A ‘disruptively better’ capitalism?

Published: September 11, 2011
The writer is a director at the South Asia Free Media Association, Lahore

The writer is a director at the South Asia Free Media Association, Lahore khaled.ahmed@tribune.com.pk

When things go bad with capitalism, socialists and other champions of ‘falahi’ economics start hoping that the world will now think of saying goodbye to the profit motive made respectable by the followers of Adam Smith.

These days Pakistan’s most likable Marxist thinker Dr Lal Khan is telling us it is still time to go back and run Pakistan’s economy differently. We know that he will deconstruct Dr Mubashar Hasan’s failed remedy of the 1970s before reapplying it. But we also know that the anti-globalisation campaign against capitalism in the wake of the 1997 Asian financial collapse had failed to reconstruct socialism.

The argument against capitalism has not entirely gone away although Margaret Thatcher’s TNA, there is no alternative, still holds the institutional field. States like India, who survived the 1997 collapse, were not overly globalised; today also states not too globalised seem to have survived the ‘sub-prime’ crisis a little better.

And capitalism is not dead even though the latest crash seems terminal to many, especially those who write Urdu columns in Pakistan. One Umair Haque, a bright Pakistani heading the Havas Media Lab, in London, has tackled the subject in a new way in his book The New Capitalist Manifesto: Building a Disruptively better Business (Harvard Business Review Press 2011).

The analogy to the Communist Manifesto is hardly concealed but ‘disruptive’ comes close to the world-changing pledge of the workers’ revolution that began and fizzled out in the last century. Nor is this disruption the revanchist message from the traditional revolution echoing in Pakistani politicians’ prediction of a ‘khooni inqilab’ against our dysfunctional democracy. Haque has a more thoughtful remedy containing a jolting revision of how to make profit. Is there a radical message of doom in it? Yes, if capitalism will not accept self-correction.

He takes account of capitalism’s addiction to financial collapse: “In the 20th century, the probability of financial crash was five per cent; at the turn of the 21st, it had more than doubled, reaching 13 per cent. According to Lehman brothers, the 18th century saw 11 crashes; the 19th century saw 18; and the 20th saw 33. Irony of ironies, the 21st century opened with a crash explosive enough to topple Lehman itself” (p.14).

The world in which capitalism is allowed its play has become a crowded ark from a boundless ocean: “Industrial age prosperity can advance only under a narrow set of conditions, all increasingly detached from today’s economic reality”. He quotes one Nobel Laureate, Paul Samuelson to debunk another, Milton Friedman, whose dictum that market system can regulate itself was the capitalist catechism not long ago (p.12).

For Haque, who writes an attractive style, the current crisis is simply shifted costs and borrowed benefits through debt: “Cost-shifting and benefit-borrowing are economic harm which leverage up a company, country, or economy with deep, risky, costly, burdensome debt” (p.25).

For a moment the book reads like socialism in its attack on laissez-faire: “In 2010, reversing decades of allegiance to laissez-faire dogma, the IMF proposed an international banking tax, equivalent to the expected value of the hidden costs and borrowed benefits of tomorrow’s bailouts” (p.12). It lays out its plan for companies on how not to pass on harm to the communities and future generations. The god of Capitalism will not die; but it is time he mutated into his next epiphany:

John Maynard Keynes said: “Capitalism is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods. But when we wonder what to put in its place, we are extremely perplexed” (p.191).

Published in The Express Tribune, September 11th, 2011.

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Reader Comments (11)

  • Ali Tanoli
    Sep 11, 2011 - 1:55AM

    There is a one sys left its called shriah banking intrest free banking but no one talk about
    that even saudia and iran are islamic theocracy states but they dont have either and there
    are shortage of profesionals too can you write next on this topic please.


  • Max
    Sep 11, 2011 - 5:31AM

    I won’t blame Dr. Mubashar Hasan for the demise of half baked and state sponsored socialism in Pakistan or should I call Islamic socialism. Statist model is heavily dependent upon bureaucratic structures, and its functionalities. The bureaucracies are neither trained nor well equipped to handle the businesses. We had seen that in Algeria, Egypt, Syria, Tanzania, Tunisia, Yemen, and so many other newly independent economies. Thus it was destined to fail.
    Dr. Lal Khan has a point but who will listen a soloist in the woods. That has been the tragedy of Pakistan and now with Islamist Dahshat Gardi, it has become harder to enter into any kind of intellectual discourse. So good to luck Dr. Khan.
    I could not get the gist from the book review of Umair Haque’s book but it is my understanding that the book takes a Keynesian route in developing its argument. The word capitalist manifesto is also not new. It has its origin in WW Rostow’s cold war crusade with the title, “The Stages of economic Growth: A non-Communist Manifesto” or to which some call key notes of development or modernization theory.
    By the way a good critique of capitalist system, is either from “world system school” (Emannual Wallerstein , Andre Gunther Frank, Samir Amin et. al.)or by the German Political Sociologist Clause Offe and in particular his two works: The Contradictions of Capitalism, and Disorganized Capitalism.
    Oh, please don’t bring up the present crisis, it is more than mortgage loans swapping. Putting it in simple words: greed by inept but otherwise smart realtors, bankers, and those who were looking forward for annual bonuses than interest of the investors, lenders, or borrowers.


  • Truth Seeker
    Sep 11, 2011 - 9:07AM

    @Ali Tanoli:
    Who will implement Sharia banking. It is a mirage and let it be a mirage. No system is good or bad, these are the executors of systems whose personal whims discredit the system.


  • Sep 11, 2011 - 12:01PM

    Things go bad with capitalism? It was Communism that came up with idea of central banks. Privatize the profits and socialize the losses is not capitalism modus operandi. In free markets bad companies are not bailed out by central government. Know the difference between the two.


  • Meekal Ahmed
    Sep 11, 2011 - 4:09PM

    @Truth Seeker:
    What is “sharia” banking?

    Islamic banking is one of the fastest growing sectors of activity in the world. It is thriving.

    To Ahmed S., good article. I agree with Keynes.


  • Ali Tanoli
    Sep 11, 2011 - 6:09PM

    @ Truth seeker
    let me tell u something now few years ago it was proposed by some guys here in states then christian and jews reliegous lobbys put pressur on those states and that it seculars
    becomes chicken.


  • N
    Sep 11, 2011 - 8:16PM

    Capitalism without oversight is a system for the rich to commit grand scale larceny.
    Socialism without individualism is a system for mediocrity to achieve poverty.


  • Dr. Ali
    Sep 11, 2011 - 11:23PM

    Mr Haque and his half baked research is just sailing the tide of his Harvard credentials… Where is in Free Market Capitalism paper money and centralized fractional reserve banking alongwith subsidies, tariffs, parities and price controls an accepted from of economic freedom?


  • Truth Seeker
    Sep 11, 2011 - 11:28PM

    @Meekal Ahmed:
    Islamic Banking is fastest growing sector of banking industry, as ‘Halal Meat’ sector is fastest growing sector of Meat industry in the West.

    The (same) instruments used for killing taboo meat are (also) used for slaughtering/killing ‘Halal Meat’, likewise forbidden ‘interest’ of Capitalist Banking is purified as ‘profit’ in ‘Islamic/Sharia Banking’.

    Islam is more than thirteen hundred years older than Keynes, so naturally he was perplexed to replace Capitalism, as he was unaware of any system in vogue such as
    Islamic Economic System.

    Islamic Banking has been introduced to lure in money from those who are uncomfortable to give money to Jewish/Christian institutes.It is not for the service of Isalm but for the benefit of (mostly Muslim) rich people/institutes/governments, idea of Islamic Banking was floated.


  • Jawad
    Sep 12, 2011 - 5:59AM

    intelligently written..


  • Ali Tanoli.
    Sep 12, 2011 - 5:00PM

    @ Truth Seeker
    Haha you need some truth man your knowledge is very limited , find out the reasons behind why westren banking dont want to introduce this system
    and the biggest reason hurdle is hate against islam and Prophet Muhammad (PBUH) and they scare if it happend then whats gonna happend to there illegal greed and intrest.Recommend

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