[Published in VILAKSHAN, Sep 2012]
Breaking of the Berlin Wall and the collapse of communism created a false and temporary euphoria in the capitalistic citadels of the West. The hardcore capitalists rejoiced over the triumph and supremacy of capitalism. Some of them announced the “End of History” because there is no other ideology to counter capitalism. But the subsequent events like the financial meltdown in US and the recent dept crisis in Europe have awakened western mind to some of the inherent defects in traditional capitalism. As a result, there is at present a serious rethinking on the limitations of capitalism and a quest for a renovation in the capitalist theory and practice. This article examines this new rethinking on capitalism in the light of a deeper and wider perspective. The first part of the article examines the emerging critic and correctives to capitalism without comment. The main objective of this part of the article is to show how a system of thought and practice is trying to correct itself by self-reflection. The second part of the article examines this new thinking in the light of Indian synthesis and a more integral spiritual vision of human development.
Key Perspectives: hard-core capitalism; crisis in capitalism; emerging correctives; indicant social synthesis; beyond self-interest; purpose of money.
The Gospel of Market Fundamentalism
Before coming to the new rethinking on capitalism let us review briefly the basic tenets of traditional capitalism. The old hardcore capitalism revolves around the motives of competition and free market. The main tenets of hard-core capitalism are as follows:
- Pursuit of self-interest ultimately leads to common good: If individuals and groups are given the freedom to pursue their self-interest, it ultimately leads to a better economy and society because there is an “Invisible Hand” which drives or compels the self-centered efforts of human beings to contribute to the common good.
- Competition leads to greater efficiency, productivity and prosperity: When the firms are allowed to compete with each other, they become more efficient and productive, costs of products and services come down which benefits the customer and increases prosperity.
- Free private enterprise with minimum government regulation: private enterprise is the best and most effective path for creating an efficient productive and prosperous economy. Private firms should be given the full freedom to produce wealth in the way they want with minimum governmental regulation or interference.
- Freedom to possess private property: Each individual or the firm should be allowed to amass or possess as much wealth as they inherit or produce as long as they pay the required taxes to the government.
- Primacy of the Market: Free market fixing the price of things and services according to the free and unregulated interplay of market forces is the best way to achieve prosperity and efficient allocation of resources.
- Concept of Trickle Down: There may be an initial and temporary concentration of wealth in a few, but ultimately the wealth trickles down into the masses and brings equity.
- Primacy of the Shareholder Value: The main purpose of a business organization is to maximize shareholder value. The only responsibilities of business is to do business well with the highest efficiency and productivity in using resources, pay taxes, abide by the laws of the land, provide employment and create wealth. Business should not get entangled with any other social problems, concerns or activities like poverty, which have to be left to the civil society and government.
- Predominance of Financial Measures:The best way to measure the success or quality of a business organization or an economy or a nation are economic and financial indicators like return on equity or Gross Domestic Product, GDP.
Most of these tenets of traditional capitalism are coming under critical scrutiny in the new rethinking emerging in business and management.
The Crisis in Capitalism
After the financial meltdown in US many thinking minds in economics and business are beginning to recognize the limitations of the traditional capitalism. Recently, a group of leading scholars, researchers entrepreneurs and corporate executives sat together to discuss and debate on causes behind and remedies for what they felt as the emerging “crisis in capitalism.” They identified the following factors as the source of the crisis and danger for the effective working of market capitalism:
- Fragility of the financial system
- Breakdown in Global Trade
- Inequality in income
- Migration
- Environmental Degradation
- Failure of the Rule of Law
- Decline of Public Health
- Rise of State Capitalism
- Radical movements, terrorism, war
- Spread of pandemics
- Inadequacy of institutions
What is the remedy? Reporting on the deliberations of the conference cited above in Harvard Business Review, Joseph Bower, Herman Leonardo and Lynn Paine argue that the corporate world must take an “activist” role in solving the problems confronting capitalism because most of the national governments are weak and do not have the will or the capability to solve these problem. The corporate world is in a better position interms of resources, skill and expertise to solve the maladies and give a new direction to capitalism. Corporations have to collaborate with the government and other institutions to provide solutions which can pull capitalism out of its crisis. [Bower etal, 2011]
However, in this approach or solution there is not yet a radical questioning of the tenets of capitalism. Most of the threats to capitalism reported in the article are regarded as external and not as intrinsic to capitalism. Market capitalism combined with western-type of democracy are still regarded as the best approach to prosperity and a better society.
Here comes the importance of another article in Harvard Business Review, where, Christopher Meyer and Julia Kerby present a wider and a more incisive criticism of the two major tenets of capitalism: Competition and the primary of financial indicators like Return on Equity and Gross Domestic Product (GDP). In this article, Meyer and Jerkins make the following critical points on the present condition of capitalism:
- Many people are now declaring capitalism a failure. The whole system has been indicted, not only because of the financial crisis but particularly since the event, as inherently unworkable.
- Obsessive and exclusive emphasis on competition and financial parameters like ROI and GDP has lead to misdirected priorities in capitalist economies.
- Financial gain is not the soul of capitalism. The overall objective of commerce is to better people’s welfare of in other words, “the greatest good of greatest number of people.”
- Financial indicators like GDP or ROI cannot be the sole measure of human wellbeing. If they are used as a part or a limb of a wider system of measurement of human wellbeing that includes non-financial parameters like education, health, then it helps. But if financial parameters become the sole aim of capitalism it derails the whole system.
Similarly, the real source of an economy’s vitality is not competition but innovation. Competition can help innovation but strategic collaboration can also be a fertile source of innovation. [Meyer C and Julia K, 2012]
Regulating the Casino Economy
There is one more major malady in capitalism which came to the limelight after the financial crisis: excessive activity of the speculative bubble and the Wall Street culture. Much has been said and written about this “casino economy” in the multitude of articles and analyses which appeared during the financial meltdown. The main problem here is that productive economy which creates tangible wealth for the society gets supplanted by the unproductive speculation in the stock marker where money becomes a means for making more and more money in the easy way.
Interestingly, John Meynard Keynes, one of the founding fathers of modern economics, warned long back: “speculation may do no arm as bubbles on a steady stream of enterprise. But the position is serious when enterprise bubbles on a whirlpool of speculation. When the capital development of a country becomes the byproduct of a casino, the job is likely to be illdone.” Even some entrepreneurs and executives in the West who favour capitalism are critical of the speculative Wall Street culture. For example, John M. Huntsman, Chairman and founder of Huntsman Corporation, the world’s largest privately owned chemical company states, “There are many professions in which one can find examples of hollow values but nowhere it is more evident than on Wall street where the ruling ethos seems to be more you deceive the other guy, the more money you make—Wall street has but one objective. How much money one can make.” [Huntsman J. M, 2006] The problem is compounded by the unregulated digital economy and the insistence of the core capitalists for “deregulation” and freedom from all forms of government control.
However after the financial meltdown there is a growing recognition of the need for an enlightened regulatory framework which encourages productive enterprise. For example, according to Juan Samavia, director General of International Labour Organisation, the remedy lies in going back to “the basic legitimate function of finance, which is to promote the real economy─to lend so that entrepreneurs can invest, innovate, produce jobs and products” and create “public policies and smart regulation that rewards hardwork and enterprise once again.” [Samavia J, 2008] Similarly an analyst at RIA Novosoti, state, “The old system-is rooted in the greediness of banks and their clients which cannot be eradicated overnight and in the mystical belief in the markets talent for self-regulation. To change this system the world must toughen control over global currency and finance and introduce state regulation of the economy.” [Fedyasin A, 2008]
The Deeper Malady And The Emerging Correctives
But the factors we have discussed so far are not the root cause of the crisis facing capitalism. The real malady lies deeper. According to Charles Hardy, the well known British management thinker, the real “malaise” within capitalism is the lack of a higher purpose beyond selfishness and greed. As Hardy explains:
“Communism had a cause-which was, ideally, a sense of equality and prosperity for all, that all people were and could be equal-but it didn’t have an appropriate mechanism to deliver that cause. Whereas capitalism is a mechanism, but it seems to me that it lacks a cause. Is it all just to make ourselves rich, or is there more to life than that? Because when we get the money, that seldom seems to be enough. The question is, are we in danger of throwing the baby out with the bathwater? The bathwater is the inefficiency and intolerance of communism, while the baby is its idealism. And that is what capitalism is sadly lacking. There is a cancer in the heart of capitalism. It is the lack of a cause that can stir the heart. What’s it all for and for whom? The first stage in rethinking capitalism is to be absolutely clear about what it’s all for and who it’s for. I don’t think the answer that it’s for the financiers-i.e. the shareholders–is a very adequate answer at all, either practically or morally.” [Hardy C, 1996]
Nevertheless, capitalism is perhaps trying to recover its soul through the new values emerging in business like ethics, corporate social responsibility environmental sustainability, which are becoming some of the new imperatives in business. A recent issue of Harvard Business Review asks in its front page, “what great companies do differently” and answers: “They create value for society, solve the world’s problems and make money, too.” The editorial of this issue of HBR sums up the new thinking emerging in business and management:
“Any manager will tell you that his or her company stands for more than just the bottom line: It takes care of its workers, limits its carbon emissions, improves the welfare of its communities. Notions of good practice change over time. In the early 1900s Henry Ford fattened his workers’ paychecks to help turn them into consumers. Later, big companies began rewarding employees for their loyalty with jobs for life. In recent years corporate social responsibility became an imperative. Now, in the information age, when we can more easily measure our effect on the world around us, companies are increasingly taking responsibility for their big footprints. Perpetually running counter to all this, of course, is Milton Friedman’s famous observation that the only true responsibility of business is to make money.” [From the Editors desk, 2011]
In the same issue, a leading management thinker, Rosabeth Mass Kanter writes, “Articulating a purpose broader than making money can guide strategies and actions, open new sources of information and help people express corporate and personal values in their everyday work.” Another well known management Guru, Gary Hamel goes still further into a more or less spiritual domain when he argues that the traditional goal of maximizing wealth is “inadequate in many respects” because it “lacks the power to fully mobilise human energies” and therefore “tomorrow’s management practices must focus on the achievement of socially significant and noble goals” and “deeper soul stirring ideals such as honor, truth, love, justice and beauty” which have “long inspired human being to extraordinary achievements.”
Similarly, the motive of self-interest, as the source of efficiency, productivity or prosperity is also now coming under critical questioning in the light of new discoveries in science. The traditional capitalist thinkers justified self-interest and competition based on old scientific notions that human nature is inherently selfish and the Darwinian “struggle for existence” and “survival of the fittest” is the best way to growth and prosperity. However, according to the new scientific thinking, human nature is not as selfish as it thought to be in old science. There is a less selfish and more cooperative and altruistic element in the human genetic nature. This new scientific perspective is entering into business and management thinking. Yochai Benkler, Professor for Entrepreneurial Legal Studies at Harvard Law School, in his article, “Unselfish Gene” examines emerging scientific discoveries related to collaboration and its implication for business and management. Here are some of the perceptions and conclusions of Benkler on collaboration.
- For generations modern western cultures have operated on the assumption that human nature is intrinsically selfish. But now the tide is starting to turn. In fields such as evolutionary biology, psychology, sociology, political science and experimental economics, researcher are seeing evidence that the urge to selfless action or collaborate is as much intrinsic to human nature as selfishness and human being are more cooperative and less selfish that we have assumed.
- The success achieved by such collaborative offerings as Wikipedia, Craigslist, Facebook, and open source software has, in fact, a scientific basis. Dozens of field studies have identified highly successful cooperative systems, which are often more stable than those based on incentives.
- Researchers have found neural and possibly genetic evidence of a human predisposition to cooperate. Evolution may actually favor people who collaborate and societies that include such individuals. [Benkler, Y, 2011]
Another interesting new discovery in science which goes against capitalist notions of life and nature is the new ecological view of nature. According to modern ecology Nature is not merely a ruthless and competitive struggle for existence as Darwin assumed it to be. In Nature, the competitive struggle for existence is only a subordinate or secondary element in a predominantly cooperative and interdependent process where the waste of one organism becomes the food for another. Fritjof Capra, physicist and author, elaborating on the implications of this new ecological perspective for business and management, states:
“A sustainable business organization will apply this principle to cooperation and partnership along product cycles and countless other ways, both internally within the company and industry wide. Here we encounter again the basic tension between economics and ecology that we need to overcome. Economics deal with quantity, competition, expansion; ecology deals with quality, cooperation, conservation.” [Capra F & Pauli G, 1995]
The message or warning of all these new discoveries and perspective to capitalism may be summed up in the following words: If capitalism wants to align itself to these higher laws of human and universal Nature, it has to discard its predominant orientation towards competition and self-interest and uplift its motives towards cooperation, partnership and altruism.
We have discussed so far some of the emerging perspectives on how to revamp capitalism, which seem to be under troubled waters. Interestingly, many of these new perspectives are in harmony with the Indian synthesis. In the subsequent sections of this article we will examine this new thinking in the light of Indian synthesis. First let us have a brief look at the Indian synthesis.
The Indian Social Synthesis
The Indian way of thinking is based on the concept of Dharma which means in a simple language, laws of life and the values, ideas or principles or purpose derived from these laws. In this Indian perspective, Dharma is the basis for morality and also values, which means for deciding what is right and good in all matters. All that is in concord with Dharma lead to harmony, progress, wellbeing, enlightenment and therefore have to be consciously cultivated. All that is contrary to dharma leads to darkness and misery and therefore have to be shunned.
There are three dimensions to Dharma. First is the universal and eternal dimension, Sanathana Dharma, which is the highest laws, aims, values and ideals of human development, common to all humanity, like truth, beauty, goodness, unity, interdependence, harmony, progress, perfection. The second is the unique, specific or individual dimension, swadharma. Every individual and group and every human activity like politics or economics or social phenomena like capitalism or socialism is or has its own swadharma derived from its unique nature, temperament, purpose or historical evolution. Every individual, group or activity has to consciously progress towards the highest ideals of universal dharma, but each in its own way according to its unique swadharma. The third aspect of Dharma is the Yugadharma which means dharma of the age or in a wider view dharma of the contemporary world, like for example, globalism. The right course action, dharma at any given situation or span of time has to be determined by a careful consideration of all the three dimensions of dharma.
In this dharmic vision, human society is only a framework for the mental, moral and spiritual growth of the individual and community. This higher growth or evolution is achieved by a progressive subordination, renunciation or self-giving of personal or corporate interests and goals to more and more universal and impersonal goals which belongs to the common good of all or derived from universal dharma. Each individual or community has to grow by following its own unique swadharma, in complementing harmony with the swadharma of others, contributing to the common good of all and ascending progressively towards the universal dharma.
According to Indian thought, human society is made of four organs: Culture, Economy, Polity and Work-force. The dharma of culture is to provide the ideas, ideals, values and the path of right living, dharma, which lead to the mental, moral, aesthetic and spiritual development of the individual and community. The dharma of polity is to enforce, establish and sustain dharma in society. The dharma of the economy is to create wealth and use it for the dharmic well-being and progress of the society. And the dharma of the work-force is to provide the physical energy and skill for the material realization of dharma in society. The Indian ideal of social development is a harmonious, mutually complementing and balanced growth of the four organs of the society organized around the ideals of dharma.(Sri Aurobindo, 1972) Let us now reexamine the tenets of traditional capitalism in the light of Indian synthesis and the new rethinking which we have discussed earlier.
Subordinating Self-Interest
The Indian thought recognized self-interest and enjoyment of wealth and power, Artha and Kama, as part of the legitimate four-fold motives or aims of life. But they are not regarded as the highest motives of life. Beyond Artha and Kama there are the motives and aim of dharma and moksha, which means mental, moral and spiritual development. We must note here that Indian thought never rejected or condemned the seeking for wealth, power, enjoyment or even self-interest, like many other ascetic religions. Upto a certain stage in human development, these motives help the individual and community to raise from the tamasic inertia of the physical being to the dynamic throb of life and bring vital energy, vigour and prosperity to the economic, social and political life. But if they are pursued exclusively, as if they are the only motives and aims of life then it leads also to mental, moral and spiritual degenerations of the individual and community which ultimately leads to physical and vital decline. For a system which pursues exclusively Artha-Kama motives without any mental, moral or spiritual ideals is a closed system subject the law of entropy, progressive disintegration. So for the higher evolution of an individual, community or a system, the Artha-kama motives of power, wealth, enjoyment and self-interest have to be subordinated to the mental, moral and spiritual motives and aim of life belonging to the dharma-moksha domains. So for the higher evolution of capitalism, it has to discover a higher motive beyond self-interest.
The new values emerging in management like corporate social responsibility, environmental sustainability or even customer service can provide such a dharmic elevation to capitalism. If serving the society and customer becomes the dominant aim of business it helps capitalism to raise beyond narrow corporate self-interest and greed to a higher dharmic level. Similarly, according to Indian thought, human nature is not entirely a mass of self-interested narrowness. In every human being there is a higher mental, moral and spiritual nature which seeks for higher values like truth, beauty and goodness and capable of selfless action. This higher nature may be underdeveloped, weak, veiled or hidden behind the selfish and greedy lower nature made of the physical and vital ego, but it is there in every individual. As we have discussed earlier, the new scientific perspectives on human nature are moving closer to this Indian view. However according to Indian thought, this higher nature in human being can be consciously cultivated and brought forward in the individual or collectivity through appropriate education, inner and outer discipline and creating an external environment favourable to its growth. This is the path for the higher evolution of the individual or a group or any human activity or system of thought or practice. Capitalism, inorder to progress further, has to incorporate this deeper Indian insight on human nature and the new scientific perspective on the “Unselfish Gene” into its system of thought and practice.
These new or higher motives emerging in business like for example CSR can be misused in a manipulative or self-serving manner. But this is unavoidable because there is a corrupting element in human nature which can twist or distort even the noblest urges. Secondly, self-interest is an obstinate and subtle thing which is difficult to eliminate. These dark spots in human consciousness can be eliminated entirely only in a spiritual consciousness beyond mind or under its direct and conscious influence in human nature. But in the course of our human evolution, we have to grow towards this spiritual aim by developing the nobler, sattwic mind which can subordinate its self-interest to the larger or common good, which is a dharmic movement. The new motives emerging in business represent this sattwic evolution.
Competition, Collaboration and Corporate Responsibility
Competition is not part of Indian synthesis. The Indian mind perceived the unity, mutuality and interdependence of all life and came to the conclusion that a harmonious collaboration between the various organs and limbs of the society, each contributing to the common good of all, is the path to attune the individual and collective life to these higher dharma of life. In other words, Indian thought perceived harmony, collaboration and social responsibility as the best path to higher evolution and progress. However we have to look at competition and cooperation in a wider evolutionary perspective and in the context of the contemporary corporate world. Here comes the relevance of the Indian concept of Yugadharma, which means dharma of the present times. We have to take into consideration the facts and experiences of the contemporary world in arriving at a new synthesis.
In the evolutionary ladder, mutuality, harmony and cooperation are undoubtedly the higher values which lead to sustainable development and competition belongs to the lower levels of development. However, cooperation can become truly creative and effective only when the individual and the collectivity attains a certain level of inner moral development or when it becomes a pragmatic necessity for the survival and success of the individual or a group. And until this happens competition is helpful. We must look objectively at the facts of nature as well as human life to understand the role and advantages of competition.
In the initial stages of human development, competition develops survival skills and the faculties of the pragmatic mind for adaptation and innovation. It awakens the inert physical man to the throb of life, forces him to face the difficulties and challenges of life and as a result helps him to progress from the physical to vital level. It also helps him to progress further by awakening the other vital motives of achievement, enjoyment, expansion, conquest. But if these vital motives are not kept in check or subordinated to a moral sense for the well-being of others and the community as a whole, then it leads to all the evils of traditional capitalism, which we see in western society like inequality, overconsumption, and environmental degradation. On the positive side we can not deny that free enterprise and competition, wherever it is allowed to function without much government control, create rapid economic progress and prosperity. Moreover competition in terms of quality, cost and innovation is beneficial to the customer. Similarly, if firms compete with each other in terms of employee well-being, social and ecological responsibility and customer service, then it is beneficial to the community as a whole.
So what is needed is an awakening in every section of the human society to the unity mutuality and interdependence of life, in man and Nature. In a life-system governed by the laws of unity and interdependence, the wellbeing of each part is depended on well-being of others and the wellbeing of the whole. When this awakening and recognition is there, then much of the harmful forms of competition will disappear and there will be a greater urge among the individuals and the groups towards cooperation for the wellbeing and progress of the greater whole.
This inner awakening happens in three stages. In the first stage when the individual or community is exclusively focused on its own self-interest, it cannot think beyond competitive struggle for survival, expansion and self-aggrandisment by whatever means. As the human organism progresses further and awakens to the interdependence of life and begins to become aware that its self-interest can be better secured by harmonizing it with the interest of others in a win-win situation, then competition is subordinated and replaced by mutual accommodation. In this stage, this subordination or accommodation is predominantly pragmatic for a better realisation of self-interest. As the human organism progresses further and becomes aware of the systemic wholeness of life and understands how the wellbeing of each individual part depends on the wellbeing of the larger whole, then it is willing to subordinate its self-interest for the sake of the progress and wellbeing of the whole with a greater understanding of the laws of life. (Sri Aurobindo, 1972) This is the stage in which the concept or ideal of social responsibility becomes a living force in the individual and communal life. Moreover, in this stage, the individual human organisms do not insist on competing with other individuals but willing to cooperate with other individuals for the progress and wellbeing of the whole. Modern corporate world is tentatively entering into the second and third stage. This is the reason why concepts like social and ecological responsibility, win-win approach, partnership, co-creation and alliance with competitors are increasingly heard and experimented in modern management theory and practice.
There is one more stage, the fourth, which may be a little far away from the present condition of humanity. It is the stage when the consciousness of humanity as a whole becomes more and more aware of the Oneness of all existence and as a result there is a spontaneous mutual self-giving.
These four stages of evolution from the stage of competition based on self-interest to the highest stage of self-giving happens through a process of natural evolution aided by a combination of external circumstances, education, thought and culture. But this natural process of evolution can be made fully conscious and accelerated by awakening the individual and the community to the higher laws of unity and the four stages of growth. When our individual and communal life becomes conscious of these greater truths of life, then, keeping the highest ideal constantly in the background of our mind, we can progress consciously from where we are at present to the next higher stage, using appropriate educational and motivational strategies.
Capitalism as a system of thought and practice has to figure out how to consciously traverse these four stages of evolution. The new rethinking in business, management and economics represent the beginning of an evolutionary growth from a predominantly competitive paradigm to a more collaborative growth. This evolution was affected by a combination of external circumstances, critical thinking and reflection. There is at present a growing recognition of the pragmatic interdependence of business and society and as a result the concept of a corporate social responsibility (CSR) is on the threshold of becoming a core value of business. The next step in evolution requires a clear understanding of the deeper, moral and spiritual foundations of CSR, which is the Indian insight into the unity and interdependence of all life. The corporate world has to recognise that interdependence of business and society is not merely pragmatic or the result of the present global environment but part of the highest laws of life, Dharma. The entire creation from the atom and molecule and plant, animal and human being are linked together in an interdependent harmony and unity and a still deeper Oneness of being and consciousness of an eternal Reality which is within our own being as our highest universal Self. In other words, the unity of all life in the oneness of our own self, which means to feel all life as a part of our own self. The pragmatic consequences of this fundamental law may be described in the following words: “long term wellbeing and progress of every human organism, individual and communal, depends on the wellbeing and progress of all other organisms, human and natural, and that of the larger whole of life of which it is a part.”
This Indian insight and its pragmatic consequences have to be incorporated into education, learning and strategy of all the economic, business and corporate systems. This intuition of unity in thought and feeling, leading to an inner identification with people, community and nature, flowing outwardly in caring and compassionate action is the true and lasting foundation for collaboration, corporate responsibility and environmental sensibility. Interestingly some of the new thought on ecology and environment is moving towards these Indian perspectives. For example, physicist and author, Fritjof Capra writes: “Within the context of deep ecology, the view that values are inherent to all of living nature is grounded in the deep ecological or spiritual experience that nature and self are one” and quotes from Arne Naess, the founder of the deep ecology movement.
“Care flows naturally if the self is widened and deepened so that protection of free Nature is felt and conceived as protection of ourselves—-Just as we need no morals to make us breathe—so if your self in the wide sense embraces another being, you need no moral exhortation to show care—-you care for yourself without feeling any moral pressure to do it—if reality is like it is experienced by the ecological self, our behaviour naturally and beautifully follows the norms of strict environmental ethics.” [Capra F, 1997]
Free Enterprise and Regulation
Communal freedom is a central and integral part of the Indian social synthesis. In ancient India, each community─religious, social and commercial─is given the complete freedom to organise its life according to its swadharma. In this Indian perspective, government has no right to interfere in the life of individuals and communities who live in harmony with dharma. In an interesting dialogue in Panchatantra, a queen say to her husband, the king, “you are the master of your kingdom. You must have complete control over your subjects.” But the king answers, “No, my dear queen, I am a master of only the criminals who violate dharma. Those who live according to dharma is their own master. I have no right to interfere in their life.” This Indian perspective throws some luminous hints on the limits of free enterprise and the role of government in regulating business.
Firms should be given sufficient freedom to create wealth, provided it is done within the boundaries of corporate dharma. But what is the Dharma of business? The main dharma of business is to create wealth for the society, not exclusively for shareholders or for itself, but for the society as a whole. A profound Indian scripture states that a householder who doesn’t make any effort to earn wealth is a sinner and also a householder who doesn’t distribute his wealth for the benefit of the society is equally a sinner. This principle applies very much to business. To create wealth through an efficient and productive utilization of available resources and ensure its equitable distribution in society are two equally important dharma of business. The Government should not interfere as long as firms create tangible wealth for the society in a dharmic way. But government cannot remain a passive spectator when the corporate greed or power tries to dominate or monopolize the economy or society, overriding the interest of other organs of the society or when its products, practices or processes become harmful to people or the community.
A disturbing trend in some of the richer nations of the west is the incessant demand of the rich and powerful sections of business for “freedom” from all government regulation and for unrestricted expansion of their corporate power, all in the name of “free enterprise.” But “freedom” for a few big corporate barrons to endlessly fatten themselves or rob, exploit and dominate the world cannot be part of corporate dharma. In a brilliant and thoughtful article in the Guardian Newspaper, British environmentalist, George Monbiot calls this illegitimate demand of the rich and powerful for unrestricted freedom as ‘liberationism synonymous with injustice” because they are using the concept and word liberty to indulge in exploitation and self-glorification. As Monbiot puts it forcefully:
“In the name of freedom — freedom from regulation — the banks were permitted to wreck the economy. In the name of freedom, taxes for the super-rich are cut. In the name of freedom, companies lobby to drop the minimum wage and raise working hours. In the same cause, U.S. insurers lobby Congress to thwart effective public health care; the U.K. government rips up our planning laws; big business trashes the biosphere. This is the freedom of the powerful to exploit the weak, the rich to exploit the poor.” [Monbiot G, 2011]
Self-regulated freedom may be the ideal to be achieved. But not many of us are prepared for self-regulation. The aim of external regulation is to make people and institutions aware of the limits and boundaries of personal and corporate freedom and keep them within those limits. My freedom ends when it begins to interfere with others’ freedom or adversely affects the wellbeing of others. Madmen and robbers, exploiters and oppressors cannot be given the “freedom” to do what they want with impurity. But this is what the rich and powerful want in the name of freedom and the governments should not succumb to such an unjust demand. As Monbiot aptly concludes his article:
“Modern libertarianism is the disguise adopted by those who wish to exploit without restraint. It pretends that only the state intrudes on our liberties. It ignores the role of banks, corporations and the rich in making us less free. It denies the need for the state to curb them in order to protect the freedoms of weaker people. This bastardised, one-eyed philosophy is a con trick, whose promoters attempt to wrong-foot justice by pitching it against liberty. By this means they have turned ‘freedom’ into an instrument of oppression.” [Monbiot G, 2011]
Here comes the role of government in regulating business and the market. The market of the traditional capitalist, driven by self-interest and greed is incapable of self-regulation. It is the outer expression of the lower nature in human being with no dharmic or evolving thrust towards higher motives or ideals. This market of the capitalist left to itself may promote short-term efficiency but cannot bring long-term sustainability and wellbeing. For the higher evolution of capitalism market and business needs a conscious higher direction on dharmic lines. This can happen either through dharmic self-regulation of business or enforced dharmic regulation from the government or both working together. On the part of business, the more enlightened and progressive sections of business must provide the dharmic leadership and direction to the corporate world by thought, action and living example.
The government should formulate and enforce an enlightened legal and regulatory framework which leads to a healthy, efficient, sustainable and equitable creation of tangible wealth for the society. This regulatory mechanism has to be evolved in consultation with the corporate community but at the same time taking into consideration the interests, wellbeing and progress of other limbs and organs of the society, especially the weaker and vulnerable sections of the community. The best way to achieve this task is through a collaborative effort which includes the four organs of the society. Leaders, representatives and experts from business, government, civil society, polity, culture and work-force must sit together and figure out how to create an economic, social, political, legal and cultural environment where those who follow or adhere to dharma gain a decisive competitive advantage over those who violate dharma or in other words where dharmic Darwinism prevails.
The Dharma of Money
We are discussing so far some of the principle or practices which belong to the system of capitalism. Let us now move from the system to the heart of capitalism.
Capitalism is a system of thought and practice which grew in the soil of the economic and commercial life of human beings. So, capitalism, whatever modification or refinement it undergoes should not stray away too much from the dharma of wealth-creation or in other words, the dharma or right use of money. However, the purpose of wealth-creation has to be defined in terms of qualitative wellbeing rather than quantitative prosperity.
The main question which needs to be understood with clarity is what is the purpose of Capital or Money. Is it to make more money or fatten the purse of a few rich people? Capitalism has to enlarge and uplift its purpose from prosperity for a few to the economic, social and ecological wellbeing of the community, nation, humanity and the planet as a whole. There can also be one more step beyond, which is to build a material environment favourable to the higher evolution of human consciousness: As Mother of Sri Aurobindo sums up succinctly the higher purpose of Money:
“Money is not meant to generate money; money should generate an increase in production, an improvement in the conditions of life and a progress in human consciousness. This is its true use. What I call an improvement in consciousness, a progress in consciousness, is everything that education in all its forms can provide—-everything that leads humanity towards its future realization. Money should serve to augment that and to augment the material base for the earth’s progress.”
But how to trigger this higher qualitative evolution in capitalism? To answer this question we must understand the process of the psychological dimension of economics. In a qualitative perspective, the nature of the economic life of a community depends mainly on the psychological dimension, which means the nature of the needs, desires and motives of people. When the needs are predominantly physical, as in most of the tribal communities, the economy is simple and primitive. If the desires are mainly material or sensuous enjoyment and the driving motives are the greed for wealth, power, enjoyment or self-interest of individual and collective ego, the quality of the economic life still remains gross, though less primitive and simple. If the technological and pragmatic mind of the community is well-developed, the economy may be more efficient and productive, but if the desires and motives of people are material, sensuous and exclusively centered around the competitive self-interest and greed of the individual and collective ego of the vital being in man, then it will not lead to any qualitative improvement in the economic life; it will also be subjected to all the turmoil, turbulence and instability of this part of our human nature, full of scams, meltdown, depressions, swings in “sentiments” leading to irrational booms and busts in the stock-market.
The economy acquires stability, balance and qualitative upliftment only when it is regulated and governed by the higher mental, moral, aesthetic and spiritual nature in us, which seeks for truth, beauty, harmony and goodness. However, these universal values of the higher self in us have to take a form which is appropriate to the unique and intrinsic nature of the economic life of the community. The seeking for truth will take the form of greater honesty, transparency and integrity in all financial transactions. The other aspect of truth is to seek for the deepest, highest and the holistic truth, law and purpose of business, commerce and finance and regulate the economic life according to this greater and truer knowledge. The quest for beauty and harmony must lead to a more beautiful and harmonious equipment and organization of the material and economic life of the society and a more balanced financial system. The aspiration for goodness will manifest itself as a generous flow of funds to the task of eradication of poverty and inequality, creating social capital, ecological sustainability and to all activities which lead to the mental, moral, aesthetic and spiritual growth of the individual or the collectivity.
Conclusion
After the collapse of Lehman Brothers and the economic recession which followed, many thinking minds in business and management are questioning the basic tenets of traditional capitalism. Interestingly many of these emerging perspectives are moving towards some of the insights and values of Indian synthesis. What we need at present is a new ecology of wealth-creation which doesn’t suppress free enterprise but at the same time ensure distributive justice and strive for a higher purpose beyond self-interest and exclusively economic aims like GDP. Here comes the importance of Indian synthesis which can help capitalism to raise beyond self-interest to a higher synthesis.
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