INTERVIEW Asking tough questions
about capitalism Chandran Nair
is is author of Consumptionomics: Asia's Role
in Reshaping Capitalism and Saving the Planet.
Benjamin A Shobert spoke to him about the
recently-released book.
Benjamin A
Shobert: Readers of your book will
encounter three key themes: first, the limitations
of Western capitalism in general, second a more
specific critique of the inability for
market-based solutions to address network
externalities (costs covered by society but not
born by corporations), and the sustainability of
demographic and consumption trends in emerging
economies. With these in mind, would you expand on
what you see as the
limitations to Western
capitalism?
Chandran Nair:
As I point out in the book, Western capitalism has
served the West and parts of the world very well
over the last 60 to 70 years. But, it has
exhausted itself now.
Extreme capitalism,
as I define it, is rooted in the belief that
countries and corporations have the right to
externalize the true cost of economic activity;
how the resource base fulfills the aspirations of
consumers has not been fully priced into the
market. My analysis is not a rant against
capitalism - it is an attempt to advocate for the
true pricing of resources and therefore for its
more equitable use.
I believe capitalism
in general needs to make three major adjustments:
first we need to accept resource limitations and
constraints, second resources need to be re-priced
to reflect their true total cost, and third,
shared resources need to be at the center of
policy making, not at the periphery as they
currently are. The economy needs to be subservient
to maintaining the vitality of the resource base,
and not the other way round.
BAS:
While reading your book, it struck me that
colonialism could be seen as the original
externality. Would you agree with that?
CN: It would be accurate to
say that the first and most extreme form of
under-pricing resources to produce goods and
services was slavery. Much of capitalism's
practices and institutions arose from a world in
the 19th century dominated by Western powers. At
the recent OECD [Organization for Economic
Cooperation and Development] 50th Anniversary
Forum in Paris where the focus was on green
solutions based on conventional economics, I
pointed out that I wasn't sure why economists
still refer so extensively to Adam Smith.
He's been dead for centuries; didn't live
in China or India; and he had a colonial view of
the world; and when the world's population was
well under 1 billion. In this sense, colonialism
was the first expression of society's
under-pricing of assets. Then, in a world of one
billion people with so much abundance, you could
get away with it. But you can't do that in today's
world, and that's a problem we need to be having a
serious conversation about. In Asia today the
problem is completely the reverse - too many
people and too few resources.
I want to
make this point again: I am not against
capitalism. I have been a successful businessman
and continue to support business activity. I
understand that capitalism gets people to be
entrepreneurs, and that can be a very good thing
but it cannot be left on its own and hijacked by
vested interests in a crowded planet. And I am not
advocating some utopian ideal that would result in
immediate solutions to rid the world of its worst
problems.
What I want is to ask tough
(more honest) questions and urge governments to
find answers and not let them abdicate those
responsibilities to companies or future
generations. That may be the really tricky bit of
the book - that in my opinion we need strong
states in order to serve the needs of the majority
and in that way save capitalism. At various forums
in Europe and Asia I have pointed out that liberal
Western democracies have morphed into political
systems that have resulted in an inability to make
meaningful long-term decisions. Science is getting
dumped in the waste bin and rational conversation
is impossible. Sustainability decisions need
long-term perspectives and good science, of which
there is lot about.
Frankly, my concern is
less about talking to those in the West. I see
myself as an internationalist, but what the West
does may not matter as much as the international
media and most people around the world think. The
population differences ironically make it Asia's
responsibility or even burden; it will be 5
billion in the East versus maybe 750 million in
the West. Ultimately, Asia's leaders will need to
find answers to these questions as it will shape
the 21st Century - for good or bad.
BAS: Some people may read
your book as a neo-Malthusian argument. You write
on page 48 that "Malthus was not wrong when he
said that if things continued as they were, limits
would be reached ... if these longer-term
depletion issues, such as where the water will be
found to raise crops for the next generation, [are
not addressed] Malthusian concerns have only been
deferred, not solved." How do you distinguish your
arguments from those Malthus made, especially in
light of the belief many have that technology will
ultimately provide the necessary answers?
CN: It is important to note
that Malthus was not wrong, he only got the timing
wrong. There has been work done to show this but
it rarely gets any air time. After all talking
about restraining consumption puts one in the
pariah bin by the deniers and thus out-dated and
cliched arguments are used to dismiss the facts -
despite the science.
What is important is
to understand is that Malthus lived in a very
different world - the 17th century. So those who
suggest that this is all a Malthusian rehash need
instead to be challenged. In the 21st century we
have much better information and tools to analyze
the impact of our current trajectory of
consumption-led economic growth on the planet and
on our societies. It is those who are in denial
and who believe there are no limits who should be
the odd ones out, not those who are willing to use
the scientific facts to argue for restraint in the
way we use resources in a constrained planet.
BAS: As you mentioned
earlier, your book is an advocate for a strong
state. That is a very unpopular political idea in
the West at the moment. How is this part of the
book being received by those in the West?
CN: The book has received a
very strong response in Europe. I was recently
speaking to a large European company in the global
automotive industry and made the point that we
really do not need another couple of billion cars
in Asia which is the likely scenario if Asia
adopts Western car ownership levels.
This
is hard for companies to hear, and even harder for
them to incorporate into what they call their
sustainability practices. But there is no denying
the truth and I rarely find anyone arguing against
these facts and the implications. The smart
companies and non-deniers know and are willing to
have that debate. Sadly many simply do not want to
go there. Needless to say there are always the
"technology will solve all the problems" group but
they too, when pushed, back off.
Sustainability is ultimately about doing
less and companies inherently fight this as they
do not "do less"; they fight regulations, which
means that only government can be the one to stand
up and say "this isn't good and therefore here is
the framework you can operate within". So, for a
company in the automobile business, a globally
sustainable strategy isn't one that seeks to
minimize the number of cars on the road; they are
going to find a way to sell more cars but use the
usual buzz words around green and zero emissions
to respond to the hard questions.
That
means that society has two choices: either
governments can act through tough intervention to
prevent the resource drain of another billion cars
hitting the road, or remain hostage to the narrow
interests of some companies and thereby in effect
not do what is their responsibility to prevent the
catastrophic impacts that will arise from such a
scenario. I believe a strong government can - and
should - stand up and prevent the inevitable
collapse of shared resources. In Europe, there is
great interest in this idea but wariness about
strong governments.
In the US, what has
been very interesting has been the great
discomfort displayed by those who won't accept
even the most basic idea in the book, that there
are limits. This is not to say all Americans think
this way, but in the business and financial world,
denial is rampant.
Some influential people
have read the book and are trying to get the
book's ideas listened to in some policy making
circles; but there is a strong ideological bias
against any ideas for a strong government
intervening in the individuals' right to consume.
Consequently, I find myself writing for and
speaking primarily to those in Asia, because the
West if it is unable to come to terms with this
dilemma, is going to ultimately have to adapt to
the changes that those in Asia need to make for
their own reasons.
I want Asian leaders to
accept that they have been intellectually
subservient for too long. Many Asians, given the
colonial past, inherited the belief that the
Western model is somehow better and this attitude
sadly pervades much of Asia's policy, business and
political circles.
BAS: It
seems to me that the West is feeling its own
insecurity over what the 2008 financial crisis has
to say about its own policy weaknesses.
CN: Yes. I think this is
something worth noticing about shifting attitudes
in Asia. Policy makers in Asia are essentially
saying "we thought our teachers knew, and now we
know they don't". There is a bit of a vacuum left
which I think is part of the intellectual
subservience I mentioned earlier.
In some
ways, the book is talking about things many of us
felt we couldn't say for some time. Many in the
West have talked about the limits to growth, but
those conversations tend to be in technical and
scientific terms and rarely about how to impose
constraints. I want to talk about this idea in the
context of politics and the role of the state,
which hasn't been done before in Asia.
BAS: You seem to take issue
with the idea that human ingenuity is the solution
to these problems?
CN: Well,
I don't believe human ingenuity in general should
be discounted. We can hope that some genius will
come up with solutions, but as I say "hope is not
a plan". Yes, we have to be hopeful and
aspirational, but at the same time realize the
size and scope of the impending problems cannot be
left to chance or human ingenuity.
For
example, China and India are full of cities with
well over 1 million people in each of them. How
many of these are in Europe or the US? We need to
be pursuing policies that can address their
challenges right now and not coaxing them to join
the consumption-led growth model. Now that
hundreds of millions of Asians have been told they
too can join the world of unrestrained
consumption, the whole game changes. I fear the
scale is not really understood in the West. Now
they all want what is taken for granted in the
West - what they see on TV and Hollywood, and what
they read on the Internet. This is sadly not
possible.
BAS: What happens
if this disconnect - between the haves and the
haven-not's - isn't bridged?
CN:
The consequences will make the Arab Spring
look like a walk in the park. I think many - if
not most - have misunderstood the source of the
Arab revolts. People need access to the basics,
and they couldn't get those, which is what
precipitated the pushback.
They want clean
water, and they don't want to have to bring water
back in a bucket from a community well; they want
reliable electricity and they know their country
should be able to provide these basics. And
because their governments have sadly been
negligent in providing those things, the revolts
happened. Of course there are political reasons
too.
The disenfranchised in Asia have very
similar needs: in Asia there are now more people
with mobile phones than sanitary toilets. In these
cities there are a huge amount of people whose
aspirations are not being met. The opportunity and
risk for Asian governments is huge. The population
in Asia is three billion going on five billion
over the next 30 years. There are more poor people
in India alone than in all of Africa.
Their future is going to depend on whether
they can get access to the basics: food, water
(for agriculture, subsistence, and sanitation),
education, public health and housing. If China and
India understand this and adopt policies to
provide these to their populations they will be
successful. It is arguable if the current model
will ever achieve this. In fact the evidence
suggests the reverse is true.
Extreme
capitalism was borne out of circumstances of
abundance and of entitlement. It all looked
possible in the West as it had access to vast
resources via its colonies and the only challenge
was how to export it. Much of our concepts of
productivity were built on under-pricing
resources, simply because there was so much and so
few people to use it.
In Asia, there is a
very different problem now, and those Western
ideas borne out of a different age won't work.
Asia needs to redefine the idea of productivity:
we need as many people working, engaged in using
as few resources as possible to address the basic
needs of human existence. It is not fast, but it
is patient work.
Urbanization also should
be carefully considered as is the notion that jobs
through manufacturing and urbanization will meet
the political objective of creating employment for
all. Different approaches are needed. For example
we will need more food in the next 40 years than
we needed in the last 8,000. This will be the work
of our lives.
BAS: Are there
inherent time scale problems to getting
governments to move on these issues?
CN: I wrote this book to get
an idea discussed in Asia, and to move it into the
mainstream to start a conversation, not to say
"these are the solutions". I have no details on
whether governments in China and India can
navigate these waters, but they need to have the
conversation.
In my mind, the debate is
really about two countries: China and India. China
has one advantage - a strong state - that India
does not have. Most Chinese I know are quick to
acknowledge resource restraints and to say they
need to get control of this or they will go back
to living in very tough times. Their main focus is
on how to improve the lives of 500 million Chinese
who still live on less than $2 a day.
If
they can't fix this, then chaos will ensue. If
Asia can do this, it will reshape the world by
showing the need for a strong state and then,
ultimately the West will have to change too.
Benjamin A Shobert is the
managing director of Teleos Inc
(www.teleos-inc.com), a consulting firm dedicated
to helping Asian businesses bring innovative
technologies into the North American market.
(Copyright 2011 Asia Times Online
(Holdings) Ltd. All rights reserved. Please
contact us about sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
