THE ONLY WAY
What is the basis of Business — Profit from Product or Scale up from Service?
Why do most businesses die within one or at best two generations?
Can greed ever be good?
The Belief
The common conviction or conclusion of any capitalist or any smart individual or collective set of individuals who initiate any form, kind, or type of business activity is Profit. That’s the very basic, core or at the heart of the principle, that motivates one to move forward and put the bucks to business.
As Milton Friedman, the famous American economist once said,
The business of business is to do business. And the sole aim of the business is to generate profits, increased profits, and super-normal profits every time, the next time and it should continue forever.
In the process, the business needs to innovate, rationalize costs, rationalize people, scale up, pivot, find new markets, manage supply to increase the profit margin or per unit of product realization, so be it.
The relationship between the business and its shareholders, the business and its employees, the business and its ecosystem — the suppliers, the distributors, the wholesalers, the business and its customers, the business and the society is merely transactional.
Some may argue against it and bring forth the perspective of good work business is doing for all the stakeholders. For instance, business is pursuing Corporate Social Responsibility (CSR) for society under the 2% norm in India (similar ones exists in other parts of the world as part of regulatory guidelines), business takes care of employees through gratuity, superannuation, and other schemes for employees (applicable in India and similar norms do exist in rest of the world) and comparable schemes and initiatives for all other stakeholders as well.
Another argument that can be cast in the above context is that a businessman is taking an undue amount of risk with one’s capital or on borrowed capital and thus it needs to generate profit so that it can first survive and then thrive.
During the process of running and scaling up the business, when business cycles or macro-environment keeps changing, as well as continues to pose newer challenges, and if then business acts, reacts, or responds by protecting its interest over the interest of others like employees or distributors or sometimes adversely impacting customers too, what is wrong with it?
Survival of the fittest with Self-interest over and above everyone’s interest is the most fundamental rule through which the world works.
Therefore, it will not be wrong to state that the ultimate purpose with which everyone in the world is living has the sole aim of maximizing one’s wealth or net worth.
Wealth & networth are essential in 3 aspects:
1. Wealth and net worth give one a sense of safety, security, and freedom, apart from fame, recognition, and acknowledgment from society. Security and financial freedom bring peace and happiness to one’s life so that one can pursue other pursuits in life beyond money.
2. Some move away from the motive of money-making after reaching a threshold, whilst others may choose to continue in their zeal to maximize profits and continue to work harder and harder to be self-assured that they have enough and more than enough for any eventuality.
Sometimes, enough doesn’t mean for self or the current family, it widens its expanse. Now enough, not only means enough to have enough for oneself but for leaving a legacy for the offspring — one generation, two generations, or even more. (At least for two — enough for one’s children and grandchildren. What is visible to the human eye needs to be provided or at least planned for).
3. Also, a rise in net worth enables one to aid others by doing philanthropy, and when one does charity, the society or community, or country benefits. Putting good money to good use.
That’s the foremost source of motivation to act, as mentioned in Maslow’s hierarchy of needs driving and dictating an individual’s behavior.
Thus Western Philosophy focused on man and solving man’s needs for life and afterlife (legacy planning) and available resources of the earth to satiate one’s needs and desires.
The Contradictions
The theory of business of the west says that one must make profits and increase profits every time, even if it means to clutch some supply so that price realization can be higher. Why sell at a lesser price, when a higher price can be extracted even with relatively modest volumes leading to higher overall profitability?
What if the goods and services that are basic for human survival are also rationed and thus the ability of those who are economically not doing so well to afford them becomes limited?
What if they die or cease to exist in absence of those goods and services?
Does not matter from the Western capitalist perspective as one’s survival or letting the best man win — theory always reigns supreme. Man is a social animal and thus in society there will be hierarchies and those hierarchies intrinsically drive the behavior and motivate one to move up the socio-economic ladder.
The question is — Can people who are left worse off in society will create an uprising, internal conflicts, and civil war?
To control such acts one has police, military, etc.
But if the disgruntlement goes deeper to the core of the society, the after-effects will be felt across. (It may not be relevant in the short term but surely in the medium or long term).
What’s happening in Sri Lanka or in Pakistan or Myanmar, where masses are pushed to the corner for mere survival? As a large number of people are worse off, the well-being of safety, security, and resilience of assets of the rich are also in question.
The counter-argument to this is the countries mentioned above are third-world countries, capitalists and the elite always find a way as they are part of the so-called developed world (name anointed by the developed world for themselves).
The Arab Spring happened exactly for similar reasons as the majority of the population had no participation in the riches of the Oil world. A few families have and continue to have control over power and money, leaving the rest to an even higher degree of impoverishment.
If one takes the United States as the role model of capitalism, the shooting of innocent school children, a grandson shooting a grandmother and later killing 19 school children and 2 teachers, an old man opening fire on a crowd gathered and attending a music festival, show the discontentment of the scorched strata and thence the vulnerability of the rich and Super-rich.
Even a rich person’s children or a rich man could have been studying in those schools or attending such a music festival.
Another example of cracks in capitalism is the rise of the commercialization of education. As education has converted into a business, students believe that it’s their ticket to glorious life. The same perception is driven amongst the parents as well. In the West, education remains more expensive compared to the east. Thus students take an Education loan and on average (in the United States), it takes them 19 years to pay off the loan. (In India on average, a home loan is paid back in 8 years).
As students take Education loans and start their professional or corporate journey, their sole objective is to maximize bonuses and payouts. Thus encouraging them to take humongous amounts of risks. The acts of these young professionals (in Wall Street and the financial sector especially as finance entails higher paying jobs) sometimes being unaware of the repercussions, result in financial catastrophes. The aftereffects of such events are felt not only within the company or the country but sometimes across the world. (The Great Financial crisis is a simple example of the same)
During such times, the poor get decimated but even savings, investments, and riches of the upper strata get wiped out.
Identifying the Problem
The crux of the challenge lies in the culture one has honed, thinking, and the belief system. The Western world’s theory of life, where man is at the core of the culture and everything revolving around it for its benefit is flawed. Also the theory that man is a social animal and they all come together for their mutual benefit to satiate emotional, social, or economic needs but with an underlying assumption that self-interest precedes the group’s interest also has holes.
The West believes that all humans, thus the groups they belong to, the segments of the society are all different and disjoint. Hence if each one takes care of their interest, the collective interest of the society as a whole will be taken care of.
The Vedanta philosophy states otherwise. For thousands of years since the Vedic era, the economics of society had an underlying assumption.
Economics and Sanatan Dharma are not separate. And thus good economics is driven by Dharma. Dharma always enables one to think beyond oneself. Hence segments of society cannot conflict.
One can’t be selfish to only think about one’s interest as the underlying thought is not of divided parts of the society that are being brought together but various segments of the society representing various parts of the human body.
In other words, if one feels the pain in hand the entire body reacts and takes action to restore the equilibrium.
Sanatan Dharma advocated that everything is linked and conjoint, the Jiva-Atma is present not only in humans but in all forms of nature including, metal, plants, rivers, mountains, etc.
The Jiva-Atma in one is connected with Param-Atma (the almighty) and thus everything and everyone is inter-connected. All collectively are part of the same human body. Thus pain in one will lead to pain in the entire body and well-being can only be achieved when harmony exists within oneself and with everything else around.
West believed that happiness and peace come from owning material things. As one owns more, consumes more, shops more, one achieves happiness.
Whilst East said, that the more one possesses, one diminishes happiness. West believed that happiness is directly proportional to possessions, whilst East believed that it’s inversely proportional to possessions.
Thus to have more possessions, one needs money, to have more money, one needs to do everything in one’s right to get it even if it harms, abuses, or is detrimental to other humans or nature, or the ecosystem.
But the problem with possessions is that possessions bring happiness momentarily.
What if instead of looking for happiness outside, one finds happiness within oneself?
What if one reduces the objects of gratification and finds happiness in performing the act rather than the outcome of the act?
That is one of the reasons ancient Kings from Bharat never engaged in mindless bloodshed in their zeal to control a bigger landmass. Alexander, one of the greatest conquerors, gave lessons to humanity through his three wishes.
1) The king of Macedon said, “My physicians alone must only carry my coffin.”
2) “I desire that when my coffin is being carried to the grave, the path leading to the graveyard be filled with the wealth that I collected,”.
3) “My third and last wish is that both my hands be kept hanging out of my coffin,” Alexander said.
Interpretation- All medical aid, healthcare services, and physicians are helpless in front of death. One spends an entire life earning riches but can carry none. One has arrived empty-handed and will leave empty-handed and only one’s deeds will be carried forward.
Solving for the second rationale why wealth should be amassed. Leaving a legacy for generations.
There is a very famous Hindi quote that sums it up well.
‘पूत कपूत तो का धन संचय, पूत सपूत तो का धन संचय’
Translation: Why accumulate wealth for an unworthy son; why accumulate wealth for a worthy son?
A worthy son does not need one’s wealth that is left behind as one builds one’s destiny with hard work and character whilst for an unworthy son, no amount of wealth is enough for his well-being and one can never be sure that such wealth will last a lifetime. (Here son means child)
Then comes the final argument of philanthropy. Most rich people keep earning more money by harming others to donate the same money.
The oxymoron is that one spends one’s entire life acquiring wealth to finally give it away. Or is it the greed of name, status, being cast in statues in front of hospitals or schools, and immortality that drives charity?
Also if one is in the right mind to think about it, it means only the rich can do charity, poor can’t. Or one can only do charity when one earns money. The answer is No.
Charity or Philanthropy does not mean philanthropy of money. One can give what one has. A smile, a hug, some words of wisdom.
Money is just a medium of exchange and one can donate by cutting the medium and performing the charity directly.
One’s time, one’s learnings, educating someone, lending a helping hand to someone, protecting someone from pursuing the wrong path by coaching, guidance, and mentoring. All these can’t be quantified, yet can be superior to donating pennies and tom-tomming about it.
The Solution
A few centuries back, great and wise minds thought that communism was the answer.
What is Communism- The political system in which the state owns and controls factors of production of goods and services and aims to treat everyone equally. It’s a political and economic system that seeks to create a classless society in which the major means of production are owned and controlled by the public.
However, communism overlooked the intrinsic nature of the human being and thus led to too much power in a few hands and with the state ultimately controlling all the power and sources of power.
Just over six decades back, one-third of the world had a communist regime. But communism collapsed.
Capitalism has taken over and the world is inspired by it. But on account of internal contradictions, the Collapse of Capitalism is also inevitable within the forthcoming 2 decades.
What’s the way out?
Collective Well-being. Integral Humanism. Pursuing Purushartha (Taking together all four universal objectives of Dharma-moral duties, Artha — wealth, Kama — desire or satisfaction, and Moksha — total liberation from the cycle of birth, life, and death).
From a business perspective, viewing parts of society that take part in the business and the business as one, such that each part of society should benefit from the services of the business.
In essence, the cost remains low, for more humans to have the ability and utility to consume, and thus profits are derived from scale rather than from supply control or any other measure.
If the business is in a challenge, the eco-system supports and vice-versa, such that equilibrium is maintained at all points in time instead of businesses running through modern business cycles.
Two examples of such systems and processes that were created in ancient Bharat and still bring equilibrium.
1. Travel — Globally leisure travel constitutes nearly 80% whilst in India, 70% of tourism is spiritual tourism and is driven by all sects, segments, classes, and socio-economic strata throughout the year. Leisure travel is dependent on external factors like income, markets, geo-political situation, and climate however spiritual travel cares for none and is pursued every year irrespective of any external conditions.
2. Festivals and Fairs — Around the year festivals and fairs were created for people to meet and be together as well as increase the economic activity after a lull season.
Thus Siddhartha Rastogi, says, What was written off hundreds of years ago is and will be showing the path not only to the spiritual world but to the world of business, finance, and economics in times to come.
Bharat’s time has come. Let’s embrace the best practices to have peace and happiness all around.
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