Flawed capitalism

I found this article criticizing contemporary capitalism on the website of Forbes magazine: it attracted my attention both because the writer is a Bengali businesswoman doing well in Silicon Valley and because I am broadly in sympathy with her views. However…

I believe that no matter what her credentials in engineering and business may be, Ms. Mitra never really took the trouble to understand economics well, though her gut-feelings, born of personal experience, are on the right track. As for her early (I guess teenage-) fascination with Ayn Rand, the less said the better: if Rand was a philosopher at all, she was no more than the rabble-rouser kind. In putting overwhelming stress on the individual and the worth and need of individualism, she lost her head completely, and never bothered to find out about how the world actually works. In real-world capitalism, individualism goes only thus far, and that is not very far at all. Without a great deal of cooperation, coercion, persuasion of large numbers and subterfuge (which is just a polite and fancy word for cheating) modern capitalism would never work at all… even the most talented, intrepid and energetic entrepreneur, inspired by the loftiest of visions, would find it impossible to get vast numbers of people to work their behinds off for him (for basically trifling rewards) and to buy blindly whatever he wants to sell to them to make his dreams come true; a Howard Roark would make very little headway in this world without the wile, ruthlessness and manipulative powers that are the hallmarks of political dictators who make it big. Napoleon, a historical figure, was infinitely better endowed than Roark (a fictional character), and he knew better than all others how little he could have achieved without brainwashing, inspiring, compelling and just plain hoodwinking millions of less clever, less cautious, less farsighted and less greedy people! Individualism works with the lone artist or scientist, or sage or writer or even teacher, maybe; it is nothing but silly (and rather dangerous) romantic nonsense in the marketplace as much as it is in government. As Galbraith never tired of pointing out, top-level corporate managers are just as much ‘organisation men’ as the most dyed-in-the-wool Soviet central planners of a bygone era, though much more subtle and flexible, maybe: they have little patience with, or space for, mavericks among their ranks. The occasional genius of a maverick comes along and rocks the boat and quickly becomes the stuff of legends, that’s all… the exception that proves the rule. For every Henry Ford or Edison or Bill Gates, you have a hundred thousand wheeler-dealers who hardly deserve to be glorified with the label ‘entrepreneur’.

Ms. Mitra hasn’t even got all her facts right, as so many commentators have already pointed out rather scathingly: to take just one of many instances, ‘union-enforced inflexibility’ was certainly not the main reason behind GM’s long decline and recent collapse. Personal success does not obviate the need for serious research when one is pontificating publicly – unless, of course, you are a beauty queen, whose pronouncements are not to be taken seriously.

And while it is absolutely true that capitalism rewards the lucky and amoral speculator much more than the creative man (unless the creative man himself turns speculator), my grouch against it is that it also rewards the salesman, the publicist, the showman, the opportunist, the hustler, the con-man and even the goon (if he is clever enough to stay clear of the law) much more than the genuinely creative folks, especially those among them who have the double disadvantage of being both honest and lacking in the aggressive money-making spirit. Thus so many artists have died hungry, while mere traders have made vast fortunes by cleverly marketing their creations… and no one will ever convince me that the most successful stockbroker or building contractor is a more ‘talented’ person than a good musician, mathematician, nurse, storyteller or teacher, or contributes more to real social welfare or cultural progress. Even more seriously, capitalism rewards people with criminal inequality; why on earth should a ‘great’ entrepreneur ‘need’ billions as a reward for his entrepreneuring when so many others who do difficult and dangerous jobs, from scientists to commandos, apparently function very well without ‘needing’ such obscene compensations (besides, we know perfectly well how CEOs of companies going bankrupt still manage to wangle huge pay-packets for themselves – what ‘talents’ justify their earnings?) Worst of all, unbridled capitalism sends out a wrong and pernicious signal to society, especially the foolish young – that money making is more glamorous, and therefore more desirable as a career than anything else, no matter how the money is made, so why should one ‘waste’ one’s time pursuing careers where the chances of making big money are not so great? And so, as we can see all around us, everyone wants to climb onto the B-school bandwagon (unless they are going into showbiz): where will this society find its future teachers, librarians, judges, writers, policemen, politicians, zoo-keepers, firemen, plumbers and carpenters (leave alone thinkers!), except among the residual riff-raff, those who couldn’t even manage to get an MBA from a third-rate B-school? And what sort of society will it be when just about everybody is either a salesman or a showman or a con-man?

So, as a lot of people are beginning to re-realize (I hope the wisdom lingers), capitalism has its plus-points, but it always (and not just now and then, when hit by a crisis) needs to be sternly regulated and guided by government in the larger social interest. The real worry is whether governments are as a rule well-qualified to play that role. Do our lawmakers even know and agree about what is good in the larger social interest? Can I expect higher IQs, higher GK, more foresight and better taste among our MPs than among our general population? Right now, in India and the US, at least, the legislatures are over-full of people who are themselves bedazzled by, in awe of, and often in the (indirect-) pay of those whose pernicious social influence they are supposed to restrict and regulate, to wit the moneybags who benefit from laissez-faire. The western European nations offer much better models: to the best of my knowledge, they have struck the happiest possible balance between unfettered (predatory) capitalism and the Soviet-style socio-political straitjacketing which I am sure nobody wants to come back… if the recent worldwide economic crisis has set people thinking along those lines again, I shall say it has been a very good thing on the whole. I fear, though, that its effects have not gone far enough. In the town where I live, looking at the market for everything from real estate to jewellery to cars and vegetables, it would seem as if nobody has heard that there’s a recession in large parts of the world!

P.S., Nov. 13: Try this article to have a glimpse of what giant financial institutions do, and what they claim to be doing...

and one more (June 01, 2010): http://www.theamericanscholar.org/too-bad-not-to-fail/