Sunday Posts

Despite all the ongoing conversation about Capitalism 2.0, and my enthusiastic participation in this, I am not sure we are done with the kind of neo -classical lessaiz - faire capitalism that dominated our thinking and policy-making for last thirty years. This crisis was a big shock, and the very fact that it was a big shock was a big surprise to a number of economists and social thinkers, because they have been predicting such a breakdown for a number of years. But, I would argue that this is still not a big enough crisis to force a fundamental rethink about the economic system. When I asked to write about the recession with a futurist perspective about a year back by an independent magazine, I ended up comparing this crisis with the great war of 1914. The First World War was a brutal, long war and forced the whole world to rethink the assumptions about the Golden Age, but it was still unfinished business. Despite its terrible human consequences, it was not big enough. It was just a ...

Capitalism has failed. Or, so it seems, standing in the middle of the worst post-war economic crisis. It is not about the house prices, which have started turning upwards, or the stock markets, which have recovered some time back. Precisely to the point, Capitalism has failed people. For all the talk of economic recovery, the unemployment is stubbornly high in many places. Carefully crafted careers have been wrecked, families lost their homes and a lost generation has been created. Capitalism as a system indeed failed all these people. The funny thing is that it was always expected to fail. Despite all the hopes that we have finally beaten recession, economists knew all along that such cyclical changes are ingrained in capitalism. In fact, some of them actually celebrate it - creative destruction is what it is called. This is Capitalism's mechanism of wiping out the old and the inefficient, and create new efficiencies and businesses. The theory is - with progress, societies create...

One interesting thing I realize when I speak to anyone in India, the recession has not affected the morale yet. Everyone seems to say, yes, times are bad, but it will be over yet soon. Some even say that the recession will not affect India at all, at least in a major way. They point to the prudence of Indian banks, and are emboldened by Joseph Stiglitz recently saying that the Reserve Bank of India has better judgement than the Federal Reserve. More to the point, many Indian businessmen point to the huge untapped potential of the country and see the recession as a temporary blip, and expect things to return to usual growth soon. Sometimes, I feel this is a very Indian thing. I spoke to friends in Dubai, who strongly believes that things will be back to normal soon. I also had discussions with Indians in the UK, and when I told them that the house prices are going down, they told me that this can not happen for too long and they would rather go out and try to buy houses now. I have thi...

I am back in Mumbai after some time. The city captivates me. Very different from any other city in India, Mumbai is India's entrepreneurial core - having been structured as such for over two centuries. This is a merchant's city - one truly enchanted by the allure of money. The message that this city gives me is about hard work and thinking big, and I love it. I have always said I love Kolkata and would want to go back and live there some day. And, this is completely sincere. Kolkata is an amazing city - so comfortable, so oldworldly charming and so personal. I walk on the roads of Kolkata for hours, as I have done for years, and still be amazed by the charm, smell and sound of the roads. If it sounds terribly romantic to anyone, that's what Kolkata is - romantic. A relic of an era past, not much of use, but of tremendous value. But, at the same time, it is frustrating to work in Kolkata . People don't work there. All the romanticism, all the emotions, come in the...

The Elephant and The Flea, when I read the book some years back, left a deep impression. Then, I was trying to live off the elephant; life of a manager in a large company in India, carrying out plans and orders of managers senior to me. I must admit that I did not dislike it that much: It was fine, as I was paid well and well recognized. I was, in fact, sort of a bluish eyed boy, often recognized, often rewarded. There were disappointments, of course; when the salary increase did not match my expectations, or I missed out on an Excellence Award, or when I was not sent for a conference. But these were not life-shattering. The good thing was the business card. Everyone knew the company I worked for. It was in the stock market - it was one of the index companies for a while - so everyone knew we are large and doing well. When I handed out my card, I watched with interest how the eyes of the beholder went about it - first to the logo, then to the word 'manager' and then to my face ...

Paul Samuelson, in a weekly syndicated column, has written about the mistakes Harvard economists Joseph Schumpeter and Edward Chamberlin made during the time the stock market crash of 1929 spread its spectre on the wider economy and eventually became known as the Great Depression, a decade-long slump which affected the western societies significantly. Samuelson goes on to argue that a similar mistake is being made by Harvard economists today, and he names Greg Mankiw and Robert Barro , when they oppose President Obama's plans to increase government investment as stimulus, including putting money in bad banks. Dr. Samuelson argues that Keynesian multiplier really works and one can see a multiplier effect of 1.5 projects results close to reality [what I understand of it is that every dollar spent by the government generates demand worth $1.50 in the economy] and therefore, the stimulus package is the only meanigful way to get the economy back on track. He argues that politics sh...

Jim Collins is researching how companies respond to downturns, and he speaks his mind in the current issue of Fortune . He is obviously researching great companies and he is looking at this with the perspective of History. Bad times? Jim Collins says this is going to stay, this is going to be the normal life. He points to Post-War period and wonders how the face-off between two nuclear empires actually gave us stability and a period of continuous prosperity. 'Danger, yes, but stability', to quote him. Surely it looks like that now - with the perspective of science - though it is funny to think what makes Cold War look like springtime. However, the key point is what, in Collins' opinion, makes great companies tick in a downturn. He points to two things - values and having great people on board. He talked about the examples of P&G, which never thought about cutting corners and undermined quality and customer service even in a downturn, and H&P, which never let go the ...