Thursday, June 10, 2010


Many years ago, the ‘legendary’ GE CEO Jack Welch proclaimed in virtually as many words that CEOs who spent money on corporate social responsibility were morons and deserved to be sacked because their primary function was to reward shareholders. Of course, when Jack Welch delivered this central tenet of capitalism and ‘free’ markets, America and the world were celebrating the triumph of capitalism over socialism and Francis Fukuyama had even announced the end of ideology.There were many in India who wildly cheered the triumph of capitalism as the magic wand that would solve India’s economic problems. They even hectored, bullied and ridiculed policy makers who did not want India to adopt what George Soros and Joseph Stiglitz have so brilliantly described as ‘financial capitalism’ and ‘free market fundamentalism’. That breed has of course gone relatively quiet after the 2008 meltdown.

Yet, the recent verdict in the Bhopal gas homicide (yes, I am deliberately using the word because Bhopal will always be a case of corporate homicide) has raised many fundamental questions about banally used terms like Capitalism, Free Markets and Profits. Most people – and very rightly so – have condemned the entire event as a travesty of justice. Thinking people have again raised red flags about the pathetic state of the justice delivery system in India. Politicians, as usual, have sputtered, fumed, raved and ranted on TV news channels.

If you are an optimist, you might be tempted to think that the uproar triggered by the Bhopal case might result in some legal reforms whereby companies and CEOs will actually be made to pay for corporate crimes that endanger and damage human beings and society (I personally think that Bhopal would have disappeared from TV screens by the time you read this). If you are an angst filled cynic like me, you might wonder if that Utopia will ever been seen. Look at what is happening in the fountainhead of Capitalism – America. More than 20 years ago, there was a disastrous oil spill and the culprit was the giant Exxon. I still remember – as a young journalist – reading wise columns in T e Economist arguing for better regulation of ‘Free Markets’ and ‘Capitalism’ as the way to avoid the similar tragedies in the future. (By then, the failure of Socialism to protect human lives from industrial disasters had been cruelly exposed by the Chernobyl nuclear disaster in the erstwhile Soviet Union). More than 20 years later, it is another giant BP that is the culprit and another oil spill in America is causing monumental damage.

Cynical it may sound, but for someone like me with a very modest understanding of economics, it seems clear that the pursuit of profits (the sole reason of existence of companies in a capitalist system) will always cause human misery and deprivation. It also seems to me that the word ‘Free Market’ is a farce because a truly free market means all participants have access to information. You must be joking if you still think the underprivileged have access to information in a capitalist system wile making transactions.

I know; one cannot dismiss Capitalism and Free Markets completely as evil because they have actually lift ed hundreds of millions out of poverty. And yet, I wonder if free markets can ever swat away the stench of human misery.