On Capitalism

In warfare, It is common to know of Sun Tzu who proposed 36 strategems of War in his evergreen work known as "The Art of War". One another classic on warfare was written by Carl von Clauswitz who timeless work was known aptly as "On War". These have been familiar works which I have been introduced as a result of my vocation.

Last weekend (on BT Weekend, page 6), I was introduced by my favourite Business Times correspondent Ms Teh Hooi Ling, a parallel in the field of Economics, particularly on the subject of capitalism. He is none other than Joseph Alois Schumpeter. Although, in my life time, I have been more familar with free market economist like Adam Smith and John Maynard Keynes. Ms Teh's coverage of Schumpeter got my attention.

When considering classical economics, the allocation of resources has been reduce to mere mathematics calculation of the interactions between demand and supply. The 'invisible hand' mechanics implies that all social and economic interactions will be resolved based on personal cost and benefits. Schumpter having the benefit of being able to observe the trend in the 19th century notes that a hybridised form of capitalism is present that is as much a social and cultural construct compared to an economic one. In this form, it extracts the value from the free market mechanism in capitalism as an efficiency form of resource allocation and yet able to reconcile the societal needs to minimise and limit the negativity of the fairness of the laissez-faire.

Another key element of Schumpeter's writing covered in the article was his thoughts on entreprenuership. He believes firms that there is a need for a "incessant dynamism" and competitive innovation for standing ahead. Failure to do so and the inability to maintain this entreprenuerial spirit is a key reason why the list of Fortune 500 in past decades would experience a great degree of variance. I quote "without blazing new trails, without being devoted, heart and soul, to the business alone", one cannot expect to remain on top.

Since my background is one of a organisation involved in the production of a public good, it leads me to think one thing. Firstly, how does one promote an entreprenuerial spirit when there is an absence of a "profit motive"? Public policy must therefore facilitate a few conditions to achieve this.

Firstly, a need for a measure to define staying on top. This I envision will come from very concrete measureables of key performance indicators or very realistic benchmarking. In short, policy must mirror free market conditions to exact the cost and benefit relationship so that failure can be real and is a measureable cost.

In the individual front, this means that the individual must passionate and with great commitment to his business and his business alone. To invoke this commitment and passion, the individual must be given a "profit motive". In today's HR context, this would be in form of rewards and recognition. As a policy, we cannot lapse into a "mere husbanding of already existing resources, no matter how painstaking, is always characteristic of a declining position". Call me a government lap dog all you want but this justisfies a rethinking of the rewards of the civil servant and hence my position of a reasonably high and attractive ministerial pay maintains. Of course, creative employment of resources here do not only apply to HR but to all facets of the public function.

Ms Teh has also made mention of entreprenuership in large corporations stating that they require "even more talents". They must "woo support" among their colleagues, "handle men with consummate skill", and give others ample credit for the organisation's achievements. At this juncture, I take this opportunity to honour my personal mentor and another dynamic and amazing senior commander. Both are great leaders that typifies an entreprenuerial description and whom I deeply respect and willing to serve. LTC Thng Chee Meng and COL Harris Chan Weng Yip.

There is a small part of this article that encouraged me greatly, it was a reflection of my current circumstance and it adds further conviction to my decision to travel off the beaten path. It is also my secret hope that Schumpeter is right and that I can truly live up to the ideal of validating it. I quote the whole section that Ms Teh has written.

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On Social Mobility

"The persistence of class position is an illusion... Class barriers must be surmountable, at the bottom as well as at the top." The key to a higher class position is for an individual to strike out "along unconventional paths. This has always been the case, but never so much as in the world of capitalism."

Most industrial families have risen from the ranks of workmen and craftsmen "because one of their members has done something novel", and this is "virtually the only method by which they can make the great leap out of their class".

As Abraham Lincoln noted, singularly talented people almost always strike out in bold new directions. "Towering genius disdains a beaten path. It seeks regions hitherto unexplored... It thirsts and burns for distinction."
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I hope in time, I can be counted among the "towering geniuses". Hahaha~!

To wrap this up, I end it with a further quote in the article.
"Innovation itself is primarily "a feat not of intellect, but of will... a special case of a social phenomenon of leadership".

I guess Clauswitz and Schumpeter is agreed on the sword of the spirit and the power of the will.