The crisis of capitalism

Citation

Steane, P. and Dufour, Y. (2010), "The crisis of capitalism", Asia-Pacific Journal of Business Administration, Vol. 2 No. 2. https://doi.org/10.1108/apjba.2010.41502baa.001

The crisis of capitalism

Article Type: Editorial From: Asia-Pacific Journal of Business Administration, Volume 2, Issue 2

Crises are anxious times. They beckon a response; often beyond our comfort zones. Crises also provide opportunities for us to reassess ideas, assumptions and practices. This conundrum is aptly captured by the Chinese characterization of crisis as both “danger” and “opportunity” in its calligraphy of the word.

In 1975, the energy crisis dominated the consciousness of the western world. At that time, the Trilateral Commission, which was constituted by elites in business and government, published a tract The Crisis of Democracy (Crozier et al., 1975). The authors proposed that there was too much freedom in democracies, and that it was necessary to curtail personal freedoms in order to preserve the governability of democracies. This was a time when the economic philosophies of Freidrich Hayek and Milton Friedman were gaining currency, and with the conservative governments in the USA and UK, a new era of smaller government and bigger business came into being. Government was re-invented, public administration was re-newed and public private partnerships ensured the neoliberal influence dominated capitalism in the new global economy.

In fact, the tract The Crisis of Democracy sent a confusing message. Was there a crisis in democracy, or were the neoliberal elites inferring that democracy itself the crisis? By arguing for greater freedom in business, less regulation and less government influence in the market, capitalism evolved, albeit partially, into an unaccountable, and some would argue irresponsible phenomenon.

The last two years have witnessed real cracks in the economic integrity of what we have come to know as globalization. The so-called “Global Financial Crisis” (GFC) has shook the traditional pillars of the capitalist system. In countries where the neo-liberal economic model held away, there has been unusual tax-payer support to prop up financial institutions. There have been various stimulus packages introduced by governments to help businesses struggling to survive. These tumultuous times call into question the normative practices of the way we do things as being merely but one, albeit imperfect, way or model. It calls into question the values and practices associated with capitalism and its financial and management practices that have uncritically been accepted as gospel truth.

Before the GFC and before The Crisis of Democracy, there was a crisis of capitalism. One of the greatest critics of capitalism was ironically one of its most revered theorists, namely Joseph Schumpeter, who posed the question “Can capitalism survive?” and then immediately suggested an answer of: “No, I do not think it can”. Schumpeter saw a weakness in the system with its over-reliance upon one type of rationality over another: instrumental over affiliative reasoning. He saw a dominance of the rational and positivist epistemology at the expense of the value-based reasoning derived from the Greek philosophers. This is what Plato warned of when material rationality took over from substantive rationality.

What Schumpeter warned of was an inherent tension in economic systems where a dominance of a material and technocratic rationality can distort good decision making: “where income is distributed by two totally different principles – energy, intelligence, skills and luck on the one hand, the brute claims of ownership on the other” (Heilbroner, 1977, p. 86). The problem with instrumental rationality for Schumpeter was the lack of critical awareness policy makers or managers, who assumed the normative (or Western) approach of business was the only way.

In fact, there are many cultural values and ideological factors influence decision making. This edition of the Asia Pacific Journal of Business Administration collates a range of papers on business in Japan, China, India, Korea, New Zealand and Thailand. It is an eclectic mix of studies on alternative models of business from the usual western European or American mindset. Culture defines our way of doing business. In the first paper by Dev Raj Adhikari and Katsuhiko Hirasawa “Emerging scenario of Japanese corporate management”, they outline the history that has shaped Japanese management practices. There is a philosophical and ideological framework that shapes the behaviour in how Japanese companies manage people and implement strategies. The second paper of Soonhee Kim and Hyangsoo Lee “Factors affecting employee knowledge acquisition and application capabilities” investigates a south Korean example of how effective knowledge management is linked to clear strategies, good communication and supportive management. The third paper from Diego Quer, Enrique Claver and Laura Rienda “Doing business in China and India: a comparative approach”, they investigate the hard and soft dimensions of business in each country. There is the (hard) political and legislative domain, with consequent public and private interface; and there are the (soft) philosophical and cultural dimensions that pervade all aspects of business. Both of these areas act to shape the pragmatics of how business operates, in ways quite different from Western notions of capitalism.

The fourth paper from Vivienne Hunt and Erling Rasmussen “Patterns and motivations of successful women pursuing their careers in New Zealand call centres”, they investigates the link between career paths and call centre employment for women. Call centres are increasingly being opening in India, China and the Philippines, and a study on the career opportunities for women in this industry are relevant to the Asia Pacific region. Hunt’s findings are divergent from other studies and she reports there are limited prospects for women in this industry. The fifth paper by Yingyot Chiaravutthi “Brand valuation of ICT products: the case of Thailand” reports on Thai brand perception and the influence on customer purchasing choices.

In each culture, there is a system of ideas and beliefs that define the culture that shapes behaviour in business. Capitalism is in reality a diverse mix of nuances and ideas that are political and economic and social in nature. There is no one monolithic normative view of how business operates. The papers in this edition provide diversity in the business of business. In Asia, an alternative form of rationality is evident, and not in any way less competitive, but distinctly different from the instrumental form that Schumpeter warned about. Perhaps the GFC means that a broader array of capitalisms is already emerging?

Peter Steane, Yvon Dufour