FINANCE SMARTS

Sramana Mitra, in her post ‘Capitalism’s Fundamental Flaws‘, has made a very important point: the capitalistic system is not rewarding the right people – the innovators and creators.

Sramana has raised valid concerns about capitalism and the need to debug it. She’s right about many bankers and venture capitalists walking away with the pie and leaving the innovators and entrepreneurs with the crumbs. She’s also right to blame unregulated greed for the unprecedented financial meltdown that has had ripple effects through every sector of the economy. She calls for Capitalism 2.0 to evolve a better, fairer system.

While I agree with her on the problems, I don’t think Capitalism 2.0 is the solution. The Agrarian Age was largely about land as a source of power, while the Industrial Age has been about capital as the source of power. The Industrial Age has run its course, making a billion people super rich, a billion super poor and leaving the world’s remaining four billion somewhere in between.

It has depleted almost 60% of our ecosphere in just 200 years – more damage than all of mankind could manage in 50,000 years. The premise of New Constructs is that the industrial age — with its focus on capital, money and wealth as the predominant measure of success – has to be replaced with a more inclusive, sustainable era – the Connected Age for want of a better phrase.

We need to value talent and connections far more than capital. The individuals and organizations that are best able to leverage not just talent but talent networks will generate far more value than firms that have access only to large capital. As Sramana says, the value equation will need to shift back to the people disproportionate share of the gain.

More importantly, our definition of value has to change. With our Industrial Age mindset, we automatically read ‘money’ when we hear ‘value’ — just as an exercise, re-read the previous paragraph to check out whether this statement is true.

We need to replace this with more holistic, well-rounded definitions of value. To recognize and acknowledge what drives people to contribute to movements like Open Source or Wikipedia. Or the value we get by participating in environmental and social movements like Green Peace or Sai Seva. Why should we short-change ourselves with the belief that money is our only motivator?

We need to go beyond capitalism, and nurture more innovative forms of human activity that are more in line with the new, connected age. While I don’t have the answers – I don’t think any individual does – I would like to catalyze conversation to help us all work together to take the world to the next level. That’s the New Constructs opportunity. Stay engaged, stay happy.

Sudhakar Ram is Chairman and Co-Founder of Mastek, a leading IT solutions company. He believes that we have the potential to create a sustainable world and live in harmony with our environment. However, this would require a fundamental shift in our mindsets – the “constructs” that drive our attitudes and actions. The New Constructs is an initiative to leverage Connected Intelligence in realizing the Connected Age. Please feel free to comment. We look forward to your active participation.
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