Asia can strive for ethical wealth creation

Beware hubris in Asian triumphalism, says Ho Kwon Ping in this speech delivered last Friday at the Pan IIT (Indian Institutes of Technology) Asia Pacific Conference.

Straits Times: Review | April 12, 2012
THE theme of this conference is entitled Reading The Signposts Of A Changing Landscape. For Asian triumphalists, this is easy: The words on all the signposts are big and clear, and point to a happy posterity.

I’m not so sure.

Not only is the wording on many signposts confused, but also many signposts themselves have not even been erected. And quite a few of them point towards dead-end solutions or quick-sand futures. My biggest fear is that in the rush towards the exuberant expectation that Asia’s time has finally come, we will fall victim to the biggest reason for failure in the history of the world: simple hubris.

The rise of Asia is not predetermined, just as the dominance of Western civilisation for the past few hundred years was not preordained. The rise of European imperialism and then American hegemony was not simply due to economic power backed by military might. It was underpinned by innovative, even revolutionary thinking about the primacy of the rule of law, the separation of church and state, the commitment to an empirical, scientific worldview, and all the institutions which brought about the modern state built on liberal democracy and market capitalism.

Much of the intellectual vigour which propelled the West to supremacy is now spent. In its place is frustration that the old order is not working, but with no clear vision as to what the new order should be.

So is it now Asia’s time to rise to the occasion and in the intellectual vacuum, offer new solutions to bankrupt thinking? Or are we not even capable of the necessary creative destruction of our own taboos and restrictive mindsets, which hobbled us for past centuries and which we need to cast off if we are to lead the future? How is our current economic growth matched by equally vigorous intellectual innovation?

Let us look at the regional landscape.

India for example has managed, despite numerous daunting challenges, to remain the world’s largest practising democracy. But the continuing clash and contradictions between tradition and modernity render Indian political and social relations almost dysfunctional. And while Indian pride in its scientific, artistic and business achievements is fully justified, the continuing inability to lift millions of people out of abject poverty remains a sobering and hopefully not insurmountable challenge.

China, the other great and ancient civilisation of Asia, is today slated to be the second most powerful economy in the world. Its government has, unlike India, lifted its teeming masses from abject poverty. Private capitalism thrives alongside the more dominant state capitalism. But the absence of a dynamic civil society – unlike in India – and its opaque political structure are becoming glaring and, worse, possibly unsustainable.

India suffers from a lack of political consensus; China has too much of it. India has a surfeit of democracy and a deficit of economic equality; China has eradicated poverty but suppressed democracy.

Indian thought leaders realise that democracy has not reduced inequality nor improved the lives of the overwhelming majority of Indians. Chinese intellectuals recognise that the current, systemic problems of political governance, glossed over by rapid economic growth, are unsustainable and brittle. But both don’t know how to really move forward beyond recognition of the need for drastic reform. Intellectual innovation and political power are simply not integrated.

Japan’s social cohesion stands in stark contrast against China and India, but that same homogeneity and social conservatism have left it stranded in genteel decline, with no new thinking to break Japan out of its stifling insularity.

South Korea, Taiwan and Singapore are probably the best examples of societies which grew rapidly due to what political scientists call ‘developmental authoritarianism’ and have successfully transited to liberal democracy. But their models of development are not easily transplanted to larger, more diverse societies.

South-east Asia has largely recovered from the debilitating financial crisis in the late 1990s which nearly crippled its private sector and brought down its banks. But internal contradictions remain unresolved in Thailand, Malaysia and Indonesia and are, arguably, growing steadily.

Fortunately, Asia as a whole is not likely to experience its equivalent of an Arab Spring, largely because rapid economic growth has papered over the social fissures which burst open in Arab society.

My intention is not to denigrate the very real achievements of an ascendant Asian civilisation. But neither can I accept the facile self-congratulations of the Asian triumphalists who seem to think that our success in this century is now inevitable. There is much to do, for all of us who believe fervently that Asia’s time has come but that we cannot afford to be complacent. Asia requires profoundly different and diverse, innovative thought leadership if its economic rise is to result in a sustainable, new paradigm for civilisational progress.

In particular, Asia needs to inculcate a virtuous cycle whereby business, political and social leaders all interact to create new norms of economic, social and political behaviour as well as values. Simply following what used to work in the West is no roadmap for future success.

One good example is the dire need of a replacement for the highly individualistic, American form of capitalism which, at its best, enormously rewarded risk-taking, but at its worst, created monstrous inequalities based on speculative gambling of other people’s money. Capitalism is not universally identical; it is shaped by history and culture, resulting in, for example, the Scandinavian variant or the German model. The American model may not be broken, but after the debacle of the past few years, Asia should not blindly adopt it.

As Asia’s economies continue their dynamic growth, we need to delve into our own history and culture for inspiration in creating an Asian variant of capitalism. One such source can be the webs of mu-tual obligations which serve as a common, recurring socio-ethical tradition of Asia. This communitarian characteristic of Asian culture can, if thoughtfully enhanced, nurtured and developed, replace the highly individualistic, Darwinian ethos of American capitalism.

Communitarian capitalism can be an Asian form of ethical wealth creation, where the interests of the community of stakeholders in an enterprise – the owners, the employees, customers and suppliers – and of course the larger community would be a higher consideration than simply return on capital.
In other words, communitarian capitalism would be stakeholder-driven and not simply shareholder-driven.

One of the contradictions of globalisation is the starkly worsening income inequalities across the world, and particularly in Asia. As members of the Asian business elite, we have a choice to either be part of the solution or part of the problem. There is no middle way; no waffling position where we claim credit for generating growth but deny responsibility for the contradictions of growth. This waffle unfortunately is what most Asian business leaders are doing today; hiding their heads under the sand – or figuratively, a fine layer of gold – and thinking that if they simply stick to what they are good at doing – creating and consuming wealth – they are part of the invisible hand of productive capitalism. But that is just not good enough because, as we have seen, unfettered capitalism is not an absolute good, and often businessmen deepen its imperfections.

On the more positive side, history has seen how many institutions we take for granted today as part of a modern and progressive society, such as liberal democracy or universal suffrage, arose out of the demands of a rising business class – the bourgeoisie. Asia’s rising middle class needs to play the same historic role as their counterparts in Europe several hundred years ago.

Thought leadership need not be in grandiose or visionary ideas but can be small, practical solutions to real problems. For example, as a tiny country, Singapore has no pretensions of being a global thought leader. We have simply and quietly created solutions to our own unique set of changing circumstances. But along the way, our successful experiments have been watched by many far larger societies.

Singapore’s approach to social security and public housing, launched many decades ago, has been universally hailed as revolutionary. In the field of sustainable resource management for cities, Singapore is probably one of the leading examples in the world. In social engineering of public behaviour for the common good such as punitive pricing for traffic congestion, or a ban on smoking in public areas, some of our experiments were once viewed sceptically – even ridiculed – in the Western world but are now widely replicated in some of these societies.

Across Asia, there are many more examples of innovative, inspiring thought leadership covering a wide spectrum of fields. But it is not enough. We need some fundamental paradigm shifts in mindsets, particularly about political and business governance, if Asia is to achieve its future. The blank signposts lie at our feet. It is now our job to write messages, and point them in the right direction. Generations after us will either blame or thank us for what we do or, more disappointingly, choose not to do.

The writer is chairman of the board of trustees of Singapore Management University and executive chairman of Banyan Tree Holdings.

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