Introduction
In line with Mahatma Gandhi’s Swadeshi movement in India, the Communes in China, and the Kibbutzim in Israel, as opposed to the calculated economies of scale of steel and cotton mills in England, E. F. Schumacher (1973) “intoned” Small Is Beautiful: A Study of Economics as if People Mattered . Just about a decade later, the first Grameen Bank was formally established in Bangladesh. Three plus decades past Schumacher, C. K. Prahalad (2004) published The Fortune at the Bottom of the Pyramid . There is a secure connection among Schumacher, Yunus, and Prahalad : Needs of the less fortunate at the corporate and public levels must urgently be addressed. This sequel builds upon these connections to suggest a business (and economic) management model for the future of global society, as if people mattered.
The Background
The production and processes in our contemporary mega multinational corporations are managed by the corporate elites. They are backed by automated systems to create business and industrial behemoths of the Amazon, Exon, and the Apple variety. In this scheme of things Schumacher’s Small Is Beautiful would be considered out of place and irrelevant. But how far such miracles of modernization go to serve the less fortunate of the world? I suggest, not very far in either the rich or the poor worlds.
The Problem: Greed and Human Needs
Mahatma Gandhi, the architect of India’s freedom, said: “There is enough for everyone’s needs but not enough for everyone’s greed.” Despite the production of “plenty for all” and reduction of poverty for some, the United Nations succeeding Millennium Development Programs report “the number of people living in extreme poverty globally remaining unacceptably high.” World Bank estimates 10–15%, approximately one and half billion of the world’s population, still living on less than US$1.90 a day, largely but not exclusively in 50 Sub-Saharan African countries. Vast subsistence depravity is also found even in the developing countries’ two superpowers, the People’s Republic of China (PRC) and India.
Poverty and Inequality in the PRC
Chairman Mao died in 1976, and with him died his Great Proletarian Cultural Revolution (PCR). Despite its ravages, the PCR was launched to spread poverty evenly in an otherwise highly uneven pre-Communist feudal China. The overall political and economic authority in the early years of Communist China had remained highly centralized, like it remains even now. But the ideal and the initial approach during the PCR was to moot and help manage small and decentralized production and service systems within some 50,000 People’s Communes. That decentralized economic management edifice began to crumble in less than quarter of a century, due largely to the paroxysms within the party that had created it.
Following Mao’s death in 1976, the general command in China passed to the reformist Deng Xiaoping and the launching of his (then) famous Four Modernizations—of agriculture, industry, national defense, and science and technology. What is interesting in this context was the emphasis on “learning from others” for each of the Four Modernizations. In one form or another, the emphasis on learning from others (sometime even by stealing from others) aided and abetted the emergence in China of large enterprises of the Western, largely the American variety, for decades to come. Gone was the idyllic notion of decentralized, people-centered rural agricultural and industrial enterprises.
Leaving behind the “shared poverty” of the Peoples Communes three plus decades ago, China today is the second largest industrial nation next to the United States. It is ruled as much by mega multinational corporations as the first one. It is indeed an achievement unparalleled in human history. But it is also an achievement full of contradictions. Even though ruthlessly, Mao emphasized economic equality and narrowing of the rural-urban divide. Modern China is nothing but. Estimates of overall poverty reduction are certainly impressive—from approximately 40% to 10–15% during the past decades. But that leaves millions of Chinese still locked in perpetual poverty, most of them in China’s vast rural hinterland (Global issues: Poverty around the world, 2015).
What is even more significant is the extent of inequality between the settled and the newly arrived (from rural areas) residents of the polluted megacities like Beijing and Shanghai and, most prominently, between the urban and the rural Chinese. Sadly, therefore, Mao’s China today is among the most unequal nations in the world. The reasons for this rich and the poor and the rural and the urban divides in contemporary China are not far to seek. That is the price millions of the Chinese people are paying today for the assumptions that modern is better than the indigenous, big is better than the small.
The current Chinese economic engine is dominated by the likes of China Railway Construction Corp., SAIC Motors, Huawei Technologies, and one hundred other industrial behemoths on the Forbes 500 list. These are government-owned and centrally administered top-down management structures. Like the mega corporations anywhere, their primary objectives or the bottom lines remain constant: continuous expansion and profit maximization. In this scheme of things people who keep these behemoths running, the workers, they hardly matter. Even though hourly wages have improved over the past decade—from less than a dollar an hour to the current rate of approximately $3.60 per hour—they remain far below Western standards. At the same time, middle- and top-level managers are reported to earn 10–25 times more (Chinese Labor Watch, 2018).
Since China is still a developing country, this comparison would be unfair but for the working and living conditions experienced by vast numbers of industrial workers in the Chinese mega factories. These are rural migrants chased by poverty, unemployment, and lack of civic amenities in their ancestral villages. They leave behind aging parents with little children in their care. What awaits them at workplace is not very wholesome: long working hours—8 to 10 hours/day—living and sleeping in loathsome company-provided quarters, often 8–9 per room with bare minimum kitchen and toilet facilities (Chinese Labor Watch, 2018).
Beginning in the 1990s decade, China faced a critical choice between freedom and control, progress and decay. The crisis was precipitated by the Tiananmen Square protest of mid 1989 when thousands of young Chinese gathered to demand freedom from the suppressed political and economic needs. Fearing further escalation, the reformist Chairman Deng ordered forceful suppression. Thousands of people were reported to have been mowed down by military bullets. The world mourned. The Chinese people mourned. The Chinese government sat back and reflected. It was bad for its global image; bad for its role in the global economy and leadership. Something had to give.
The Chinese leadership devised a unique blend of freedom and controls for the Chinese economy and its people. One, they would let management at the enterprise-level innovate by any means possible in order to compete in the global economy, expand national wealth, and expand the Chinese global power through foreign domestic investment (FDI) —similar to the historic role played by the Western MNCs. Furthermore, they would let the people free to pursue material prosperity, but at the cost of political freedoms. Consequently, the PRC today is an odd mixture of capitalism and totalitarianism, of freedom and control. It seems by and large the Chinese people have come to accept the choice. And so there will not be another Tiananmen Square, at least not in the near future.
As noted above, Communist China today is among the most unequal societies in the world. After nearly four decades of promoting capitalistic management of mega corporations, “China’s income is divided almost as unequally as America’s.” According to a 2014 survey by Peking University’s Institute of Social Sciences, “income inequality in China has reached an alarming degree whereby 1% of the population owns 1/3rd of the national wealth.” Most of the rich in China live in the cities, the poor in the rural farming communities.
Consequently, I suggest reduction of poverty and inequality should be a major concern for the future of Chinese society by encouraging family-owned small- and medium-sized enterprises in rural and semi-rural communities.
The Case of India
Gandhiji extolled the virtue of “small is beautiful.” So did his many followers, notably the extraordinary but forgotten freedom fighter Jay Prakash Narayan. In their vision, the soul of Mother India resided in her “seven hundred thousand villages.” Her needs would be better served by homegrown, self-owned, and self-managed small- and medium-sized business and technology systems. That was the essence of their vision of the Swadeshi. There, Gandhi, JP, and Mao had come together. But only there!
The Swadeshi—or small is beautiful idea in the contemporary Indian economy and society—continues to thrive through millions of family-owned and -run dry-foods Kirana stores all across the subcontinent. They buy their merchandise—rice, lentils, spices, cooking oil, and so on—in bulk from large distributors and retail it to the large and small households on daily, weekly, or monthly installments. But that is not enough; for that leaves millions of other Indians without meaningful vocations or manageable means.
The Notion of “Big Is Better”
Gandhi ’s Western-educated political “heir” and independent India’s first prime minister and the architect of modern India, Jawaharlal Nehru saw things differently. In Nehru’s eloquent vision, India had missed the first scientific and industrial revolution. It had to catch up with the West (and the rest) through the second. The strategy, therefore, was to build and manage large industrial production and process systems through a mixture of borrowing, adaptation, and innovation. Some seven decades down the road, India today is the world’s fifth or the sixth largest (mixed-model) economy—not a mean achievement, warts and all.
Of particular interest in this discourse is the fact that modern India’s mega public and private enterprises are by and large centrally owned and controlled—the former exclusively by the central or state governments; the latter by the founding families.1 Management styles in both of these types of enterprises tend to be top heavy; even where automation and democratic practices, such as quality circles, are encouraged. Public sector managing directors are appointed by the government bureaucracies, sometimes regardless of their technical qualifications. Privately held companies are equally susceptible to such pulls and pressures emanating from within the families. Regardless, like all mega corporations anywhere, the bottom line for big companies in India too is: BIG PROFIT, not the welfare of people within or without.
Four social and economic consequences of big profit-maximizing enterprises are worth noting: breeding poverty, inequality, worker alienation, and environmental deterioration. In this essay I will deal largely with the first and second, tangentially with the third, and scantily with the fourth within the contemporary Indian society.
According to the World Bank (2016 report), “India has been able to lift significant percentage of its population out of poverty but many still live in it.” Poverty estimates, particularly in rural areas of a vast country of over a billion people, pose significant problems. Nonetheless, 40–50% of the population is estimated to live on less than $3.00/day. Twelve percent—about 170–175 million are living on $1.90/day. According to these estimates, a third of all Indians are undoubtedly poor (Bhalla, 2019). But poverty generally escapes the eyes of the affluent Indians. A small personal incident may be instructive here. Second time back in India after an absence of five years in the United States, I mentioned continuing poverty in the country to a nationally renowned corporate consultant at the Administrative Staff College of India. His response still rings in my ears. He said categorically, “There is no poverty in India anymore.” That was the middle of 1973.
This takes me to the age-old dictum: perception is reality. Like the selective invisibility of poverty, the wealth gap in India too may not be seen or experienced by many Indians. But actually, India...