Asia: Considering A New Model Of Capitalism – OpEd

By Kalinga Seneviratne

When the alumni of India’s prestigious Indian Institute of Technology (IIT) met in Singapore in April, there was much discussion whether the emergence of Asia as the world’s centre of economic activity could help to create a different, and perhaps a better model of global capitalism.

The three-day conference hosted a diverse range of top-notch speakers representing global business, academia and the financial sector, expressing their views on developing strategies to navigate the challenging global economic environment and to create sustainable long-term growth.

Except for one Westerner, all the speakers were Asian, mainly Indian, including heads of formidable global businesses, such as Arjun Malhotra, co-founder of Hindustan Computers Limited and chairman of Headstrong USA; Shekhar Mitra, senior vice president of Procter and Gamble USA; R. Gopalakrishnan, director of Tata Sons Limited; and Ho Kwong Ping, executive chairman of Banyan Tree Holdings, Singapore.

Referring to another age when Europe rose to become the global economic powerhouse, Gopalakrishnan observed that the ‘Age of Enlightenment’ as it is called now, was a cultural movement of intellectuals in Europe to reform society and to advance knowledge. “It promoted science and intellectual exchange,” he noted. “It opposed superstition, intolerance and abuses in church and state.”

“Today, if economic progress has delivered less than society’s expectations, then we know who the enemy is. The enemy is us and our own societies, because what we are fighting is against our own sense of values, our own principles,” said Gopalakrishnan.

He reminded the audience of what Mahatma Gandhi said over half a century ago ‘Beware of politics without principles and commerce without morality”.

“Values, and only values, can help us to withstand the political, social and economic turbulence that these will bring. The greatest mistake leaders can make is to assume that results alone matter,” warned the managing director of one of India’s largest multinational companies. To believe that morality and goodness have gone out of style is wrong he argued.

Many other speakers at the meeting pointed out that with economic crises in Europe and the U.S. still unresolved, following the western capitalist model blindly is not the right development path for Asia, which should instead develop its own model, utilising traditional practices.

This was a theme taken up in a keynote speech given by Ho Kwong Ping, whose Banyan Tree Holdings has developed a chain of luxury hotels across the world based on Asian tastes and standards. He warned that Asia’s rise is not predetermined and argued that the continent must produce a basket of intellectual solutions to address Asia’s chronic social inequality.

Ping also acknowledged that the dominance of western civilizations in the past 200 years was made possible through innovation, and even revolutionary change. “Separation of church and state, commitment to scientific worldview, and all these institutions which formed the modern state was built on liberal democracy and market capitalism,” he noted.

“China has a deficit of democracy (while) Indian leaders have realised that democracy is not reducing inequality, and both are unable to move beyond capital reforms,” he added.

“As Asia continues its dynamic growth we need to delve into our own history and culture for inspiration to develop Asian values of capitalism. One resource could be the webs of mutual obligations which are present in virtually all civilisations of Asia,” argued Ping. “It is possible for Asia to develop this communitarian capitalism, if properly nurtured and developed, as an alternative to the highly individualistic model of American capitalism.”

Ping singled out India’s Tata model of capitalism, which benefits from being “stakeholder driven and not shareholder driven.”

In an interview after his address, Gopalakrishnan told this writer that most Asian businesspeople have been reading books written by Westerners and adopting their ideas only because there are hardly any books written about good practices by Asians. “The West is saying we must become conscious capitalists (though) many people in Asia are saying we have always been doing that,” he said.

He added that Tata used its one billion dollar profits to set up a trust to help the poor, “so part of our profits go back to the community.” The Tata group consists of over 100 companies in seven business sectors operating in more than 80 countries around the world.

Jignesh Shah, founder chairman and group CEO of Financial Technologies India, a world leader in creating and operating technology-centric financial exchanges, argues that new business models in Asia are opening up. He pointed out that Asia’s two economic powerhouses – India and China – hold about 30 percent of the world’s savings and about 50 percent of the gold.

“India and China have huge savings rates and if it gets into share markets rather than remaining in banks … Asia will generate the next Goldman Sachs,” predicts Shah.

Ping is not so sure of the inevitable dominance of Asian capitalism. “Asia needs new forms of diverse innovations and intellectual leadership if it is to develop a sustainable new paradigm of civilisational progress,” he argues. “Particularly Asia needs to inculcate a virtual cycle, whereby business, political and social leaders all have to compete in new nodes of economic, social and political behavior. Simply following what used to work in the West is no roadmap for future success.”

Ping believes that communitarian capitalism could be an Asian form of ethical capitalism where the community of stakeholders of enterprises – employees, customers and suppliers, and the larger community – will be given high concern in the development of capitalism. While there are many such examples in Asia, Ping points out that many Asian business leaders are still reluctant to take responsibility for contradictions in the growth model.

“We need a paradigm shift in mindsets, particularly in politics and governance in larger civilizations in Asia, if we are to achieve our future,” argues Ping.

Dr Kalinga Seneviratne is a Sri Lankan born journalist, television documentary maker and media analyst based in Singapore.