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.