The document discusses the evolution and challenges of capitalism, emphasizing the shift from profit maximization to a purpose-driven approach amidst economic recessions. It highlights critiques from renowned economists about the sustainability of current capitalism, especially regarding its ability to regulate itself and address issues like wealth disparity and environmental degradation. The concept of 'formative capitalism' is introduced as a potential new paradigm focused on purpose, people, and shared wealth, proposing a transformative approach to ensure lasting economic prosperity.

1. Article of The Month
Formative Capitalism for The New Capitalists
Capitalism - The System: question forward from the depth of
Did we all around the globe sit down the consumers’ cries, is Capitalism
together and decide to follow (current form) going to sustain at all?
Capitalism? Was Capitalism in the Paul Samuelson, the first American to
same form since beginning than now? win the Nobel Prize in Economic
In fact, it would be unrealistic to say Sciences, observed that “today we
that we decided to pick Capitalism. see how utterly mistaken was the
We just derived into it. And the Milton Friedman’s notion that a
concepts, forms and philosophy of market system can regulate itself.”
Capitalism evolved over time. Alan Greenspan-a disciple of
Capitalism, as we are aware, is an Friedman- blamed that a systemic
economy where resources and firms failure of “enlightened self-interest”
are privately owned in free markets, as the cause behind failure of the
though, this usually involves some market to be self regulated and then
government intervention to regulate he noted that “the whole intellectual
certain aspects of the economy and edifice” of financial economics
protect private property. Why did we “collapsed in the summer of [2008].”
derive into it? Because, Capitalism is Another Nobel Laureate- from
Free Market, with limited Columbia University, Joseph Stiglitz,
government intervention, in a free who predicted the 2008 crash in 2006
market, personal profit maximization - concluded that “the debate over
motivates people and lead them ‘market fundamentalism,’ the notion
taking risk and doing business. that unfettered markets, all by
Nobody fixes the prices here. It is themselves, can ensure economic
fixed by demand and supply. Firms’ prosperity and growth,” was “over.”
competitiveness leads to efficient And Treasury Secretary Tim Geithner
outcome. Thus advantages of has noted that tomorrow “capitalism
Capitalism draw a glossy picture of will be different.”
economic world named as Free
Market, which gives a feeling of ‘for Why did they mention all these
good, forever’. negatives about Capitalism, where it
is full of advantages? Well, the core of
Capitalism in Recession: the problem layers into the so called
Recent global financial recession and Capitalism is, profit maximization
the chemistry behind it as explained under almost no direct government
by different thinkers, analysts and control. When profit maximization is
economists worldwide, is putting a a race and the large firms of the
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2. Article of The Month
Formative Capitalism for The New Capitalists
industrial age are at the track, at the of Capitalism has now become one of
end of the day, what really matter, the most dread drawbacks. Gradually,
are profit, growth, and shareholder the firms started thinking that, profit
value, by any means. End result is, is the fundamental issue for which
fast depletion of natural resources, they should run, though it’s not.
devastating environment pollution, Profit is merely an effect, not a cause;
re-allocation of wealth among a reward, not the accomplishment.
employees and employers, sharing What’s the result? Most of the
drops with the bottoms, saving piled companies fail to craft a meaningful,
up for the tops. We welcomed and and sustainable philosophy (or
grew with Capitalism in the sense vision), that can help them define
that, it would prevail, fair wealth how they will create value, instead of
distribution based on productivity merely adding value and bringing out
and skill. What we expected out of so called new products in the name of
Capitalism and what we had! differentiation.
What we expected out of Capitalism Purpose - Profit Castling:
is that it would be a system that Thus the objective function of the
would serve the purpose of a firms became PROFIT instead of
sustainable and fair economic system, PURPOSE. When the castling between
regulated by market itself. In Profit & Purpose took place, every
contrast, we find until twentieth firm and employee had to look for
century, gradually there grew large immediate profit, sales target and
corporations from small firms that immediate benefit like promotion and
started influencing the regulatory bonus, which washed away the other
bodies and were so powerful that paradigms of Capitalism like:
could control or manipulate the sustainability and ethics of business,
market system. Moreover, from small contribution to economy and adding
firms to large corporations, all put and creating value for consumers’
“profit maximization” as their bottom lives. When this model ran for a
line. Thus the PURPOSE of capitalism while, profits started to be realized as
got cannibalized by Bottom Line fragile and meant to be too short-
(PROFIT). During Stone Age of termed. Many economists now call
Capitalism, it was conceived that, what as Fictional Profit.
incentives for productivity will bring
more reward for individuals and it will
motivate them. This basic assumption
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3. Article of The Month
Formative Capitalism for The New Capitalists
Discussion & Debates Going on… The New Form of Capitalism:
Financial and Economic magazines Formative Capitalism
and papers all over the world are How is then the New of Form of
discussing the issues of recession, Capitalism going to shape like? If we
expected recession in near future and recollect from the beginning
how to combat that. A recent scratch paragraph, we notice, one of the
from The Economist, “…..The major advantages of Capitalism was
drumbeat of negative news marches conceived to be “Less Control of
on. In August (2011), no new jobs Government over markets”. The New
were created in the US. In Europe, Capitalism is believed to start
negotiations between Greece and its changing its current hue from this
would-be rescuers have stalled, point. This article does not suggest
spooking already skittish markets. the conversion to a command
And new figures point to signs that economy neither does it support
the Eurozone’s economy is faltering. more control in the hands of
The International Monetary Fund Government. Instead, the current
(IMF) called on America and Europe procedure and methods of limited
to take immediate action to stimulate control by Government will call for
their sluggish economies, warning modification for greater information
that the global economy faces a freedom within markets. Another
serious downward spiral…..” Even the basic assumption of Capitalism is that
magazine (The Economist) is going to market players are “enlightened
convene The Buttonwood Gathering, about self-interest” which will be
bringing together leading thinkers, safeguard to market regulation by
practitioners and provocateurs in market itself. Alan Greenspan noted
economics and finance to tackle the that, this assumption is not viable. If
challenge of how to put America and we do further stretch the concept
Europe-and the global economy-on a said above “enlightened self-
more solid footing. Dr. Alan interest”: what it means, what’s the
Greenspan, Lawrence Summers from boundary spanning of the concept
Harvard, Austan Goolgbee, US and how is it going to be applied and
President’s Council of Economic conceived the firms at the market
Advisors are few of the thinks tanks places? The term “enlightened self-
attending the gathering (October interest”, would be interpreted as a
2011). radical transformation over the next
few decades and is expected to be
pied into some sub factors as follows:
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4. Article of The Month
Formative Capitalism for The New Capitalists
just seeking industrial age efficiency,
1. Purpose not Profit productivity, and effectiveness:
2. People not Product they’re taking a quantum leap beyond
3. Shared Wealth: for them based on “Thick Values.
Prosperity, not as a bone
to run
Adoption and deployment of the
above mentioned sub factors would ANM Farukh
not bring the conversion of Capitalism Head of R&D
in a day. It calls for rigorous practice Mutual Trust Bank Ltd.
and adoption by heart over long Bangladesh
period of time, gradually which will
develop a thick value of Formative
Capitalism. And this Thick Values
would be the core of the foundation Farukhrana@Gmail.Com
of 21st century economies, by means
of which, firms are expected to do
meaningful stuff that matters the
most, to people, society, and the
future.
Formative Capitalism:
Why would Formative Capitalism
would survive during recession and
depressions? And why should we
believe that to? The simplest reason
is: because the performance of
Formative Capitalists isn’t just
countercyclical, skyrocketing during
the downturn and then collapsing.
They build stronger economic
foundation, that underpin structural
outperformance, deeply rooted
superiority in 21st century terms-
because, Formative Capitalists aren’t
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