Capitalist and Communist... Thumbs up, Thumbs down

Communism has known to be the direct opposite of the capitalists and the very concept of the ownership of any business in a capitalist economy is irrelevant. In implementation, it creates a controversy and clash of policies and actions. There has been a wave of takeover, some hostile and some amicable, of American companies by Japanese firms in the 1980s. The acquisition of Germany based Mannesmann by Vodafone in 2000 to the recent plethora of increasing private equity and venture capital firms and their acquisitions have often irked the social fabric of national pride and anxiety.

Social and Business Economists have highlighted the concerns which will intensify over the next decade, as BRIC and specifically Chinese state owned firms are on a inorganic activity growth radar. Chinese companies have recorded record numbers in terms of foreign M&As in 2010. They have been bidding for everything ranging from gas (Americas), oil (US) and electricity (Brazil) to cars (Swedish Volvo).

The very idea of communists buying the companies of capitalist is a disparity as far as economic theory of liberism is concerned. This is what has been irking the Repulics and the Democrats alike. Take a 2009 story, where the National Energy Administration (US) agreed to establish a special fund for China's state-owned companies to buy oil and gas firms overseas. The beneficiaries being the Petrochina, Sinopec and CNOOC, which enabled benefit in terms of low interest loans and direct capital injections.

Chinese companies were seen as an example and epitome of state capitalism. Economic
factors like emerging world's non credit culture and the huge reserves of public saving, their resource wealth and the collapse of free market model led to a hailing of state capitalism. The value of the globe’s emerging stock markets have risen fivefold ($80,000 billion from $14,000 billion), taking the emerging market share of global equity markets from 31 % to 55 %.

The so called first world has coped up with countries such as South Korea and Singapore, who have been on an acquiring spree of companies outside their countries. The developed world has the experience of tackling the rise of mercantile economies but China stands apart, it is already the world’s second biggest economy, and in another two decades is rightly poised to overtake America. Chinese firms, till the outbreak of recessionary times, have looked inwards. The rising oil prices and the recessionary pressures on the US have made them potential targets for their vast resources abroad. Nothing could be more apt then the case of Unocal.

China stands fifth in outbound investments globally. Unearthing the pages of history shows that both Britain and America had shares of about 50%, in 1914 and 1967 respectively at their prime of supremacy. The biggest weight on the scales will be the Chinese rate of government investments powered by the per capita savings of the people. These monies today are invested in government bonds and treasuries of the first world counties; tomorrow this will serve a pool which can be used to buy companies and insulate the Chinese people against the first world countries currency devaluations and financial defaults.

Taking a cue from the chapter of globalisation, very similar to the old way of annexation of countries, a company (country) tries to inorganically for primarily three reasons: secure raw materials for future production, acquire better technical knowhow and the most important, to gain access to foreign markets.

In a normal situation, private companies around the atlas, find and allocate their
resources towards the attainment of perfecting its strategy to maximize its customers base.

These are governed by market and economic logic. So far so good, now the idea that an communist government might dominate the realms of global capitalism scenario is
unappealing. The very idea of shift in the control of global resources to an body which would not be market driven but official driven, an establishment principled on politics (principle, if you please) and not profit are the real concerns. Developed countries like Australia and Canada, which were once open for takeovers from the foreign countries, are now escalading the barriers for Chinese, especially in the arena of exhaustible resources.

China has been most active in deal making for the natural resources, yet its way off the needed quantities to control the rigging capacity of the markets for such commodities.

The Americas, Australasia and the Europe should consider subsidized capital of the Chinese. The major focus in these terms should be dealt with strengthening and plugging the loopholes in the competition law rather than trying to stop the investment flow, thus constraining the movement of capital around.

Taking the example of Geely, the new owners of Volvo. It made complete sense for both the parties. Geely had been trying to launch itself into European markets but was losing on the pricing factor and Volvo was in deep crisis since it could not find distribution partners in Asia to sell its cars. Volvo's existence was threatened due to its inability to sell more care in Asia.

CNOOC was one of the greatest finds of Warren Buffet n the last century. Chinese firms are believed to come with a lot of perks such as lower operational costs and access to newer and fresh markets to otherwise flagging companies in the saturated markets. In BRIC, Indian and Brazilian firms have the maximum advantage of being the free and open market policy adopters. But China is catching up fast . . . really really fast.

“This is a time for bold measures. This is the country, and you are the generation.”

I have been quite quiet for sometime now… Reasons galore.

I have been disturbed and have done some serious background familiarity work on the current state of affairs ranging from issues to Bring Back Black Money to India Against Corruption to Next Prime ministerial candidate and till the recent Delhi rape case. I have been off late been disturbed by these issues which are non-economical in nature per se but have a strong bearing on the economic, political and the strategic turn our country is going to take hereon.

 I will narrate a small story before we delve on the issue: On the 60th Birthday of our country, hearing a famous anthem which said,

 “There are two India’s in this country, One India is straining at the leash, eager to spring forth and live upto all the adjectives the world has been showering upon us, the other India is the leash.
One India says give me a chance and I will prove myself, the other India says first prove yourself first and maybe then you have a chance.
One India lives in the optimism of our hearts, the other India lurks in the skepticism of our minds...
One India wants, the other India hopes. One India leads, the other India follows. These conversions are on the rise, with each passing day more and more people from one India are coming on the other side. And quietly when the world is not looking, a pulsating dynamic new India is emerging.”

 A friend (Deepak) from a small town of Ballia, Uttar Pradesh (Bihar) called me and said, “Bhai, this is our story. You are One India and I am the other India, and I am crossing over.” He had apparently landed up a job in a growing Indian IT company and wanted me to help him settle down in the city of his new job. 

Deepak did well for himself in the company and adapted to the lifestyle of a city. Later, I shifted out of the city and had minimal contact with Deepak during those days. Deepak got a promotion and his location was shifted to Delhi. He called me emphatically about the good news and added that his marriage is on cards and gave me a stern direction to be present at his wedding.
Finally in 2010, Deepak got married and shifted to his new apartment in Kirti Nagar, Delhi. Since then, we both have been busy with our lives, hardly catching up with each other.

In Oct 2011, I was elated to meet Deepak in Ballia after almost two long years. While having lunch on a charpoy, I asked him about his job and till when is he in Ballia. He got upset and said, “Forever”. . . . . What had transpired after his marriage was shocking. His wife was targeted by some local political ruffians and often was teased on the roads. On bringing this to Deepak’s notice, he had a scuffle with the guys and was put behind bars. Deepak’s parents had to come down to Delhi and had to go through the ordeal of all the process of getting him released. Upset and Scared, Deepak’s parents made him quit his job and return back with them to his hometown, Ballia. Deepak now runs a computer training institute in Ballia. He often rues the fact that in 2012, he would have been sent on an overseas onsite project for 5 years.

That brings to the basic question of sociology about the evolution of a civil society. If a society feels insecure, what does it do ?? According to History, “this is the very seed of revolution, on which civilization evolves and leapfrogs into a metamorphosis stage”.
TRUE… we have seen this happen recently in Egypt. Today with the advent of social media, we (Society) have so much to broadcast and voice over. It gives us an opportunity to live a pseudo life where we have a microphone and can exercise our freedom to speech and expression.

The question which is relevant today is, Does signing an online petition on the Facebook Timeline and share it with friends enough to bring a revolution? Is sharing a status or changing a profile picture to a black dot to show solidarity with the victim enough to make the government kneel down? Does cursing the government for its inept actions or non-delivery of speedy judgement enough to ensure that from tomorrow rapists will dread the action?

While returning late from office on a Friday, I was caught in a tiny traffic jam because a candle vigil was passing by. Intrigued and curious, I too got down to see the intensity and wanted to walk a 100 metres. The vigil was a mark of protest against the govt and was to show solidarity about the unity of the public in terms of the Delhi Gang Rape.
It really skips my mind as to how many of us really know, think, or even understand an issue before we pass comments/ expert advice on the matter.

In an attempt to put the numbers in perspective, India’s has an average of 88% literacy youth rates, and it’s a pity that we still remain to be of the herd mentality. A survey carried out during the India Against Corruption agitation reported that only 9% of the agitators knew what they demanded, why are they protesting, and what changes would be effected after the implementation of the Lokpal Bill.
 India currently has been going through a lot political and social upheaval, a lot of interest and increased participation from the youth in waging campaigns and protests. The underlying fact remains that majority of the agitation are comprised of flimsy people, who get active on weekends for a get together.

 The obvious question which I have come across every time I have shared my mind, “Why don’t you tell us what should we do???”, and I have categorically replied every time, “ India needs shepherds and everyone is happy being the fleet. My boundaries of advising ends here, I only ask you the right questions, answers is something which you have to seek. Remember, there is no Right or Wrong, but only avoidance”

I would also like to add that this post goes out due to utter frustration, disgust and helplessness from an individual, who is shameful at his inability to change things. Taking a leaf from a philosopher in his own right: “This is a time for bold measures. This is the country, and you are the generation.”

 Jai Hind.