Tag: Capitalism

Where do we go from here?


Wonder if we look, inside our hearts, exactly what
We’d find
Or Maybe we could take a lot of pain away
Yeah
Or maybe we could heal the world today
Yeah
Or maybe, you know, something, I don’t, if you do then

Tell me    
Where do we go from here
Where do we go from here
Where do we go from here

                                                   Chris Rene, American Singer

A few weeks back I had watched the limited coverage of the national convention of the Chinese Communist Party. Rows and rows of party leaders listening and taking notes as a new leader Mr. Xi Jinping took over China’s leadership. With China’s flagging growth, Mr. Jinping is widely expected to provide his vision of the Chinese economic and living standards growth going forward.

The current UPA Government in India seems to be on its last legs and is frantically trying to reverse the ominous dip in GDP growth rates through desperate reform measures. While the jury is still out on the short-term impact of these “big ticket” reforms, it is obvious that no coalition or party can come back to power without a proven record of economic and consumption growth.

This story repeats in country after country in the developing world. Per capita growth, higher standards of living, endless availability of goods and services seems to be the universal mantra. The flickering images on the LCD panels, the endless sitcoms on myriad channels instigate us to go for that I phone 5. Or a fine dining experience. Or hanker for that newly launched car or luxury home. Our ability to consume, to pander to whims and fancies is seen as our success and growth.

But what happens when the two and a half billion folks from China and India come onto the field and want to play ball? What happens when the Chinese and Indians turn around to ask, “Hey you guys in the west, you followed your own American dream for more than a century. Now it’s our turn.”

Thomas Friedman did allude to this in his best seller ‘The World is Flat” but  said it in the context of Globalisation and a world view of a level playing field allowing everyone  an equal opportunity. Methinks however that the far more critical issue is the emerging stress on sustainability. The strain on our planet to continue to produce in pace with the exponentially rising consumption. To put it bluntly, mankind is well on course to strip this planet dry. Do see my earlier post “We need a second planet by 2030” in which consequences of mindless growth and consumption have been discussed.

So where do we go from here?

We need a shift in perspective and mindset. The twentieth century dream of conspicuous consumption cannot remain a role model any longer. This needs to be revisited, reviewed, redefined. We need to be able to answer the following.

“What really is personal prosperity, what constitutes our success?”

“Does success necessarily have to come from ownership and self-aggrandizement?”

“Could our hunger for access to better products and services be satiated, not necessarily by owning, but by sharing?”

This of course is easier said than done. We remain conditioned to acquire and own for our psychological security and comfort. This harks back to days of yore when scarcity and competing for scarce resources was the norm. This mindset continues even though access and availability is on a different plane. In our mind, Owning signifies upward mobility and prestige, of having arrived in a brave new world of capitalism. While Sharing is looked down upon as the vestige of a failed experiment called socialism.

Clearly a tectonic shift in perspective is called for. In a different context in “Age of Discontinuity and the Chinese Shi”, I had brought up the aspect of the Shi mindset which eschews the heaviness of resource ownership. Could this be a perspective that may be needed today?

I think of this and wonder who could play a catalysing role. Political leaders? Opinion makers? Media? What could be the trigger for them to buy-in and play such a role?

The good news is that technology and engineering acumen exists to achieve the above shift. Through better public transportation, better residential spaces with higher density, superior services delivery and energy efficiency, better use of public spaces, better reuse of stuff which we tend to throw away etc.The other great opportunity is of more and more “have not” folks gaining access to products and services which till now have been out of their reach.

Could this be the moment when the best tenets of Capitalism and Socialism coalesce and synergise to open up the path to sustainability?

In Learning………                                        Shakti Ghosal

 Acknowledgement: The World is flat A brief history of the twenty-first century: Thomas Friedman, 2005.

The Oxymoron of our times


From the heart of all matter
Comes the anguished cry
Wake, wake, great Siva,
Our body grows weary
Of its law-fixed path,
Give us new form
Sing our destruction,
That we gain new life…

                                                                                             Rabindranath Tagore

               (Translated from the Bengali original)

The media remains flush with dire tidings. About persisitent US unemployment. About the Euro zone crisis. About faltering growths in the BRIC economies. On screen debates and coffee table discussions waft around how to get back to the old ways of Capitalism fuelled growth.

We remain witness to cycles. The boom and bust. The shortening of product and business cycles. The rapid changes of technology and society. As I muse, I visualise the ebb and flow of human endeavour. Of our  knowledge and  creativity. Of our  follies and emotions. I see the movement, at once intuitive and playful, of the flowing curves and trends. I see economic and social aspirations as energy, unfolding and folding within itself. I see oscillations between  active and dormant states. I start to see Creation and Destruction….

I think of Creative Destruction, a concept by Joseph Schumpeter that has often resonated with me. Schumpeter saw human advance as a “perennial gale of creative destruction”. He likened it to the Darwinian natural selection to secure the “survival of the fittest”. What Schumpeter envisioned was the economy and society constantly regenerating from within by shedding old and failing businesses and social structures as it reallocates resources to newer, more productive ones.

I do see the path that Creative Destruction has taken in times gone by. As steam powered factories and looms closed down to give way to those with electric power. As did the horse drawn carriage give way to the automobile on the roads. And more recently, how the digital revolution squeezed out the traditional photography and music industries.

A machine perennially ON, creating that which is ‘new’ as it destroys what is ‘old.’ Like Lord Siva’s Rudra Tandava ( Dance of destruction) in Hindu mythology. Like the proverbial phoenix, rising from the ashes of that which no longer serves. And as it rises, it creates new Capital, new Thought, new Man. I see unstoppable movement. To stop would mean stopping change, evolution, progress. To stop would mean the inevitable decline.

But as I muse, I start seeing how Creative Destruction is failing today, just as it succeeded in centuries gone past.

As the old “debris” is destroyed, the ground needs to be cleared for the new to arise in a sweeping upward motion. This of course presupposes that both creation and destruction take place within the same society, winners and losers standing close and people gaining in other ways as they lose in some.

The grandeur of those great American auto towns in Detroit and the tens of thousands who worked in and around have surely gone with the wind, not to return. But as these jobs got destroyed in that area, many other value added and differentiated opportunities did arise, if not within the state, at least within the US itself. So Creative Destruction did work…….but this was last century.

Cut forward to our era of Globalisation and we see the Information and Technology outsourcing leading to near elimination of that industry in many parts of the world. Jobs destroyed in fact get created somewhere half way round the world, never to return. And with this we have been witness to the near destruction of the very communities from which they emanated

Whole countries and regions are becoming long term losers through destruction versus others becoming winners through creation. In this globalised age, the integrity of the oxymoron ‘Creative Destruction’ is being torn apart, way beyond what Schumpeter could have visualised.

And so I come back to the aspect of how the current global crisis looks through the lens of Creative Destruction. Are governments the world over in fact doing all the wrong things through politics? As they bail out top-heavy banks. As they subsidise inefficient businesses. As they prevent natural job losses. By doing these, has the world willy nilly shortchanged creation itself? And sowed the seeds of Capitalism’s own destruction?

In learning…..

Acknowledgement: Prophet of Innovation: Joseph Schumpeter and Creative Destruction    by Thomas K. McCraw, 2007.

Coming of the Second Wave


So you speak to me of sadness and the coming of the winter,
The fear that is within you now that seems to never end,
and the dreams that have escaped you and the hope that you’ve forgotten,
and you tell me that you need me now and you want to be my friend,
and you wonder where we’re going, where’s the rhyme and where’s the reason?

                                                                   John Denver, Rhymes and Reasons, 1969.

  

Is it not ironic that at times when we stand close to a momentous event, seeing it unfolding in all its HD brilliance, we tend to miss the wood for the trees in terms of its future impact? So it was when the Berlin wall came down; most folks saw it as the factual German reunification rather than the tectonic ideological change about Communism it portended. So it is with the Occupy Wall Street protests, mostly being seen as anger against job losses and lack of economic opportunities rather than something more structural.

As I look around, I see a march of seemingly unrelated trends and events.

  • Declining social and political trust arising out of a growing global inequality and a deepening fiscal crisis. This has lead to a crisis for pension, healthcare schemes etc. dependent on debt burdened states.
  • A heightened perceived insecurity in the developed world. For the first time in generations, people no longer believe their children will grow up to have a better standard of living.
  • More criminality. Be it cyber crimes, drug trafficking or acts of urban terrorism. Symptoms of rising youth unemployment and disenchantment.

During this year’s Davos meet of the World Economic forum, failures of the globalised market economy and an ‘uncertain future’ of Capitalism became the main issues. Ironic when you consider that over the years, Davos has become a byword for Globalisation.

I notice that Capitalism and Globalisation, those two economic pillars of the last few decades, appear to be losing flavour. So, is the world at some kind of an inflexion point?

I believe we have begun grappling with a massive socio-economic change. A change ushered in by programmable machines, networks and the World Wide Web. I had spoken of this in some detail in an earlier post. I say again that technology implementation is resulting in massive shifts at the work place as also how the very concept of work itself needs to be viewed. For the first time in history, technology, without human intervention, is adding economic value and wealth. So those getting in ahead of the game in terms of controlling technology are the new millionaires, displacing the aristocrats and industrialists of the last century. And these millions are being created thick and fast with hardly the need for additional employment generation. Not only is this fuelling a widening wealth gap and disparity, it is leaving more and more of the population behind, unemployed and dispossessed.

Small wonder therefore that a recently published global Wealth Report indicates that most of world’s richest people became richer through the recent economic downturn and into 2011. When in fact the average middle class family actually saw its income fall in real terms. According to Economist Paul Krugman. the current disparity gap in the USis the biggest since the 1920s. Clearly we have entered a landmark period of inequality where the gap is widening to unprecedented levels.

But do you know where the core irony of this whole situation lies? Well it happens to be our much vaunted economic models that not only failed to predict but also to come up with solutions to handle the inequality problem. Worse, if we were to go by economic theory, it is possible to show overall economic growth while significant part of the population is facing a recession or mired in poverty!

So if the predictive reliability of modern economics cannot be relied on, what do we as a society fall back upon? I sense fear as political leaderships all over brace themselves against increased social and political backlash of a growing global inequality. In the Occupy Wall Street protests. In the Arab Spring uprisings. In the resurgence of Marxism in the Indian tribal belts. In the eschewing of the rugged Thatcherism by the British Conservative party as it swing towards leftist policies.

There remain vestiges in our societal psyche of what happened a century back. The chasm between rich and poor opened up by the industrial revolution had been one of the main factors that led to the massive unrest in the first half of the twentieth century. Reaction to this had culminated in adoption of the Communism model in large parts of the world.

I believe we have once again reached that inflexion point where conditions are ripe for the coming of Socialism’s ‘Second Wave.’ I see this as a reaction to the perceived failure of the Capitalistic model and the kind of Globalisation and growth it has spawned. This Second Wave would need to show us ways of re-distributing the wealth created by that part of technology working without human intervention.

Would this be the way Inequality would give us our rhyme and our reason for the future?

In Learning…………..                                                                                        Shakti Ghosal

Clash of our pillar beliefs?


It is early days yet of the twenty first century. And while we look forward with hope to human development and new fangled wonders that the future would bring, we also remain rooted to our pillar beliefs which have stood us in good stead. So what are these beliefs?

Pillar belief one: Capitalism remains the panacea for economic development. Capitalism fosters and aligns with Man’s inherent nature to create and innovate for his own benefit.It thus spawns and rewards entrepreneurs. As economic activity expands, so does work and jobs. We hold the belief that Capitalism leads to pulling up of the lower economic strata by the shoe laces. Through more employment and “trickle down” distribution of wealth.

Pillar belief two: Technology facilitates economic development through higher productivity and process efficiency. History has shown that while in the short term, technology may take over repetitive work and jobs, it ends up creating more jobs requiring different and higher competences.

 Though mutually exclusive, both Capitalism and Technology collaborated towards job and wealth creations throughout human society. Until yesterday………..

So what has changed? For the first time in history, technology has evolved to a self sustaining state where it now is able to create wealth without creating jobs. At a subterranean level, technology is clicking and whirring away as it takes care of vast tracts of economic activity 24X7. So today, wealth creation may no longer be an issue but wealth distribution sure is.

Is this a malaise? If it is, symptoms of it are everywhere. As wealth gets created, it gets aggrandized by the CEOs and leaders who envision implementing of technology and cutting of jobs and costs. And so under the protective umbrella of capitalism, we are witness to those huge bonuses and golden parachutes for business honchos and top bankers while “We the 99%” need to make do with largely stagnant pay packets.

Do we realise that Capitalism, the Ayn Rand propagated 20th century pillar belief, possibly for the first time, is no longer “pulling up the lower economic strata by the shoe laces”? On the contrary, it is taking the refuge of technology to increase disparities between the Haves and Have-nots.

A clash of our long held beliefs?

So how do we ensure an equitable distribution of wealth? And how do we do this so that the intrinsic quality of life continues to improve, the initiative taking and creative abilities continue to flower? Frankly I do not profess to have an answer. But I can envision some broad directions and perspective shifts that may be needed.

Can we afford to be purists and let Capitalism and Technology be absolute? And what are these purist beliefs?

  • That “Governments need to adopt a laissez faire stance in economics and commerce”.
  • That “all subsidies need to be frowned upon”.
  • That “cloning of technology in different parts of the world is the fastest route to development”.

But as we start thinking of these, do we not spot inherent contradictions within each of these that could self destruct the entire system?

With the turning screw of time, synergies can turn contrarian as we have witnessed above. And as we shift our perspective away from what we have been conditioned to believe, what could remain the bedrock for anchoring our purpose? Could we achieve this by fostering core values? Values such as   Sharing, Caring, Truth, Service to others and Sustainability?

“Predatory capitalism created a complex industrial system and an advanced technology; it permitted a considerable extension of democratic practice and fostered certain liberal values, but within limits that are now being pressed and must be overcome. It is not a fit system for this century.”

NOAM CHOMSKY

                                                                                                                       **************

In   Learning……………..                                                                       Shakti Ghosal

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