GLOBAL RECESSION: AN OBJECTIVE EPILOGUE Presented at: RICON 2009 RAI BUSINESS SCHOOL International conference on CRYSTAL B...
AYN RAND <ul><li>Nathaniel Branden a student of Ayn Rand says in the book “Capitalism: The Unknown Ideal” by Ayn Rand </li...
AYN RAND <ul><li>&quot;Today, people are beginning to understand that the government's account is overdrawn, that a piece ...
WHICH WAY DO WE GO ? KEYNES V/s ADAM SMITH <ul><li>PUMP PRIMING V/s INVISIBLE HAND </li></ul><ul><li>Intervention V/s Non-...
Joseph E. Stiglitz and Y.V. Reddy <ul><li>IDEOLOGY  OR  </li></ul><ul><li>In the battle of ideologies, what is often forgo...
<ul><li>THE CRISIS </li></ul><ul><li>What one often ignores about the propagators of the philosophy of free economy is, it...
DECOUPLING THEORY HAS FAILED <ul><li>India in the past years has globalized rapidly and integrated with the world through ...
“   Small and Medium Enterprises drive industrial growth and development. Let us have a look at the Indian SME sector: <ul...
How does the Indian business community respond to this crisis? <ul><li>Solution to the current  </li></ul><ul><li>economic...
CREATIVE DISRUPTION-Jean Marie Dru <ul><li>Disruption is breaking away from the conventional practices, challenging the ru...
INSIDE THE BOX THINKING <ul><li>Box 1/VISHNU THE PRESERVER: Managing the present  </li></ul><ul><li>Box 2/ SHIVA THE DESTR...
  Capitalism <ul><li>Ayn Rand refers to the rational mind in her book ‘Capitalism: The Unknown Ideal’, is also about the i...
Path for the Indian companies <ul><li>BREAKTHROUGH MANAGEMENT </li></ul><ul><li>Prof. Shoji Shiba </li></ul><ul><li>DISCOV...
How could the government help? <ul><li>REMOVE THE BOTTLENECKS </li></ul><ul><li>TRIPLE HELIX MODEL </li></ul>
<ul><li>CONCLUSION: </li></ul><ul><li>Decoupling theory has failed and the developing world is no longer immune to the eco...
<ul><li>We need concerted and combined efforts of the business, university and government to apply innovation and make it ...
BOOMING AHEAD WITH OPTIMISM &quot;But we do have a plan. We're working on it. And, I do think that we will get it stabiliz...
References: <ul><li>Capitalism: An Unknown Ideal- Ayn Rand </li></ul><ul><li>The Virtue of Selfishness- Ayn Rand </li></ul...
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  1. 1. GLOBAL RECESSION: AN OBJECTIVE EPILOGUE Presented at: RICON 2009 RAI BUSINESS SCHOOL International conference on CRYSTAL BALL GAZING: Management Practices Beyond Recession 7 th -8 th August, 2009 , Presented by:- Rashmi Malapur, Faculty, International Business School, Mumbai
  2. 2. AYN RAND <ul><li>Nathaniel Branden a student of Ayn Rand says in the book “Capitalism: The Unknown Ideal” by Ayn Rand </li></ul><ul><li>“ As to depression and mass unemployment, they are not caused by the free market, but by government interferences into the economy”. </li></ul>
  3. 3. AYN RAND <ul><li>&quot;Today, people are beginning to understand that the government's account is overdrawn, that a piece of paper is not the equivalent of a gold coin, or an automobile, or a loaf of bread—and that if you attempt to falsify monetary values, you do not achieve abundance, you merely debase the currency and go bankrupt.&quot; —Ayn Rand, &quot;Moral Inflation,&quot; The Ayn Rand Letter , vol. 3, no. 12, p. 1 </li></ul>&quot;Today, people are beginning to understand that the government's account is overdrawn, that a piece of paper is not the equivalent of a gold coin, or an automobile, or a loaf of bread—and that if you attempt to falsify monetary values, you do not achieve abundance, you merely debase the currency and go bankrupt.&quot; — Ayn Rand, &quot;Moral Inflation,&quot; The Ayn Rand Letter , vol. 3, no. 12, p. 1
  4. 4. WHICH WAY DO WE GO ? KEYNES V/s ADAM SMITH <ul><li>PUMP PRIMING V/s INVISIBLE HAND </li></ul><ul><li>Intervention V/s Non- Intervention </li></ul>
  5. 5. Joseph E. Stiglitz and Y.V. Reddy <ul><li>IDEOLOGY OR </li></ul><ul><li>In the battle of ideologies, what is often forgotten is ‘common sense’. </li></ul><ul><li>Y.V. Reddy, former Governor of RBI mentioned to Joseph Stiglitz, American economist and Nobel Laureate , when the latter asked the method of managing the economy amidst the crisis. Y.V. Reddy answered, instead of getting enticed by complicated theories he relied on simple ‘common sense’. </li></ul>COMMON SENSE
  6. 6. <ul><li>THE CRISIS </li></ul><ul><li>What one often ignores about the propagators of the philosophy of free economy is, it is based on objectivism. </li></ul><ul><li>Objective decision making by individuals and bankers will regulate the economy and money supply. </li></ul><ul><li>But what we saw during the crisis was the result of interference of the Federal Reserve by lowering the interest rates persistently. </li></ul><ul><li>The Federal Reserve regulates the credit availability in the US economy. Banks were lending to borrowers with low creditworthiness and engaged in unscrupulous and risky investments. </li></ul>
  7. 7. DECOUPLING THEORY HAS FAILED <ul><li>India in the past years has globalized rapidly and integrated with the world through exports and imports. </li></ul><ul><li>Indian corporate have relied on external funding to a great extent, as external funds were cheaper. </li></ul><ul><li>Thus as India remains integrated to the world economy it continues to be hit by the crisis. </li></ul>
  8. 8. “ Small and Medium Enterprises drive industrial growth and development. Let us have a look at the Indian SME sector: <ul><li>  </li></ul><ul><li>13 million SME UNITS. </li></ul><ul><li>Employ 30 million people. </li></ul><ul><li>One million jobs per annum </li></ul><ul><li>Contribute 34% of exports </li></ul><ul><li>Contribute 40% of Industrial Output </li></ul><ul><li>Produce more than 8000 products </li></ul><ul><li>Thus plays a major role in industrial growth </li></ul><ul><li>SSI growth rate12.32%” </li></ul><ul><li>“ 7 th Global SME partnership Summit” </li></ul><ul><li> </li></ul><ul><li>SOURCE: http:// www.globalsmeexpo.com / </li></ul>
  9. 9. How does the Indian business community respond to this crisis? <ul><li>Solution to the current </li></ul><ul><li>economic crisis lies in </li></ul><ul><li>INNOVATION </li></ul><ul><li>Austrian economist Joseph Schumpeter’s idea of ‘creative destruction’ is an instrument used by entrepreneurs to sustain in the capitalist society. (Theory of economic analysis) </li></ul>
  10. 10. CREATIVE DISRUPTION-Jean Marie Dru <ul><li>Disruption is breaking away from the conventional practices, challenging the rules and coming up with something entirely new. </li></ul>
  11. 11. INSIDE THE BOX THINKING <ul><li>Box 1/VISHNU THE PRESERVER: Managing the present </li></ul><ul><li>Box 2/ SHIVA THE DESTROYER : Selectively abandoning the past </li></ul><ul><li>Box 3/ BRAMHA THE CREATOR : Creating the future </li></ul><ul><li>VIJAY GOVINDARAJAN </li></ul>
  12. 12. Capitalism <ul><li>Ayn Rand refers to the rational mind in her book ‘Capitalism: The Unknown Ideal’, is also about the innovators. She says, “It is from the work and the inviolate integrity of such minds- from the intransigent innovators- that all of mankind’s knowledge and achievements have come. It is to such minds that mankind owes its survival.” </li></ul><ul><li>This is the mind that will help us make use of the opportunity of the challenge posed to us by the crisis . </li></ul>
  13. 13. Path for the Indian companies <ul><li>BREAKTHROUGH MANAGEMENT </li></ul><ul><li>Prof. Shoji Shiba </li></ul><ul><li>DISCOVERING BLUE OCEAN </li></ul><ul><li>W. Chan. Kim and Renee Maurborgne </li></ul>
  14. 14. How could the government help? <ul><li>REMOVE THE BOTTLENECKS </li></ul><ul><li>TRIPLE HELIX MODEL </li></ul>
  15. 15. <ul><li>CONCLUSION: </li></ul><ul><li>Decoupling theory has failed and the developing world is no longer immune to the economic upheavals of the developed world. </li></ul><ul><li>But the developing world should set itself on the path of innovation to make use of the time which the developed world uses to battle with the crisis. </li></ul><ul><li>The time that the developed world engages itself in fighting the crisis, India can bring about a silent revolution. It needs to invest its resources to gear up for and match the capacities of the developed nations. </li></ul>
  16. 16. <ul><li>We need concerted and combined efforts of the business, university and government to apply innovation and make it marketable. </li></ul><ul><li>The solution lies, especially for developing nations in the Joseph Schumpeterian idea of “creative destruction ”. </li></ul><ul><li>Breakthrough management and disruptive innovation can transform the challenge into opportunity and make Indian economy competitive in due course of time. </li></ul>
  17. 17. BOOMING AHEAD WITH OPTIMISM &quot;But we do have a plan. We're working on it. And, I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year.“ -Ben Bernanke Federal Reserve Chairman <ul><li>THANK YOU </li></ul>
  18. 18. References: <ul><li>Capitalism: An Unknown Ideal- Ayn Rand </li></ul><ul><li>The Virtue of Selfishness- Ayn Rand </li></ul><ul><li>Times of India </li></ul><ul><li>Economic Times </li></ul><ul><li>Blue Ocean Strategy- W. Chan. Kim and Renee Maurborgne </li></ul><ul><li>http://www.livemint.com/2008/02/26230403/For-creative-disruption-try-c.html </li></ul>

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