Page 120 - EW November 2024

Books

Case for classic WHAT WENT WRONG WITH soft, Google and Facebook,
soft capitalism has stalled
capitalism CAPITALISM “creative destruction” of
Ruchir Sharma
outdated, unprofitable
ALLEN LANE “zombie companies” kept
EW YORK-BASED Rs.999 alive by continuous debt
Ruchir Sharma, Pages 368 rollovers. As a result,
Nchief global strate- huge amounts of capital
gist at Morgan Stanley are locked up in zombie
Investment Management companies instead of being
for 25 years until 2022 centuries powered its rise An enlightening available for funding new
when he founded Breakout to the world’s richest, most narrative of how far innovative enterprises
Capital, a global invest- inventive and militarily USA has strayed from that would add to national
ment firm, is one of few dominant nation. For- the basic principles wealth. Moreover, easy
economists worldwide who tunately, as is his wont, of capitalism. It also money prompts specula-
writes readable books. Sharma doesn’t restrict highlights capitalism tive investment in complex
Sharma is refreshingly himself to analysing the success stories abroad derivatives that triggered
readable because he rou- crisis of capitalism in the the sub-prime mortgages
tinely advises governments US and West, he also high- crisis of 2008, as also reck-
and publics of emerging lights the success stories liberalisation by routinely less speculation in stock
third world economies of countries world over trashing licence-permit raj markets.
to jettison fine-sounding that have benefited from long before Dr. Manmo- Foolishly, despite being
communist/socialist ideol- following best practices of han’s awakening. blessed with several mil-
ogy and adapt and practice free markets ideology. Be that as it may, this lennia of private enterprise
enlightened capitalism, Sharma experienced volume is an informed nar- and banking traditions,
which he believes offers an epiphany in 1991, “the rative of how far America after independence free
the best prescription for darkest year in post-inde- has strayed from the basic India opted to take the
growing the wealth of na- pendence India’s history” principles of capitalism, socialist road to prosperity
tions in the 21st century. when the country was “on the prime cause of its which has proved to be an
In this cause he has done the verge of defaulting current problems and arid dead-end, plunging
signal service by writing on its foreign debts” and downward glide. the country into deep il-
several comprehensible Union finance minister Dr. According to Sharma, literacy and poverty.
books (all reviewed in EW Manmohan Singh present- America has been debili- The Central govern-
see educationworld.in ar- ed the Congress govern- tated by too much govern- ment’s 258 public sector
chives) including Breakout ment’s historic economic ment spending, easy mon- enterprises (PSEs) and an
Nations (2012), Rise and liberalization and industry ey policies and welfarism equal number in the states,
Fall of Nations (2016), deregulation budget. Al- financed by massive fiscal have proved to be a col-
Democracy of the Road though at the time Sharma deficits which have become lective disaster, returning
(2019) and 10 Rules for was employed with a the rule in American poli- barely 1-2 percent on vast
Successful Nations (2020). “leading financial paper” tics and governance. With capital poured into them.
In his latest oeuvre, Manmohan Singh and his the Central Bank (Fed- Worse, in 1969, all major
Sharma, an alum of the “Oxbridge and Ivy League eral Reserve) lending to banks were nationalized.
Shri Ram College of team” became his heroes. other banks at rock bottom Managed by over-pro-
Commerce, Delhi who Evidently, history ag- interest rates, business, moted, risk-averse clerks
began his career as a nostic Sharma is unaware industry and investors, innocent of project and
correspondent of the that for over half a century including private equity entrepreneur appraisal
Economic Times before Dr. Singh was an architect companies are on reckless skills, they dried up credit
he was recruited into the of socialist licence-permit- spending sprees. to private MSMEs (micro,
Mumbai office of Morgan quota raj which had While the upside is that small and medium en-
Stanley, examines what’s reduced India to its “dark- easy money and amazing terprises), opting to fund
gone wrong with capital- est hour”. Nor or does he risk-taking entrepreneurs PSEs instead. The outcome
ism in the US, the fons et remember that Business have powered the rise of was disastrous. Annual
origo of capitalism aka India and BusinessWorld America’s globally-dom- GDP growth rate stagnated
free markets ideology, edited by this reviewer inant, super-innovative at 3.5 percent for over 40
which in the 19th and 20th prepared the ground for megacorps such as Micro- years and hundreds of mil-

120 EDUCATIONWORLD NOVEMBER 2024