Restructuring Capitalism

The following was first published as an op-ed by Sramana Mitra for Xconomy:

In the fading months of 2011, we find ourselves in an uncertain world.

On the one hand, America is still reeling from the 2008 financial crisis, and the nation’s faith in free-market capitalism as its guiding principle has been shaken to the core.

On the other hand, Europe is reeling under the burdens of socialism and welfare economics, and the economies of entire countries no longer seem viable.

The emerging markets are growing, but the methods used are complex. China is practicing state-run centralized capitalism that is heavily controlled by policies and bolstered by subsidies, by no means a free market. India, a chaotic democracy, is caught somewhere in between.

The time has come for us to ask the question: Is capitalism still the right answer for the future of our world?

One of the fundamental flaws of capitalism that has collapsed the system is unbridled speculation. If you believe that capital is at the heart of capitalism, then speculators are at the heart of capitalism.

As it happens, the speculators have hijacked the system...

The system needs to be re-engineered. In effect, the entrepreneurs need to hijack it back from the speculators and marginalize their ability to create destruction.

How do we do it? What is a reasonable framework for capitalism 2.0?

For me, the most logical next step would be to democratize capitalism in the same way that Henry Ford democratized the personal automobile and Steve Jobs and Bill Gates democratized personal computing. But we need to focus on democratizing entrepreneurship, not speculation. Speculation has already been democratized to disastrous ends, as we saw in the dotcom crash at the beginning of the millennium.

Another problem is that entrepreneurship remains the province of the elite. There is tremendously high “infant entrepreneur mortality” owing to a lack of education, guidance, and resources...

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