Wednesday, November 7, 2012

Capitalism = Insights

From A N Shroff memorial lecture delivered by Arun Maira on 9th October, 2012.

"Revisiting the role of India’s Planning Commission

When I joined the Planning Commission as a Member in 2009, one of the tasks the Prime Minister assigned to me was to determine what role the Planning Commission should play in 21st century India. I asked Montek Ahluwalia, the Deputy Chairman of the Planning Commission to give me a list of 20 persons to whom I should ask this question. He gave me a list of 20 respected citizens of the country. Some of them had worked in Government in very senior positions, in the Reserve Bank, in Parliament, some even in the Planning Commission in the past. And several others were respected industrialists of the country.

I asked each of these 20 leaders the following questions:
  • Is the Planning Commission playing a useful role for the country?
  • If not, is there another role that the Planning Commission could play in India’s progress?

The answer to the first question was unanimous. The Planning Commission was no longer making a significant contribution to the progress of the country. The country had changed. It was more decentralized politically and administratively. The private sector was playing an increasingly large role. The Indian economy was more connected with the international economy. For all these reasons, five year plans and budgets made by some experts in Delhi, which had then to be implemented by people all over the country, was an outmoded idea. 

However everyone, including the industrialists, said that the dynamic nature of changes in India and outside required a strategic group that, like a radar, could sense the forces that were causing change to happen and that could provide governments in the center and in the states, and private industry too, with insights into the forces shaping the future.

A More than Perfect Storm

I will now give you a picture of the forces shaping our future. I will also explain their effects on institutions of democracy, capitalism and government. I will use two images for you to visualize these forces and their implications. One, an image of a storm. The other, an image of a globe in stress.

First the image of the storm. Many of you may recollect the ‘Perfect Storm’ that Sebastian Junger described in his book. Not two, but three storm systems converged in the North Atlantic. This was unprecedented. No ship had been designed for such conditions. And no captain had the skills to steer a ship in such a ‘perfect’ storm.

As the 21st century unfolds, there are four strong winds blowing across the world and converging to create a more than perfect storm which is challenging captains of business and government institutions that are not designed for these conditions.

Free Markets and Capitalism
The first strong wind is the idea of free markets and capitalism. This is not a new idea. Often attributed to Adam Smith, it has been around for at least 200 years."

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