India, Socialism and Free-Market Capitalism (FMC)

What is capitalism? The dictionary says it is an economic system in which 'the means of production are privately owned'. 'Means of production' means farms, factories and companies. 'Privately owned' means not owned by the government but by individuals, families and groups. So capitalism is an economic system in which individuals, families and groups (not the government) own farms, factories and companies. Now how else should an economic system be? And how else has it been – since the beginning of civilisation? It is nothing but the natural economic system.

If capitalism is the natural economic system, why have a term for it? That too a term ending with 'ism' – as if it is an ideology? The word 'capitalism' was coined by Karl Marx – for two reasons:
1. To defame/slander the natural economic system
2. To distinguish it from his economic system 'socialism' – in which the government owns farms, factories and companies.

India became free in 1947. Nehru was a socialist. So he chose socialism as our economic system. With socialism, our economy grew at an average rate of 3% and our population grew at 2%. So our average income grew at 1% per year. Meanwhile, the East Asian countries (Korea, Taiwan, Hong Kong) and the South East Asian countries (Malaysia, Thailand, Singapore) did not make this mistake. They adopted capitalism and grew at 10%. The result: By 1990, the East Asian countries became high-income countries and the South East Asian countries became middle-income countries. And we? We were still a low-income country – though in 1947, these countries were poorer than India.

Finally in 1991, the Soviet Union (the world's biggest socialist economy) collapsed – and proved that socialism is an inefficient economic system (China had wisely converted to capitalism in 1978 itself). The same year we had an economic crisis and we converted to capitalism under Prime Minister P V Narasimha Rao. Since then, our economy has grown at an average rate of 7% and our population has grown at 1% – so our average income has grown at 6% per year. As a result, we have drastically reduced our poverty and are on track to eliminate it. We have also become the world's 5th biggest economy and are on track to becoming, yes, a superpower. All this is due to the free-market capitalism (FMC) we embraced in 1991.

So now we have a choice:
A. Continue with free-market capitalism and become a First World country.
OR
B. Go back to government-controlled socialism and remain a Third World country.