Inclusive Capitalism!!!

The collapse of the Wall Street majors has spilled over to the Main Street. Since the economies are shedding jobs. In US, this September alone, monthly mass layoff claims for unemployment insurance jumped by 34 percent. General Electric, General Motors, Chrysler, Yahoo! and Xerox have all announced major layoffs, along with the humbled financial giants such as Goldman Sachs and Bank of America. This is in addition to all those who have lost jobs in financial institutions which have gone bankrupt. State governments in US are facing a tax revenue shortfall of roughly $100 billion in the next fiscal year, 15 percent of their overall budgets. The fact that the economy’s overall gross domestic product (GDP) shrank between July and September the first such decline since the September 2001 terrorist attacks only confirms the realities on the ground facing workers, households, businesses and the public sector. All of this is happenings in US, a country which epitomized and preached capitalism.

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With Communism having fallen from grace with the collapse of the Soviet Union and now, capitalism is under siege with the collapse of Wall Street majors. Is “Inclusive Capitalism or Social Capitalism” the new way to survive?

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All those who championed for the cause of capitalism, and campaigned against communism failed to understand the fragilities of capitalism. Hard-core Capitalism only seeks to satisfy those who provide capital, in this process fail to take care of other stakeholders, who form the foundations of an economy. This kind of Capitalism is very much exclusive in nature. Inclusive capitalism is all about satisfying the needs of all stakeholders and most important of them being customers. Traditional capitalism exploited the customers the most, who form the base of the fortune pyramid.

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A classic case of primitive capitalism which was failing now would be inability of the telecom players to penetrate into the market. In spite reforms, till 1995 the fruits of telecom were not available to 95% of the country. Hence the players failed to penetrate into the market. With some more reforms and slashing of tariffs by the players the benefits are available to more than 50% of the country. In this sector, the application of inclusive capitalism had become a force for good.

The appliance of inclusive capitalism should be done voluntarily by the corporates than due to government intervention. In a country like India with a very small number of high-margin customers in India, corporates will have no option but to look at other segments of the population.

In order for inclusive capitalism to work, corporations must realize that they are part of a larger society and part of a complex network where every element is interlinked and that all the wealth that they produce is not their own.