Industrialization—Capitalism and Communism

The industrial revolution had started from around 18th century up to 19th century.   This revolution has changed the socioeconomic condition of the whole world, especially Europe and North America.  Then it spread to all over the world.  In the Industrial revolution, Adam Smith, Karl Marx and F.W. Taylor have numerous influences.

In the book “wealth of nation”, Adam Smith refurnished the idea division of labor (Plato, David Hume already talked about Division of Labor) and it represents mainly qualitative increase in productivity. This idea relates primarily to the specialization of the labor force.  It emphasized on three key points as how to increase the quantity of work,

1.Incease the dexterity of each and every workman: – The division of labor reduces    every man’s work to one simple operation, and by making this operation the sole employment of his life and it will increase the dexterity of the workman significantly.

2. How to save time which is commonly lost in passing from one work to another: – “Adam Smith suggests that it is impossible to pass very quickly from one kind of work to another that is carried on in a different place, and with quite different tools. A country weaver, who cultivates a small farm, must lose a good deal of time in passing from his loom to his field, and from the field to his loom. When the two trades can be carried on in the same workhouse, the loss of time is no doubt much less.” [Smith, A. (n.d.). The Wealth of Nation (Glasgow ed., pp. 17-19). N.p.: Oxford University press.]

3. Adam Smith saw the importance of machines and that’s why he said Invention of new machines would be more effective: – According to Smith, the use of the machines in manufactures made the work more efficient.

F.W. Taylor is regarded as the father of scientific management.  The main aim of the scientific management was to improve economic efficiencies in the industry.  This was one of the revolutionary thought in the industrial revolution.  In the 1st chapter of the book The Principles of Scientific Management, F.W. Taylor found that there are three reasons why workers are inefficient and the reasons are inefficient rule of thumb methods, Defective management systems and wrong belief that a material increase in the output of each man or each machine in the trade would throw people out of work.  In the 2nd chapter F.W. Taylor explained how to solve those problems through his principles of scientific management. They are as follows —

1. Replace rule of thumb work methods with scientific study methods.

2. Scientifically select and then train, teach, and develop the workman.

3. Provide detailed instruction and supervision of each worker.

4. Divide the work between managers and workers, managers will apply scientific management principles to planning the work and the workers actually perform the tasks.

Karl Marx’s reaction on industrial revolution and criticize the concept of capitalism. He believed that alienation is a systematic result of capitalism and in the long run, it won’t create harmony in the society. Karl Marx’s identified there were four types of social alienation of labor under capitalism — they are

1. Alienation of the worker from the work he produces, from the product of his labor: – The product doesn’t belong to the workers.  The capitalist class determined the product’s design and the manner in which it is produced.  Both intellectual and creative workers will be under the control of capitalist.

2. Alienation of the worker from working, from the act of producing itself. Labor is forced and doesn’t satisfy worker.  According to Marx, one’s species being is fulfilled when it maintains control over the subject of its labor by the ability to determine how it shall be used directly or exchanged for something else. In Capitalism economy, capitalist removes the right of the worker to exercise control over the value or effects of his labor.

3. Alienation of the worker from himself: – Industrialization gave capitalist more power and eventually progress to a state of near-total mechanization and automation of productive processes. During this process, the newly dominant Bourgeoisie Capitalist class would exploit the Industrial working class.

4. Alienation of the worker from other workers or producers. Capitalism reduces labor to a commercial commodity to be traded on the market, rather than a social relationship between people involved in a common effort for survival or betterment.

[According to Karl Marx species-being’ or ‘species-essence’ means this is that humans are capable of making or shaping their own nature to some extent.]

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Greed and Ethics in Business

By Pradyumna Kalita

” Earth provides enough to satisfy every man’s need, but not every man’s greed.” ———– Mahatma Gandhi.

I am thinking how we can regain the economic confidence among people after devastating economic crisis, which has left millions stranded without job. Is this the failure of capitalism or where it went wrong?

During the recent economic crisis, even the staunch advocates of free market have become cautious and started to see virtue in regulation of markets. Governments around the world are talking about installing business ethics among business leaders so that another Bernie Madoff, Kenneth Lay or Richard Fuld cannot betray the trust to loot. But my question is, only talking about business morals enough to save us from another crisis? How much worth it the implementation of Business Ethics in the Master of Business Administration course?

Business values, ethics and morality are not new to business. Adam Smith (1723-1790) said “Markets could not flourish without a strong underlying moral culture, animated by empathy and fellow-feeling, by our ability to understand our common bond as human beings and to recognize the needs of others.” I think it is time we needed to internalize Adam Smith’s thought and applied to everyday business. If we don’t work on it today, we will face not only economic crisis but also social value crisis tomorrow. Even Daniel Defoe’s “The Complete English Tradesman” advocates how a businessman should behave.  But is it just on the books or we can follow this in our day-to-day business life. No one can deny that business is not a part of society.  I would argue that business’s not only concern about their shareholders but have responsibility towards stakeholders.  The corporate social responsibility is nothing but the responsibility of their executives.  Corporate is an intangible object, so only the people who work for the corporate should be responsible towards society.  A corporate executives primary concern is to earn profit but it doesn’t mean that they will ignore society.  Earn profit in a responsible way.  Here responsible way means doing the business without severely hurting nature, disregard social value system etc.    Recent economic crisis is the reflection of the decadence of our social value system. I understand that business leaders need to be reasonably aggressive in today’s business world but it doesn’t mean that everyone should suffer because of irresponsibility of a few. In today’s global interdependence, everyone’s fate is connected and an act of unethical business deal in New York can shook Hong Kong. Government has the primary duty to look into this. Government should control the radical capitalists or we will see more Enron, HIH insurance, Worldcom, Satyam Computers and Lehman Brothers and so on. Business leaders should control their emotions and play vital role in managing ethics. I am sure that if we don’t start working on the improvement of value system in today’s economy, another catastrophe is not far away. I do hope that we will learn from this crisis.  I think a business is not only responsible for their shareholders but also responsible for the stakeholders.

We have missed out some key lessons in our education system. By and large, our education system is not driven by the respect for basic human values and civic sense but by the goal of creating leagues of work force for the corporations; a work force suffering from the moral bankruptcy; a work force who cares about financial values without much moral engagements.  There is urgent need to revamp the education system by introducing subjects which can teach us how to control the evil practices in the name of free market. We need to introduce the moral education at the primary school level in order to install the sense of ethical responsibilities. It is very hard to change one’s moral character and thought-process at the age of 25 (average age of MBA student). The outcome of the recent idea of taking oath by the MBA students in the business-schools is still in the mist. Even great psychologist Erick Erickson’s theory of social development explains that the social responsibility of a person develops at the age of 12-19 years (Adolescence stage).  In this stage a person tries to create his own ideology by asking some question like “Who am I or where am I going?”  Thus, it is important to design a structured moral education framework and teach the children who are free from prejudices. I am inspired by the story of “Full of Cup” of Zen Philosophy, which will be a good story to vitalize currently ongoing B-school reform (Story is explained below).

Lao Tzu wrote 2,500 years ago: ‘There is no calamity greater than lavish desires, no greater guilt than discontentment and no greater disaster than greed.’

The Zen story Empty cup mind

There is a story about an old Japanese Zen master who was engaged in conversation with a prospective student. The student chatted on and on, full of his own ideas and ambitions. He described the master everything he knew about Zen, trying to impress the old man with his great knowledge. The master sat and listened patiently for a while, then suggested that they should take some tea. The student held out his cup dutifully and the master began to pour. The tea came to the top of the cup, but still the master kept on pouring.

The tea overflowed but still the master kept pouring. The student, unable to contain himself, pointed out that no more tea would go in the cup. The master looked up and said “Like this cup you are full of desires and ambitions. How can I show you Zen unless you first empty your cup?”

(From “Myths & Legends of the Martial Arts” by Peter Lewis, published by Prion, Copyright 1998)


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