one country one destination

Arun Maira-One Country, One Destiny

I wanted to study economics but I studied physics in St. Stephen’s College because the Principal would not let me switch from physics to economics. He said physics would teach me to think clearly, which would stand me in good stead through life. For 40 years, I have worked as a manager and a consultant to business corporations. I have thought a lot about the role of corporations in society. For the past few years, I have been reading and thinking a lot about economics. I was at the World Economic Forum in Davos last month. At the commencement, several hundred business leaders voted in a ‘global town hall’ meeting to determine issues uppermost on their minds. Clear winners were: ‘poverty’, ‘equitable globalisation’, and ‘climate change’. “The World Economic Forum now sounds like the World Social Forum”, a journalist commented. While some people would be delighted with this apparent change of heart amongst profit-obsessed businessmen, others, like The Economist, would be aghast. In its recent issue focussing on Corporate Social Responsibility, the journal argues that good economics (citing Adam Smith to explain good economics, as it often does) requires that corporate leaders’ social responsibility must be limited to the pursuit of profits for their shareholders and nothing else.On the same January days, meeting in warm Porto Alegre, far from frigid Davos, participants at the World Social Forum slept on the ground in tents and railed against the corporations of the world and berated their erstwhile hero, President Lula of Brazil, for betraying them by going to Davos. And at Davos, a prominent social worker (from India) chastised business leaders for not coming down to earth to listen to the people on the ground. Perhaps the time has come for the two forums to listen to each other and shape one World Forum. And for fundamentalist economists to question their orthodoxies and build more real models of the world, rather than abstractions based on false assumptions about the nature of man. Perhaps the most erroneous assumption in economics is that men and women take purely rational decisions driven only by self-interest. If this were so, why do economists, like those who write for The Economist, and financial analysts who believe in the sagacity of markets, have to explain the changes in market indices with words such as ‘moods’, ‘sentiment’, ‘fear’ and ‘confidence’-words more associated with emotions than pure reason? They do this because they do not have models to explain even economic phenomena such as the ‘behaviour’ (another tricky word) of stock markets in purely rational terms.Economists tend to over-simplify their assumptions to enable mathematical modelling. For example, The Economist says, ‘Measuring profits is fairly straightforward; measuring environmental protection and social justice is not. The difficulty is partly that there is no single yardstick for measuring progress in those. How is any given success for environmental action to be weighed against any given advance in social justice-or for that matter, against any given change in profits? Measuring profits-the good old single bottom line-offers a pretty clear test of business success.” This is sheer intellectual laziness. If Newton had decided to ignore the concept of gravity merely because, when it occurred to him, he did not have the means to measure it, or Faraday ignored the force of electro-magnetic induction because he did not have instruments to gauge it, physics could not have developed its power to change man’s world.Market movements are caused by perceptions, as well as perceptions about others’ perceptions. Which causes markets to swing up and down, even when there is no change in the ‘fundamentals’ (to use another popular term amongst financial analysts and economists, and also a vague term because they cannot agree what these fundamentals are). Businessmen and investors cite the need for confidence and trust as factors that influence their investment decisions. And businessmen would like their stakeholders, be they investors, customers, suppliers, or employees, to have confidence and trust in them because this gives their business economic advantage by way of lower costs in attracting capital, acquiring customers, and retaining employees. Hence they spend time and money in confidence building measures, such as brand creation and advertising, which are considered necessary for business. Then why are ‘corporate social responsibility’ programmes, which aim to build bridges between corporations and society, dismissed by some economists as bad for business?In his book, “Complexity”, M. Mitchell Waldrop describes a meeting between physicists and economists (including some Nobel Prize winners on both sides) that took place at the Santa Fe Institute some years ago. “As the axioms and theorems and proofs marched across the overhead projection screen, the physicists could only be awestruck at (the economists) mathematical prowess-awestruck and appalled. “They were almost too good,” says one young physicist, who remembers shaking his head in disbelief. “It seemed as though they were dazzling themselves with fancy mathematics, until they couldn’t see the forest for the trees…I thought they often weren’t looking at what the models were for, and what they did, and whether the underlying assumptions were any good. In a lot of cases, what was required was just common sense.”Since the collapse of the Soviet Union, a fundamentalist school of capitalism has dominated both politics and management practice: the school in which markets are supreme, nations are merely economies, corporations are merely profit-making machines, and citizens are merely consumers. This school traces its recent political roots to Thatcherism and Reaganomics, named after the two leaders who together stood against the ‘Evil Empire’ which, in their minds was as much the military empire of the Soviet Union as it was the socialist view of economics prevailing within their own countries. With the collapse of the Berlin Wall, Fukuyama claimed that history had ended because there was no longer any threat to capitalism, and the Washington Consensus of capitalism prevailed unchallenged. But there are as many schools of capitalism as there are varieties of Heinz pickles, said Harold Minskey, the economist. Therefore, why cannot a country that provides social services through the public sector and does not privatise in a big bang, describe itself as capitalist without an apology to The Economist? Fundamentalist economists who came to reign after 1989, and against whose domination civil society has begun to react, should read the book, “20:21 Vision, Twentieth-Century Lessons For The Twenty-First Century”, by Bill Emmott, the editor-in-chief of The Economist, no less. Emmott says that capitalism has to evolve much further, and if it does not it will remain under threat, because the predominant school of capitalism is “unpopular, unstable, unequal, and unclean”.’Human society is also about respect and relationships, not merely profits’, says Francisco Whitaker, founder of the World Social Forum. A better model of human society (and business corporation) can emerge from a dialogue between experts who, like the blind men confronting the elephant, see only a narrow view of reality from the perspective of their own discipline. For a better world to emerge, as well as a more credible, scientific, and human model of economics, the participants of the World Social Forum and the World Economics Forum must enter into a dialogue, rather than harangue and denigrate each other, as they are wont to. My hope is that India will take the lead to sponsor this integrative World Forum and also create an inclusive model for development for its own development, integrating the country’s social, economic, and political development. A better idea is needed than what economic theory has been able to provide so far.The next piece, following this, will question whether economists have gone too far in their influence on human society. And whether one should venture, like the little child watching the imperial procession, to ask whether the present day emperor-the profession of economics-is wearing any clothes. (This could be heresy and I may be compelled to drink the hemlock cup, I fear!) The concept of homo economicus, of man as a rational decision-maker acting in his self-interest, suits mathematical modelling. The reality is that we that we do not take decisions rationally (whatever that means!), that our emotions play a strong part, and that very often our decisions emerge without any rational application of mind.Economists are wont to describe countries as economies, in terms of their GDP, the sizes of various economic sectors, and the flows of trade between them. And we listen in awe to their evaluations of nations’ strengths and prospects.But nations are not merely economies. They are also societies, communities, and polities: in fact they are a complex amalgam of many facets, and therefore their trajectories cannot be explained by the equations of econometricians that factor only those variables that economists understand. No wonder there is so much acrimonious debate between economists themselves about the fundamental solutions for a country’s progress. Do physicists and engineers need to argue as much about the right way to build and maintain a structure? Therefore, should we not take the priests of economics less seriously than we do?I think we should also talk about what is the proper role of ‘scientific’ approaches. I have been working with the International Futures Forum, which is a small group of thoughtful people from many disciplines who have been meeting for three years to understand the power of scientific approaches that have led to the so-called Enlightenment of mankind, as well as the inherent limitations of scientific approaches to solve major problems facing mankind, such as persistent poverty in spite of the scientific means and the material resources at disposal to eradicate it. Scientific approaches run into difficulty when confronted by complex phenomena in which many different aspects of a system (that are subjects of different scientific disciplines) interact. And when one thing does not lead to another in a linear, cause-and-effect relationship but things just ‘come with’ each other and ‘mutually arise’. Like chickens and eggs and yin and yang. Our lives are surrounded by such wonderful phenomena. Systems thinking is a more useful way to comprehend them. It can give better insights than many prevalent scientific approaches. So let me talk about systems thinking in my third article. In that conversation, I also want to comment on man’s desire to play god-to change the state of systems and alter their course. Stanley Kubrik’s memorable opening scene in Space Odyssey 2001 put the idea eloquently: that human beings are more evolved than other animals because they have the desire to understand why things are the way they are with the desire to change them.In our fourth conversation, let’s talk about freedom. And how societies of truly free people can shape a system that will benefit them all. Amartya Sen won a Noble prize for expanding the limits of materialistic economics to broader wants and needs of human beings with the concept of development as freedom. George Bush’ drive to change the world, beginning with Iraq, is ostensibly about spreading democracy-the freedom for people everywhere to shape their own futures. The United Nations is struggling to develop an effective, yet democratic institution of nations. India’s economic growth is supposedly hamstrung, when compared with China’s, by India’s democratic drag. I believe there is a fundamental clash of theories about how results can (or should) be produced. What mankind needs, and India maybe one of its’ best laboratories, is a way to produce faster, all-round progress in societies that aspire to be both efficient and truly democratic at the same time. What does it mean to “manage” in such a system? And what is the relationship between those who manage and those who are managed?The fifth conversation maybe about how an outsider to a human system, whether it is a nation, a local community, or a business organisation, can help it become more capable and more free. This should be the objective of international aid organisations, social NGOs, management consultants, and even spiritual gurus! Let us talk about the motivations of such change agents and how these can complicate, and perhaps impede the process of development of freedom in the client system. Therefore what are principles for intervention with humility, recognising the Heisenberg-like interplay between observer and observed, ‘intervener’ and ‘intervenee’? This is at the core of the learning agenda of the International Futures Forum, the International Society of Organisational Learning, and other forums.What shall the sixth article be about? Let us see what emerges as the conversation unfolds. Maybe some readers may have something to say as we talk that I could weave into my last piece.


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