Infosys founder NR Narayana Murthy created wealth through capitalism and prudently distributed it to his people as an exemplar of socialism. He showed that it is possible to build a business empire with socialist values
The poster boy of Indian entrepreneurs of the 21st century, NR Narayana Murthy, is back in business at Infosys — the third biggest Indian tech firm — with a renewed mission to reverse the slide that had happened in his absence. Of course the economic slowdown had its own role to play, but the Infosys slide has been mainly engineered by a rising attrition rate, probably because of eroding values of employee welfare; values that were initially laid down by Mr Murthy himself.
The catchword of ‘employees first’ resonating with equal importance to ‘customers first’ was pioneered in India by Infosys, not just as a business strategy to foster higher revenues but also higher happiness levels of its workers. You can call it altruism, but despite some new-age philosophies preaching against this construct, it is better than the ‘me only’ capitalist doctrines. Even the heartland of United States that was built on the ideals of ‘survival of the fittest’ and showed little sympathy for those who couldn’t make it, has been eventually forced to acknowledge the pain, frustration and miseries of the weak as was evidenced through the Occupy Wall Street campaign and President Barack Obama’s second term.
Mr Obama is often castigated by the Conservatives and media for being a socialist, and hence labelled as weak — a typically stereotyped capitalistic prophecy — only to find out that the overwhelming middle-class voters are behind him, despite his belonging to a racial minority. That’s levelling scores of socialism with capitalism, which many thought is indispensable. Without any doubt, capitalism forms the backbone of almost any economy, and centrally-controlled Government planning or equal wage distribution based on principles of communism alone cannot take a country far and on the path of being economically prosperous. But an equitable distribution of wealth is as much important in an economy as ‘wealth creation’ per se is.
Mr Murthy understood this perfectly, an understanding that set the standard for employee stock ownership plans in Infosys. He distributed Rs 50,000 crore among his employees and made all of them shareholders of Infosys. Even when he founded Infosys with his and his wife’s savings, he made his top employees top shareholders of Infosys, making many multi-millionaires. That’s socialism at its best — upholding dignity and ownership from the topmost to the lowermost in a flat employee structure. But that doesn’t mean he did not pursue capitalism — Mr Murthy created wealth through capitalism and prudently distributed it to his people as an exemplar of socialism. His motto of following capitalism in his mind and socialism in his heart was thus fulfilled. Truly, this set the pattern for many others in similar businesses. Indian entrepreneurs, at large, now follow his exemplary principles as Mr Murthy showed that it is possible to build a business empire with socialist values.
If it can be done at the micro-level of a firm, is it impossible to do the same at the macro-level of a countryIJ Although the picture of an economy is more complex than that of a firm, clusters of firms do make an industry, clusters of industries do make a sector and sectors do make an economy. Countries like China, Brazil or even Japan are live examples of more or less successful economies based on the capitalist model but with a socialist face.
And that is where India made a mess of it. After liberalisation in 1991, India’s economic policies attempted to mimic those in Western economies and thus wholeheartedly were capitalist in nature. Even though factors like labour laws, tax breaks of primary sectors, farmers subsidies et al still have the socialist bend, our focus has still been completely redirected towards wealth creation at the expense of the interests of the labour class and farmers. Consequently, the primary and secondary sectors have been largely neglected, leading to a lopsided growth trajectory. The divide between India and Bharat hasn’t been more conspicuous, with a rapid flux of rural migrants flocking into the streets of the metropolises, forced to live in the most inhuman conditions to make their living.
The question remains: Why are people of hinterlands forced to migrate in the first placeIJ Even in capitalist states like the United States, the geographical distribution of wealth is much better than is the case in India. The Human Development Report brought out by the Indian Planning Commission (in the year 2011) admitted that Indian wealth distribution is highly skewed, contributing to an ever increasing gap between the rich and poor.
India’s empathy deficit on welfare of the masses has been a major hurdle to its economic progress. It doesn’t, however, take away windfalls of economic growth that lifted as many as 200 million out of the poverty rut in the last two decades and created a landscape of neo-middle class that has been a potent engine for our march forward. Still, poverty is relative and the increasing gap between the affluent and underprivileged is bound to create an undercurrent of resentment and deep-down frustration in India’s socio-economic paradigm.
A soothing effect of an evenhanded wealth, income and growth spread — a la the benchmark of Infosys — can leverage long-term sustainability and accountability of our progress graph. As the vision in Infosys percolated from the top, so should our Prime Minister roll down a humane economic model and breed a culture that is just and compassionate. Mr Murthy ensured that biased and partial appraisals of his employees were checked at all cost.
As ups and downs are part of life, the under-performers in our society should be given a fair chance to redeem themselves. India’s socio-economic mores should inculcate similar values and the drive has to come from the top. Our main political parties must realise the importance of India’s social well-being alongside its economic advancement.
(The author is a management guru and honorary director of IIPM Think Tank)