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Economists and members of civil society have voiced concern with regard to the concentration of wealth in a few hands, who, in most cases, are cronies of the government. The concentration of income in the hands of top 5.0 per cent of society seems to be unstoppable. The political leadership, which is influenced heavily or controlled indirectly by this segment of the population, seems to be unconcerned about the issue of fair and equitable distribution of income. Cronies are getting their ways freely. Apparently, the government is for the cronies, of the cronies, by the cronies. Can anyone expect a semblance of competition in the economy when cronies rule the roost?
Speaking ideally, capitalism is market economy. Such an economy, or an economy driven by demand and supply, is basically meant to promote and ensure a competitive economy so that players in the economy can receive their due share as per their merits and contributions. But when a market economy drifts away from competition or cronies combine together and influence the political leadership to make the regulatory system dysfunctional, then the market economy turns out to be 'dirty capitalism' that serves only the interest of a few to the deprivation of workers and other weak stakeholders.
In Bangladesh economy, cronies have taken over production in important areas. They got business contracts at an exorbitant price and made 'monopoly profit'. They manipulated the banking system and took huge amounts of money as credit. No law seems to be strong enough to force them to pay back the borrowed money to the banks. They have looted the share market too. They played a pivotal role in creating artificial bubbles in the market in 1996 and 2010.
Bangladesh economy has been growing at about 7.0 per cent per annum for years, but the cost of the growth has been too high. The poorer section of the people has been forced to become clients in a non-competitive oligopolistic market, and the natural resources of the country have been ruthlessly exploited and destroyed. The country has lost vast tracts of cultivable land in the greedy spree of industrialisation. It has also lost much of its forest resources. The rivers are getting filled up and occupied for the so-called business purposes.
Most of the superrich in the economy are the product of crony capitalism. In most of the market economies, government plays the big role in making a level-playing field so that all get equal opportunities and none is discriminated at. The people, who lag behind, receive transfer payments in different forms. Also, the logic of progressive taxation is based on the principle of a warranted requirement of equity in society. The rich are taxed at higher rates depending on their level of income. But the reality in Bangladesh is that rich people avoid payment of tax more than the poor. The rich people's real tax burden is much lower than that of the poor when sales tax like VAT (value added tax) is taken into consideration.
Abu Ahmed is Professor of Economics, University of Dhaka.