FP Article 31
(To learn what is needed to boost
your personal productivity to earn more per unit
by Rajen Devadason
Capitalism and communism stand at opposite
poles. Their essential difference is this: The
communist, seeing the rich man and his fine
home, says: "No man should have so much." The
capitalist, seeing the same thing, says: "All
men should have as much."
When the largest financial
institutions in the world began to
unravel in the watershed year of
2008, intelligent observers rightly
insisted that there was something
inherently wrong with banks enjoying
capitalism on the way up and
socialism on the way down!
So, is capitalism
I don't think so.
What I do believe is on the verge of
justified extinction is rapacious
behaviour by high-ranking,
A common theme in the news reports and
subsequent in-depth analyses of the big American
investment banks that were at the heart of the
US subprime fiasco was the unfettered greed of
overpaid executives who were paid in accordance
with short-term performance. The flaw in such a
remuneration system is now clear: If an
executive is not a shareholder but a mere hired
hand, then he - all the high
profile culprits of that era were
testosterone-laden men - is going to do whatever
is necessary to deliver the required short-term
performance numbers needed to justify obscenely
large bonuses. Genuine shareholders, owners of
the business, were often blinded by the opaque
corporate-speak of these smart employees and so
went along with the flow. Big mistake...
This is an article on whether we've
seen the death of capitalism. I hope
you enjoy reading it. But if it isn't what
you're looking for, you're welcome
to search for something that better meets
your needs. Thank you for allowing
me to serve you.
It must never be forgotten that
shareholders of a company are its owners. This
means the employees, from the CEO or MD all the
way down to the janitors and tea ladies, work
for the shareholders.
In true capitalism, shareholders
who are experienced and wise know that it is
most profitable over the long haul to take care
of the goose that lays the golden eggs. In that
childhood story, the greedy poultry farmer
decided he wanted ALL the golden eggs at once!
He killed his magic goose, sliced it open and
found only bloody innards without a trace of
Commonsense teaches us patience
is a virtue. Furthermore, the law of the harvest
tells us that seed must first be planted and its
growth nurtured for a full season before a
profitable crop may be gathered.
We know this intuitively.
So, why did the heads of huge
corporations, mainly in the West, ignore these
truths when they created toxic weapons of
financial mass destruction?
They were blinded by short-term
greed, which was exacerbated by a lazy lack of
oversight by the true owners of the affected
In Max Weber's classic book
The Protestant Ethic and The Spirit of
Capitalism, which was based upon Weber's
German articles written in 1904 and 1905, the
eminent sociologist and political economist
noted: "Unlimited greed for gain is not in the
least identical with capitalism, and is still
less its spirit. Capitalism may even be
identical with the restraint, or at least a
rational tempering, of this irrational impulse."
For all its shortcomings, most
notable of which is a tendency to widen the
wealth gap between the poorest 20% of society
and the richest 20%, capitalism is still the
most dynamic economic system ever discovered by
man. It is also the most successful in not
merely enriching capitalists but in raising the
general standard of living of all humanity.
Today, it is easy to take for
granted the fast online connections,
instantaneous satellite-linked phone calls,
clean water, safe air travel and powerful
antibiotics that are integral parts of our
lives. None of these advances would have been
accomplished as effectively outside a capitalist
defined economic system.
In the aftermath of the subprime
crisis, it has become fashionable to expect BIG
GOVERNMENT to come to the rescue. I fear,
however, that the ongoing printing of fiat
currency, which is backed not by gold or silver
but by nothing more than supposed confidence in
the government doing the printing, will soon
backfire on us all and create runaway inflation.
The only true solution, I
believe, is to return to a purer, truer form of
capitalism. One that is focused on earning an
ethical, possibly slower growing profit over a
More than a century ago, Weber
made this observation:
"But capitalism is identical with
the pursuit of profit, by means of continuous,
rational, capitalistic enterprise."
Profit is good. Make no mistake
about it. What is bad, indeed downright evil, is
If each of us learns this lesson,
correctly, it might turn out that instead of
facing economic oblivion, we actually stand
today at the cusp of a brand new era; one in
which the worst excesses of the past will be
suppressed, at least for a little while, so that
the best form of capitalism can be allowed to do
its healing work.
As capitalism does that, there is
a great chance that each of us will have the
opportunity to participate in this recovery to
While I don't have all the
answers, I suspect the self-prospering solution
all of us are looking for hinges upon more
capitalism of the correct sort being integrated
into our lives.
To succeed in the new arena ahead
of us, I urge you to get back to basics and do 4
1. Manage your cash flow better;
2. Save more money;
3. Invest more wisely;
4. Aim to build up multiple
sources of income into your life.
To help you with each of those 4
vital goals, here are 4 resource articles I have
written on those respective issues:
What is a Cash Flow
How to Start Saving Money?
What is Investing?
Create Many Income Streams
The simplest definition of
capitalism I can think of is using your capital
to create current and future wealth.
You build up your store of
capital by not spending everything you earn. At
this point of history, Asians are doing a better
job of that than those in the West.
But regardless of where you live,
East or West, North or South, capitalism is not
However, I'm convinced that any
country, family or individual that abandons the
most ethical form of capitalism will one day,
soon, face economic extinction. As B. C. Forbes
wrote: "A nation's economic salvation does not
lie in the amount of money its rich inhabitants
can squander recklessly. A nation's economic
salvation lies in the amount of money its
inhabitants can save and invest after providing
themselves with all the necessities and all the
reasonable comforts of life."
What will you do with this
(If you live in Malaysia AND
believe you might require my help in the realm of financial
planning and retirement planning, you're welcome
more about me
© Rajen Devadason