What Kind of Capitalism Should India Have?
In the face of growing inequality, we need not just compassionate and creative capitalism, but also one which recognises the ethical core of reciprocity. Though the term ‘compassionate capitalism’ has been a part of public discourse outside India for some years now, the current spotlight on it in India is largely due to N.R. Narayana Murthy, the co-founder of Infosys. Describing his philosophy of compassionate capitalism, Murthy said it was capitalism in mind and socialism at heart, a creed which looks at fairness and at ensuring that everyone is better off. According to him, if we have to make capitalism acceptable to a majority of Indians who are poor and to create jobs, “Every senior management person of an Indian corporation has to show self-restraint in his or her compensation and perquisites. He or she has to fight for maintaining a reasonable ratio between the lowest salary and the highest salary in a corporation in a poor country like India. The board has to create a climate of opinion for such a fairness by their actions.” Senior leaders should, he felt, consider taking cuts instead of laying off youngsters and encourage these employees to reskill so that companies can take advantage of new emerging opportunities. In FY16, at least 27 directors earned at least 100 times more than an average employee, whereas under a saner capitalism the ratio between highest compensation in the firm and the median salary should ideally be 50-60. Picketty confirmed that though capitalism is central to the innovation and entrepreneurial risk-taking needed for economic growth, inequality does not naturally or automatically decline under capitalism and that capitalist growth leads to greater inequality because of the higher rate of return on capital compared with the low overall growth rate of the economy, or to put it another way, income from investments rises faster than wages. Several economists like William Easterly, professor of economics at New York University and senior fellow at the Brookings Institution, have argued in favour of traditional capitalism because it helps the poor; others believe that insisting on greater equality will distract businesses from their primary goal of making profits. Apart from communism, reform advocacy has ranged from welfare capitalism to Gandhi’s theories of decentralised production by small individual owner producers, along with trusteeship of the wealthy; corporate and individual philanthropy; mandatory corporate social responsibility contributions from companies, to variations of compassionate capitalism such as ‘inclusive capitalism’, the ‘humane capitalism’ of Muhammad Yunus and the ‘creative capitalism’ of Bill Gates. Gates’s creative capitalism would be one “Where governments, businesses and non-profits work together to stretch the reach of market forces so that more people can make a profit or gain recognition doing work that eases the world’s inequities”. Compassionate capitalism must also emphasise conscious reciprocity, a concept which implies that the giver gets as much as the receiver.
compassionate capitalism definition
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