Saturday, October 29, 2011


From "Capitalism in jeopardy: Why India holds thekey" by R Jagannathan 
  • For evidence, look at the number of capitalisms competing for survival. In Europe we havewelfare capitalism in crisis. In America we find the Occupy Wall Streeters questioning laissez faire capitalism; in China we have a thriving authoritarian capitalism, and we also have partly successful chaebol-keiretsu capitalism in the rest of Asia (minus China and India).
  • In India we have what I would call “Hindu capitalism” – a huge diversity of approaches where we have an Infosys at one end that runs to western notions of institutional capitalismand corporate governance, and huge, family-controlled business empires that are representative of feudal capitalism, at the other. Corporate governance is a secondary goal here.
  • In nowhere land is Indian muddle-path state capitalism – encompassing highly profitable companies in the raw materials and energy sectors (ONGC, Coal India, Nalco) and unprofitable basket cases that operate in competitive industries like telecom and aviation (BSNL, Air India).
  • Little wonder, The Economist, which has devoted a special issue to India Inc, concludes that “while India’s capitalism does have oodles of vim, it is writing its own rules, some better than others.” In the magazine’s view, Infosys is the exception, not the rule. “A Martian investor landing on Mumbai’s streets of gold might judge its business scene a mix of Sao Paulo, Seoul and Shanghai, with only a dash of Silicon Valley.”
  • Where The Economist goes wrong is in assuming that India needs a Deng Xiaoping or Margaret Thatcher to give Indian capitalism a new lease of life.
  • However, Indian capitalism is about diversity, not homogeneity. Which is why it is more appropriate to call it Hindu capitalism – which is the acceptance of multiple approaches to capitalism without prejudging what will work. It is a non-ideological approach to see which capitalism works.
  • As any evolutionary biologist will tell you, when you have diversity and multiple approaches, you are more likely to stumble upon the right answer in due course.
  • Different countries in the world are adopting different approaches to capitalism. In India, we have adopted all the major approaches. May the best approach win.

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