Desi Economy: Capitalism Vs Socialism

What form of government and economic policy should a government take? Nowadays it has become a trillion dollar question? It’s even more important for countries like India and China that have a huge population of 1 billion.To feed our one billion population what kind of an approach should we take. Should profit and shareholders wealth maximization be the only goals of Indian Corporates? Should the government play into the hands of the capital markets? Should the government increase the foreign direct investment cap in all the key sectors in the name of globalization and liberalization? What do we need, 15000 ATM’s or 45000 clerical banking jobs? Fully automated production lines or 1000 plus manufacturing jobs? Should we take the approach of capitalism or communism or socialism? I know it’s a tough question, but the more I see Corporate America, I starting doubting capitalism.

For years the developed world has taken the route of capitalism. They have prospered in it to a certain extent. To start with, the sharing was equal and everyone seemed to enjoy a good life. But after 200 years of capitalism, the wealth sharing has been polarized to such an extent, where 1% of America owns 33% of its wealth. Today in America you won't find average Americans on the left or on the right. You'll find them at Wal-Mart shopping for deals. That’s capitalism for us.

Today capitalism’s single minded goal is to increase the wealth of its shareholders. To increase the wealth of its shareholders companies pursue a number of strategies like automation, downsizing, re-engineering BPO, ERP etc. It certainly results in improved efficiency and value creation for the customers and shareholders but the important question we need to ask ourselves here is: What is the overall cost an economy pays for such improved efficiencies? In his book straight from the gut, GE ex CEO Jack Welch justifies himself by saying ‘We dint fire the people, we fired the positions’ however they may call it, the net result is a job loss. A family loses its livelihood because the company can perform the task in a much efficient way by employing lesser resources and increase its profitability. My question is can India afford to improve efficiency at this cost or should it go back to the socialist form of government where social responsibilities are given its due respect. I certainly don’t have an answer, but I am really concerned about the way the previous Indian government danced to the tunes of capital market in the last 5 years. Hope the new government amends the mistakes of the old regime. I would be happy to see a economic policy which can ensure growth at the grass root levels.