Ethical wealth creation key to India's prosperity
Malpractices like profiteering and crony capitalism can create money for specific entities but in the long run hampers the economy and the totality of assets in a society
In place to support the mission of ethical wealth creation. Laws to counter fraud, information asymmetry and a host of other troubles which burden public trust have to be enacted. Simultaneously, the government must work in tandem with all players in the economy to ensure optimal and transparent utilization of the country's resources and connections
Wealth creation continues to be a chief concern across economies. Yet, there happens to be a valley between the importance accorded to it and the way it is popularly understood. Wealth creation is not the same as making money and has to be evaluated from cultural and ethical standpoints. As economist Georges Enderle notes,
"Making money" can be destroying wealth while creating wealth can be losing money.
A thorough understanding of wealth creation enables us to sharpen our economic critique of fashionable and short-sighted management recipes and to bring the power of ethics to bear where it matters most."
Using Enderle's ideas, the concept of wealth is tremendously capacious. The wealth of a nation is defined as the total amount of economically relevant private and public assets including physical, financial, human, and social capital. Consequently, the creation of wealth includes the production of public as well as private assets and has a distributive dimension, concerning allocation for consumption and investment. Wealth is primarily a stock, or an economically relevant quantity at a certain point in time, but, in a broader sense, it also includes flows i.e. increasing or decreasing quantities over a certain period of time. Wealth creation is thus a dynamic process which transcends the concept of money.
Malpractices like profiteering and crony capitalism can thus create money for specific entities but hamper the economy and the totality of assets in a society. Ethical wealth creation, therefore, is indeed the way to go when it comes to enhancing a nation's prosperity. Chief Economic Advisor Krishnamurthy Subramanian, earlier this year said that India should focus on ethical wealth creation, which is already a part of its DNA. India's Economic Survey documents that ideas of wealth creation are rooted in India's rich illustrious traditions. India has been a dominant economic power globally for more than three-fourths of the known economic history and such dominance manifests by design, not by happenstance, since philosophies of wealth are as old as the treatises of Kautilya and Thiruvalluvar.
In terms of ethical wealth creation, national growth can be achieved when we unpack what needs to be created. Good wealth consists of assets that are created, distributed and used in a manner that respects human dignity and promotes the common good, thus leading to strides in terms of well-being. Ethical wealth creation thus encompasses reward for sustainable and fair business practices, value creation for the community and the fostering of a legacy acceptable to all.
Good wealth is an antidote to poverty and allows for self-reliance, independence and job creation. When profiteering and malpractices are done away with, even as individuals create wealth, they become empowered to enable others to create wealth. Augmenting your asset base enables you to create employment and income opportunities for others through ways of collaboration. This is where India can take massive strides.
Think of the grassroots economy for instance. If a grassroots innovator acquires wealth and material success, the community itself earns new avenues for financial progress. To consider the example of Arunachalam Muruganantham from Coimbatore, popularly known as Padman, who invented low-cost sanitary pad-making machines, the idea of wealth creating wealth finds corroboration. The machine's widespread success led to jobs and incomes for numerous people, including women and entrepreneurs who are part of the production and distribution process. Simultaneously, the social impact of this wealth is such that through the sale of these affordable pads, countless women were enabled to and pursue their ways to earn livelihoods during menstruation. The wealth created here is a prime example of good wealth.
Apart from empowering local innovators and entrepreneurs, strategies and legislations have to be in place to support the mission of ethical wealth creation. Laws to counter fraud, information asymmetry and a host of other troubles which burden public trust have to be enacted. Simultaneously, the government must work in tandem with all players in the economy to ensure optimal and transparent utilization of the country's resources and connections. Finally, greater awareness has to be spread about ideas around ethics, wealth, entrepreneurship and trust for proactive participation in the process of wealth generation from all ends.
It can be safely remarked that a transparent, sustainable and value-oriented approach to creating wealth benefits everyone in the longer run. To this end, India with its communitarian ethos has gargantuan potential to be exemplary. We must ensure that this potential is harnessed to the brim, and the wealth we create, endows our nation with value and socioeconomic certainties.
(The author is Chief Impact Officer at Recykal Foundation)