Unit 1 Paper

Capitalism,
is it sustainable?
Hisham El Sherbini

AMSR7

June 2016
Table of Contents
1. Introduction .................................................................................................................................. 1

2. What is Capitalism?....................................................................................................................... 2

3. The Egyptian Case ......................................................................................................................... 2

4. The Indonesian Case ..................................................................................................................... 4

5. Impact on the Environment .......................................................................................................... 5

6. So, is all of that sustainable?! ....................................................................................................... 5

7. References .................................................................................................................................... 7
Hisham El Sherbini Unit 1 Paper

1. INTRODUCTION

I like to believe that, over the last 20 years, I have been developing my understanding of the
principles of Equality, Human Rights, Social Justice and Environmental Responsibility; and it
was interesting and assuring to see how that aligned with the Ten Principles of the Global
Compact (UNGC, 2016).

One event, however, was exceptionally significant. On the 3rd of July, 2013, we, Egyptians,
woke up to the shocking news that a military coup has taken place in our beloved country, a
coup ousting Egypts first democratically elected Egyptian civilian president, Morsi, and
throwing Egypt decades away from its newfound democracy (One Target Media, 2013). The
people rose up again but the counter-revolution was ready with guns, tanks, and helicopters
to wipe out and annihilate any resistance whatsoever. Just over a month later, on the 14th of
August, Egypt witnessed the worst state-led massacre in its known history with over 1500
people murdered in cold blood in Rabaa and Nahda sit-ins in just one day (Figure 1).

Figure 1 - Before & After the Rabaa Massacre

Since the coup and up till now, no less than 5000 people have been killed, thousands injured
and tens of thousands detained and are being tortured and raped as we speak. That was
very devastating on all levels including, obviously, the personal one. But, at the same time, it
wide opened my eyes to the disturbing consequences of unrelenting Capitalism. It led me to
research the modern history of Egypt, the so-called revolution of 1952, when Monarchy was
abandoned in favour of a Republic, as well as similar cases of Capitalistic moves to leverage
military coups for the sake of economically restructuring countries and markets and
exploiting their human and natural resources; examples include Indonesia & Chile.

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Going through the Global Compact material, it so much provoked me, but perhaps did not
surprise me, that in spite of nearly half a century of national and international endeavours
to alleviate poverty, and despite significant socioeconomic progress, the sad reality [is]
that more than 2 billion human beings still live on US$2 or less a day (Leisinger, 2007,
p.114) and that was in 2007, years before the devastating humanitarian crises now
engulfing the Middle East.

In this paper and in light of the above, I want to inquire whether Capitalism is a sustainable
model and, if not, what the alternatives could be. I want to discuss and compare the
Egyptian and the Indonesian cases, looking for parallels.

2. WHAT IS CAPITALISM?

Being obsessed with definitions and aware of how terms could be used in the wrong context or to
mean different things, I would like to illustrate my understanding of the term Capitalism: It is an
economic structure based on the capital-labor relation. It is motivated by profit and the need to
accumulate capital. Even though it might seem to be based on social cooperation, capitalists, as the
private owners of the means of production, have the legal right and the political capacity (via state
power) to exploit the social product for private profit and personal enrichment (Petras & Veltmeyer,
2013). It could have different types but I would like to highlight Crony Capitalism specifically being
the one that allows for special regulation and favourable government intervention based on
personal relationships (WebFinance, 2016). That type is quite evident in the cases of Egypt and
Indonesia, for example (Chekir & Diwan, 2014; Hughes, 1999).

3. THE EGYPTIAN CASE

My research led me to realise that, in spite of the different views about the coup and the
fact that some people, up to this day, are still denying that its a coup, the reality is that
what happened was a lateral transfer of power from the civilians in the previous, Mubarak,
government with their capitalist interests, to the military, which has similar economic
interests, with their enterprises and retired officer corps. The reality is that the military took
a pre-emptive strike against the threat and real moves of the Muslim Brotherhood and the
Morsi government to use their nominal state power to re-normalise Egyptian capitalism,
resume neoliberal economic policy, bring workers organisation under control and curtail
the economic activity of the military which, at that time, held interests controlling around

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Hisham El Sherbini Unit 1 Paper

40 percent of the economy. At the same time, the Egyptian elite funded the anti-Morsi
campaign and their external allies, including Saudi Arabia, UAE and the US, successfully set
in motion a counter-revolutionary process. They moved with textbook precision to protect
their interests and continue that domination, but this time in the name of revolution
(Baraka, 2013; Crowe, 2013). What made things even more difficult for me personally is that
those elite happen to be my family and friends with whom I grew up, went to school and
university and worked!

Looking at the role of Capitalism in all of what happened, I found Aouds (2013) argument
that that capitalist globalization and ultimately the 2008 global financial crisis were main
causes of the uprising, to be convincing. The Mubarak regime's privatization schemes
exacerbated poverty and widened the already huge gap between rich and poor (typical of
Capitalism, isnt it?!). Mubarak employed repression to ensure that no effective political
opposition would materialize to challenge his authoritarian rule and crony capitalism.

The arrogance of Capitalism could possibly be summarized by its predatory bold face, aka
the Wall Street Journal, when they, not only favoured the coup but, said: Egyptians would
be lucky if their new ruling generals turn out to be in the mold of Chiles Augusto Pinochet,
who took over power amid chaos but hired free-market reformers and midwifed a transition
to democracy (WSJ, 2013). They forgot to mention Pinochets 17-year reign of terror,
though (Chediac, 2013). Another interesting summary by Goldstein (2013) reads: The
Egyptian crisis points up the historical problem of trying to carry out a bourgeois democratic
revolution in an oppressed country ruled by an authoritarian capitalist regime with a deep
state and strong ties to imperialism.

As part of my inquiry, I casually interviewed friends, from both sides probing their views and
whether their perspectives have changed after almost 3 years of the coup. Those who are
anti-coup, even though mostly well off, all wanted a way out of the country. They were
unable to live or bring up their kids in such a polarized, lawless, unfair and unjust jungle (and
neither would I!). Those who are pro-coup seemed to still be in denial even with the human
rights situation continuing to deteriorate across all fronts (Amnesty, 2016), the country
reporting a worse corruption score of 36/100 in 2015 vs 37/100 in 2014 (Transparency,

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2016) and the Egyptian pound sliding on a descending curve (Figure2), losing 8% of its value
in just 1 year (2014-2015) (RCSS, 2014).

Figure 2 - USD per 1 EGP

(XE, 2016)

It is now way too obvious that Mubaraks ouster has not improved anything. On the
contrary, with the military clearly in charge, everything seems to be going down the hill at
high speed with some even claiming Egypt is nearing bankruptcy (Kent & Hess, 2014).

4. THE INDONESIAN CASE

I found John Pilgers television film The New Rulers of the World to be a revelation. He
exposed the myth of globalisation by investigating the case of Indonesia. He revealed how
Western Capitalism fuelled Suhartos military coup and bloody seizure of power in the 1960s
for the sake of restructuring the countrys economy and beginning the imposition of a
global economy upon Asia or, in other words, modern imperialism. The price was so
deer, up to a million Indonesians died and those who lived were living on less than 1 USD a
day (Pilger, 2016).

However, that model economy was, again, an illusion. At the beginning of Suhartos reign,
inflation hit 600% and in, just, his last year, the Indonesian currency, the rupiah, lost 80% of

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its value. Overall between 1970 and 2015, the he Indonesian rupiah has lost over 97% of its
value (Sovereign Man, 2016).

Even today, millions of Indonesian women are being enslaved at home and abroad, facing
heartbreaking levels of economic exploitation in their struggle to provide for themselves
and their families due to failed capitalist and man-made economic systems that have
generated mass poverty, and mass dehumanization of their women as economic goods
(Khilafah, 2013).

In addition to secondary sources, I wanted to explore how Indonesians today experience

both the assumed pros of Capitalism economic/political freedom, efficiency, and growth
and the cons inequality, waste, starvation, anti-social, pollution, propaganda
(EconomicsHelp, 2015; Ryan, 2012). So, I casually interviewed a small sample of Indonesian
friends and their experience was that political or democratic freedom is an illusion, its not
real, inequality prevails and effects of the Suharto period are still felt up till now. Corruption
is thriving, propaganda is everywhere, people are slowly becoming more materialistic in
certain parts of the country and pollution and waste are at a high level.

5. IMPACT ON THE ENVIRONMENT

Indonesia is, unfortunately, a good example of the deeply concerning impact of Capitalism
on the Environment to the extent that McDonnell (2015) suggested that This Could Be the
Worst Climate Crisis in the World Right Now. This is mainly due to the enormous
greenhouse gas emissions resulting from massive deforestation for the sake of logging,
agriculture, especially Oil Palm Trees. Just between 2000 and 2012, Indonesian primary
forest loss exceeded 6 Mha and, just in 2012, it lost 840,000 hectares of forest compared to
460,000 hectares in Brazil, despite its forest being a quarter the size of the Amazon
rainforest (Margono et al, 2014; Vidal, 2014). And thats not the only problem but the fact
that forests are cleared out with fire is causing a public health crisis not just for Indonesians
but surrounding populations in Singapore and Malaysia (McDonnell, 2015).

6. SO, IS ALL OF THAT SUSTAINABLE?!

If there is an agreement on one thing, it is that the current form of Capitalism is, by no
means, sustainable. Some, such as Porritt (2007), claim that properly regulated capitalism is

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capable of addressing the current issues. Others, however, argue that the he who believes
exponential growth can go on forever in a finite world is either a madman or an economist
(Attributed to Kenneth Boulding in Congress House, 1973). Henderson (1988) agrees and
adds that no economy or system, even is based on renewable resources, can support for
enormous pyramided capital structures and huge overheads, large pay differentials, windfall
returns on investments, and capital gains to investors.

I agree with the latter views and I am convinced that production that is based on generating
profit rather than fulfilling need is inversely proportional with equality and almost
impossible to guarantee social justice and regeneration of resources.

So, to answer the question, NO, it is not sustainable. The next question would be: What are
the alternatives?! I refuse to accept that there are no alternatives and that there are no
ways of coming up with alternatives because were stuck with Capitalism and nothing could
be as loud as it.

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7. REFERENCES

Aoud, I. G. (2013). Egypt: Revolutionary process and global capitalist crisis. Arab Studies
Quarterly, 35(3), 241-254
Amnesty. (2016). Egypt 2015/2016. Retrieved 02 July, 2016, from
https://www.amnesty.org/en/countries/middle-east-and-north-africa/egypt/
Aziz, M. N., & Mohamad, O. B. (2016). Islamic social business to alleviate poverty and social
inequality. International Journal of Social Economics,43(6).
Baraka, A. (2013). The Military Coup in Egypt: Requiem for a Revolution that Never Was.
Retrieved 12 June, 2016, from http://www.ips-
dc.org/the_military_coup_in_egypt_requiem_for_a_revolution_that_never_was/
Chediac, J. (2013). The Egyptian revolution and the military coup. Retrieved 14 June,
2016, from http://iacenter.org/nafricamideast/egypt-chediac-1-081713/
Chekir, H., & Diwan, I. (2014). Crony capitalism in Egypt. Journal of Globalization and
Development, 5(2), 177-211
Congress House. (1973). Energy reorganization act of 1973: Hearings, Ninety-third Congress,
first session, on H.R. 11510. p. 248
Crowe, K. (2013). Coup In Egypt: Can The Revolution Survive?. Retrieved 12 June, 2016, from
http://anticapitalists.org/2013/08/21/coup-egypt-can-revolution-survive
EconomicsHelp. (2015). Pros and cons of capitalism, Retrieved 03 July, 2016, from:
http://www.economicshelp.org/blog/5002/economics/pros-and-cons-of-capitalism/
Goldstein, F. (2013) Imperialists struggle to restore stability in Egypt. Retrieved 14 June,
2016, from http://www.workers.org/2013/08/08/imperialists-struggle-to-restore-stability-
in-egypt/#.V18_xLsrLIV
Henderson, H. (1988). Politics of the Solar Age: Alternatives to economics. In Politics of the
Solar Age: Alternatives to Economics. Knowledge Systems.
Hughes, H. (1999). Crony capitalism and the East Asian currency and financial'crises'. Policy:
A Journal of Public Policy and Ideas, 15(3), 3.
Kent, A. & Hess, A. (2014). Not just Argentina: 11 countries near bankruptcy. Retrieved 13
June, 2016, from http://www.usatoday.com/story/money/business/2014/07/31/countries-
near-bankruptcy/13435097/

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Khiladah. (2013). Due to their Adoration of Capitalism, Indonesias Rulers Allow Millions of
Women to be Enslaved at Home and Abroad. Retrieved 03 July, 2016, from
http://www.khilafah.com/due-to-their-adoration-of-capitalism-indonesias-rulers-allow-
millions-of-women-to-be-enslaved-at-home-and-abroad/
Leisinger, K. M. (2007). Capitalism with a human face. Journal of Corporate
Citizenship, 2007(28), 113-132
Margono, B. A., Potapov, P. V., Turubanova, S., Stolle, F., & Hansen, M. C. (2014). Primary
forest cover loss in Indonesia over 2000-2012. Nature Climate Change, 4(8), 730-735.
McDonnell, T. (2015). This Could Be the Worst Climate Crisis in the World Right Now.
Retrieved 03 July, 2016, from
http://www.motherjones.com/environment/2015/10/indonesia-climate-change-fires-palm-
oil-el-nino
One Target Media. (2013). The Story of Rabaa. Retrieved 12 June, 2016, from
https://www.youtube.com/watch?v=W5ewVj5_jAg
Petras, J., & Veltmeyer, H. (2013). Imperialism and Capitalism in the Twenty-First Century. A
System in Crisis
Pilger, J. (2016). The new rulers of the world. Verso Books.
Porritt, J. (2007). Capitalism as if the World Matters. Earthscan.
RCSS (2014). The depreciation of the Egyptian Pound. Retrieved 02 July, 2016, from
http://www.rcssmideast.org/en/Article/452/The-depreciation-of-the-Egyptian-Pound-
#.V3fSF_krLIU
Ryan, L. (2012). Top 10 Disadvantages to Capitalism. Retrieced 03 July, 2016, from
http://listverse.com/2012/01/16/top-10-disadvantages-to-capitalism/
Sovereign Man. (2016). This currency has lost 97% of its value against the US dollar.
Retrieved 03 July, 2016, from https://www.sovereignman.com/investing/this-currency-has-
lost-97-of-its-value-against-the-us-dollar-17342/
Transparency. (2016). Corruption by Country Egypt. Retrieved 02 July, 2016, from
http://www.transparency.org/country#EGY_DataResearch
UNGC. (2016). The Ten Principles of the UN Global Compact. Retrieved 12 June, 2016, from
https://www.unglobalcompact.org/what-is-gc/mission/principles

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Vidal, J. (2014). Rate of deforestation in Indonesia overtakes Brazil, says study, Retrieved 03
July, 2016, from https://www.theguardian.com/environment/2014/jun/29/rate-of-
deforestation-in-indonesia-overtakes-brazil-says-study
WebFinance. (2016). crony capitalism. Retrieved 14 June, 2016, from
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WSJ. (2013). After the Coup in Cairo. Retrieved 14 June, 2016, from
http://www.wsj.com/articles/SB10001424127887324399404578583932317286550
XE. (2016). USD per 1EGP, Retrieved 02 July, 2016, from
http://www.xe.com/currencycharts/?from=EGP&to=USD&view=5Y

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