pushing Indonesia implement a floating exchange rate system.
Both systems have a weakness, because the value of a currency exchange can be used by some irresponsible people to obtain benefits, both economic benefits and non-economic, because both systems are highly vulnerable to factors outside the economy that can not be controlled by economic actors.
For example, a state x using the system of fixed exchange rates, those who want to undermine the state governments x and has a strong financial exchange rates can affect the state x in a way to buy foreign currency with foreign currencies x massive and continuous, state government as a result X will difficulties maintaining its exchange rate at the expected position, because the attack was made suddenly and continuously because of his goal to overthrow the government of country X, so that foreign exchange reserves x are depleted over time will dramatically or even exhausted and minus because it was owed another kenegara. History records, this phenomenon led to Suharto should be willing to resign from the presidency who had occupied Indonesia for 32 years.
It can also apply to countries that use the system of floating exchange rates, Ulah speculators who have a strong financial exchange rates could encourage a keposisi currency they expect to make profits. For example, Indonesia with a floating exchange rate system, and there are those who want to create chaos in Indonesia, the rupiah can use to realize these ambitions dollar by buying massive and continuous use of rupiah that will push the rupiah weakened, with the other party notes as actors in the foreign exchange market to support this, as a result of BI will be difficult to keep stability in the rupiah and inflation will increase because of raw material used to produce goods and services purchased in dollars.
Increased inflation will be followed by peninggkatan interest rates to attract public funds through savings and deposits in order to reduce the money supply in the community that will reduce the rate of inflation and push the rupiah is expected keposisi (rupiah strengthened against the dollar). On the other hand, increasing interest rates will cause economic actors are reluctant to apply for a loan and more tends to invest funds in the bank, the result did not go real sector, unemployment is not absorbed, so that high crime rates, poverty increased, and many of his domino effect.
What is the solution to this? The answer is togetherness, remove greed and want to share for the benefit of all. Early stage could be possible by copying the European Union to impose a single currency, it also can be tried for the ASEAN region, the region gradually more Asia-Pacific and eventually the world are expected to use the single currency. So far, the main factor causing the difference value for money of a country with other countries, because developed countries and the rich are reluctant to share with the poor countries and take advantage of the system that they created themselves.