Arun Maira’s book, “Transforming Capitalism : Improving the World for Everyone” deals with the most important crisis the World is facing today. It explores and delves into the causes, and tries to find out the solution of the myth of Capitalism, and the implosion of 2008.
I was curious about this book. Arun Maira after all is a much respected authority, presently a member of the Planning Commission of India, was for 25 years in Tata Administrative Services, a Capitalist, advisor and consultant to Global Business Giants, chairman of the Boston Consulting Group, and in the board of numerous business and educational institutions. Also a noted columnist in various journals and papers, including the “Economic Times”. I was curious, not about what I will find in the book, as to be modest, it was predictable. I was more curious to find out which of his identity eclipsed the other one…the capitalist eclipsing the social planning, or the other way round. All I can say is he atleast tried to maintain a balance, which is a rarity these days.
Coming to the book, this book comes up with some good case studies, and essays about the global crisis of Capitalism. That’s just about it. For the start this book maintains the same line of arguement about balance between CSR and greed, between social subsidies and survival and competition. It makes the same mistake of looking at capitalism from a linear, monochromatic point of view, identifying the “laissez faire”, hire and fire policies of 18th century Adam Smith influenced economics, to modern 8 hour work limit, worker’s right and social security included capitalism. I have heard the story many times since Fannie Mae and Freddie Mac. I am still not onvinced or impressed. They are not similar, the situations…and there is a two hundred years gap between them.
See, we are without doubt in the middle of a crisis. Global crisis which started in the west, which will somehow touch us too, sooner than you imagine. One nation, with howsoever strong and growing economy, can’t flow against the tide. It is therefore important to identify the proper causes of this problem, in order to implement any solution or collective approach. With all due respect to Mr. Maira, he couldn’t do it, or give us a new vision with his book. Nor can I, to be frank, but then I am not writing any book, am I?
The main arguement against subsidies, and state bailouts, and social security can be the example of Greece. It is fashionable these days, we see college youths, ideologically motivated, talking about “equality” and how everyone has rights to live with dignity etc. Noble though the ideals maybe, the practical feasibility of the goals are much questioned. What are the economic solutions? Where are the resources? Greece had one of the best social security systems. They nurtured a class of people, who are now rioting when they are asked to work, and take up austerity. On the other hand, look at Germany. Two World wars, broken legacy, and a burden of guilt which somehow never leaves, they are now at the top, leading the economic recovery of Europe. But then not everyone possess German efficiency and discipline, do they? Which brings us to a more important question…considering the difference of the problem, and the difference of the situation prevailing across the globe, is it at all wise to suggest a single solution for all?
I don’t know the answer. But I guess that is a good line from where one might start thinking.
I am not against CSR. Honestly. I believe it can be great if Capitalists can be a bit more compassionate and considerate. But I am caustic about false prophets of doom, who cry “death to free market” in every sign of a bust. Capitalism survives. It survived the World wars. It survived the strikes of weavers, when the first cotton mill came. It survived the Great Depression. It survived Cold War, the first arrival of computers in Work force dislodging manual labour in the 80s. Some cried hoarse then too. What we saw however is that more people got job than who lost them, though not always necessarily the same set of people. It is important to innovate and change according to time. One can’t expect to be static and expect the State to feed him, and his future generations regardless of his or their quality. And therein lies the hopelessness as well as the inevitability of capitalism. It will stay on. It will change, mutate according to time, but will stay on. Like I said before, it is fashionable for people, mostly young people to shout noble goals of equality and social security. But here’s a warning from me, a man reaching his thirties, with a few white hair over the temples, who lived in the stagnating days of late 80s and early 90s, in a proper socialist economy. You have absolutely no idea what you are creating and proselytizing.
Like my father told me once, “those who are not leftist before the age of 20, don’t have a heart…those who are still after 20, don’t have brains.”
Finally, a food for thought. Tatas and Ambanis, are much hated men among leftists in India. They are “exploiting capitalists”. Arundhati Roy is a beloved one, Booker prize winner, fighter for Maoist and tribal rights. Ambanis and Tatas opened schools for underprivileged, and distributed books, foods thereby touching upon lives of thousands. Roy drank double scotches in her posh South Delhi apartment, and lectured about exploitation. I think I will choose the former any given day.
[ This review is a part of the Book Reviews Program at BlogAdda.com. ]
Daily World Watch 
I’m a 53 year old American woman. I live in the world’s most capitalistic nation. Capitalism in its truest form is a system where someone who is a producer is providing something to meet the needs of a free market. It is pure and it is simple. There are no artificial barriers to entry. It is a simple system of meeting a need.
Capitalism goes wrong, primarily for three reasons. One reason is, government intervention, like in the case of companies like Solyndra in the US. Solyndra was producing “environmentally friendly” products in the US. Nobody was BUYING their products, because nobody wanted them. But some Bureaucrat in the US decided we NEEDED their product and so they gave 500M of taxpayer money to them to stimulate the economy and keep them alive. They built lavish offices….to keep this company, producing products people did not want, alive….because some bureaucrat decided that their products were worthy…..and then they went bankrupt anyway because people did not want the product. There are also many situations in the US where the govt has structured policy around the needs of their political contributors…..the whole system degenerates into crony capitalism and it degenerates into a practice of enriching politicians who are bastardizing markets to protect rich contributors.
Another reason capitalism goes wrong is that there can be monopolies. The utilities in the US are such monopolies….and everyone hates them. Many areas only have one gas company or one cable company. They are lazy and have no customer service interest because they have no competition. But again, these monopolies are normally set up by the govt. In a free market, it is very hard to establish and keep a monopoly if you make a substandard product. It you have a high profit margin on a product that dominates the market, capital and competition will come in. Even when a product completely dominates. The extraordinary profit of that domination will bring competitors in. You see this going on in technology every day.
A third reason capitalism goes wrong is when the capitalist starts focusing on the goal of a fatcat lifestyle, instead of producing a product people want, at a competitive price that meets the need of a market and sustains the success of the company. This often comes at the point when you are moving out of a first generation of a company, where the original entrepreneur loved the company like a child…..has to pass the company onto an adopted new leader.
Finding a new leader who has the same drive to love the “baby” as an adopted parent, once a company is producing big profits is not an easy task…..as Apple will soon find out. But again, a company which makes large profits that forgets its mission and its customer will soon face competition from companies willing to be devoted to the customer and steal their rich market.
For people who have not read the book, Atlas Shrugged, I highly recommend it. It is a fictional book that describes the advantages of capitalism and free markets over all alternatives.
Yes, it is a brilliant book. I quite like Ayn Rand. I agree with you mostly, except the “fatcat lifestyle” part, which I didn’t quite understand what you wanted to say. A man earns to spend, he has a right to property. And only when a man spends like a fatcat, economy rolls. If there is no massive spending, the economy is not fluid, then the money will be stagnant. Adam Smith proved that long back. One reason why capitalism is in crisis is capitalists while earning money, is storing it as big capital in bank, instead of investing. One should spend more, in cash, ofcourse, not credit.
Also, like I said, resources is a factor. I believe a total overhaul of the system is needed, like during the Industrial revolution. But much needs to be analysed.
It will be my pleasure to read this special book and give my opinion on the important subject which may decide the course of socio political future.
Glad to see that someone shares the same views about this book. I found the book extremely fatuous with no substance. However, I dont agree much with your observations on Ambani and Tatas. Opening up few schools, creating memorable CSR entertainment packages designed to deceive audience to hide huge costs they have externalized for their business growth. Here is my take on the book http://www.venkinesis.in/2012/02/transforming-capitalism-jet-lagged.html