Economic Manifesto -1

10 Dec

One of the basic beliefs in the capitalist mind is that the one who takes the risk must have the highest right to enjoy the benefits of success. Now I am no socialist but despite my strong capitalist leaning I cannot fathom or agree upon this fundamental principle.

Let’s try to break the whole process in sub-parts. This is a very simplified approach but for the purpose of argument it will suffice.

  1. There is always a beginning, in which there is an individual who has the capital. And the individual is seeking returns from this capital.
  2. He has many options, like putting the money in bank but that only protects the value of money but doesn’t enhance it.
  3. That obviously is not what the individual desires, he wants more than that. He thinks of an idea.
  4. He hires people, promise them salary and certain incentives. All of them together start operating.
  5. The idea turns out to be successful business model and profits are made.
  6. The promoter or owner, keeps the profit and everyone is happy.

Objective of the owner is to maximize his profits. That means he must reduce cost as much as possible. Only through lowest possible cost that he would be able to maximize his profits.

The extreme example of this capitalist approach is slavery, wherein the worker doesn’t get more than food for his basic sustenance. That is the lowest cost for the owner.

Though slavery has been abolished the mindset still exists.

Capitalist model promotes slavery, as the system glorifies the individual who takes the risk, a bit too much. It tries to promote the myth that without the risk that particular individual takes there would be no progress.

Such theorists and propagandists perpetuate the myth of a man against the society. Standing alone, fighting the unchanging rigid world, struggling to bring to the world his beliefs and in the process making lives better. And such a man if he succeeds should enjoy the fruits of his herculean labor.

Now obviously it is bull shit.

Such individuals do exist but they are few and far between. Even those individuals do not have the right to such extreme benefits. And in any case if you look at the history of any break-through, the creator rarely has benefitted from his creativity, it normally is the financer who gains from such inventions and discoveries.

In most of the cases it is profit that has come from opportunity.

Now we go back to the beginning.

Individual has money.

Agree.

He wants returns.

Agree.

But this step has another question that has not been asked.

How much return does he seek?

10%, 20%, 30%, 100%??

There must be some value in his mind that there must be justification for expecting that return.

  1. And is the return in perpetuity??
  2. Is thinking of an idea and executing of an idea have the same meaning?
  3. What about other people who helped make it a success? Do they have a stake in monetary success of the idea?
  4. And what happens if the idea fails

I am of the opinion that a return has to be established. And this has to be fair return philosophy and NOT maximization of return approach.

The detractors of this approach would say that if the individual had not invested, there would have been no wealth.

This argument is fundamentally flawed.

To be continued…….

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One Response to “Economic Manifesto -1”

  1. Nirwan, Archana December 10, 2012 at 12:41 pm #

    Nice….this is a great idea for the book

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