BUSINESS MANDATE
fountainhead of excellence
1 JAN 2022
BUSINESS MANDATE
fountainhead of excellence
40 JAN 2022
Delivering the 3rd R K Swamy Memorial Lecture, Mr S Gurumurthy highlighted the growing gap in the current geopolitical space and India’s role in the emerging world order.
T
hree weeks ago, I addressed a chosen strategic community in Delhi on strategic defence and war models of India. The strategic thinkers said that only in 1905, at The Hague, the International Convention was held to recommend that we should distinguish between combatants and non-combatants. They said that they listen to the international people who say that it is they who brought the noble rules of war.
In Mahabharat, after the day's war was over, the Pandavas and Kauravas used to sit and dine together and talk as if nothing had taken place, forgetting that they were going to hit each other the next day. We all thought that this was just a poet's imagination. I had done a lot of research on this. V R Ramachandra Dikshitar was one of the famous minds who wrote a very, very powerful treatise on the Hindu rules of war. He had said that Ashoka's Kalinga war was an adharmic war, because he hit a weaker enemy without giving him notice. Our war model was different. I studied the entire thing through the History of Dharma Shastras—11 volumes of profound knowledge. It was brought out by Bhandarkar Institute and the Government of India funded it at that time, when it had some inclination for civilizational understanding of the country. When I read this, I was stunned by the noble rules of war, which 41
JAN 2022
our people had instituted and how it was followed right down to our Pallavas, Cheras and Cholas. We had very elaborate rules. If somebody dropped their weapon, he should not be considered a fighter. A wounded man is a patient. In the 16th-17th Century Kerala, the Zamorin kings had wars with the Portuguese. The Zamorin kings had told the Portuguese as to how they would wage the war and this was brought out by Whiteway, an English scholar. Their rules said, ‘We do not wage war where people are involved. Agriculture should not be affected. People's lives should not be affected. There is a playground outside and on both sides of the huge ground, there is a lake. You can perch your army there. We can be on the other side. We will beat the drum to say that we are ready for the war. Only if you beat the drum, we will start the war. ‘There will be neither night fighting nor ambushes. There should be no surprise attack on the enemy.’ ‘War had become a game governed by a series of elaborate rules and to break one of these rules involved was dishonour, which was worse than death,’ wrote Whiteway. In the entire 18 days of the Mahabharata war, only one night fighting was allowed. Otherwise, it was only day war. Whiteway adds,
BUSINESS MANDATE
fountainhead of excellence
"Soldiers of both armies mingled at the time, put on their armour, ate their rice, chewed their beetle, gossiped and chatted together. At the beat of the drum, either side drew apart and formed ranks. It was incredible." The Encyclopaedia Britannica says that all ancient wars were barbaric. No Indian stood up to counter this with information about the kind of war which we had for thousands of years and it was followed right down to 17th century. You can understand the civilizational poverty in India.
The Post‐Covid World Order Discussing how the world is now turning and what we should do calls for a helicopter and silos-free view. We have to put together everything—politics, economics, trade and military—and see where we are, where our intellectuals are and where our media is.
order, which has been visible in the last decade or so, is the rise of China. The rise of China has stunned the West. But Deng Xiaoping had told even 30 years ago, "Let's hide our strength and bide our time." That the West, with many strategic think tanks and great minds running all kinds of aspiring institutions, failed to read China is surprising. Brookings Institution brought out a paper which said that the entire American system has been bribed by China. The whole of American think-tank is today not free from Chinese influence. The World Bank admitted that China bribed them to give them good ranking in the Ease of Doing Business Index.
There is near unanimity that the post-Covid world order will change forever. The man who structured the post-cold war order, Henry Kissinger wrote a 600 word article in which he mentioned that the post-Covid world order will change forever but didn't elaborate. No one knows what is likely to be the change and who are going to be the actors.
After Biden got elected, on 30 December, the European Union entered into a Comprehensive Agreement on Investment ﴾CAI﴿ with China. It was a slap on America.
The Rise of China The most important aspect of the post-Covid world BUSINESS MANDATE
fountainhead of excellence
42 JAN 2022
Decoupling from China is going to be as difficult as China decoupling from other countries. It's not easy because it is like doing a major operation to separate two entangled
Don't think that pure economic forces are working here. Forces deeper than that are working. Only the Anglo-Saxon countries first declared that they would not use the Chinese 5G technology. Everything was centered on Australia, England, America, and Canada. Everyone else had to fall in line. The world is being shaped by a group of nations, which feel threatened, not just economically, politically militarily but also civilizationally. This is an important aspect. So everything changed in a matter of four months and that is not even discussed in India.
We have a rising China and fatigued West. This is a paradox. The whole picture has changed over the last decade. China's rise is the most debated issue in the last five or six years, without any answer.
Who did this? Which mechanism invented the great idea of human rights problems in Xinjiang? It has been happening for the last 20 years. They have been shooting and killing people and suddenly they put sanctions on the Chinese who were so confident that they had conquered the EU and even put sanctions on the EU Parliament members under the Green Party President of Germany, which was China's greatest supporter. So we can understand how arrogance leads to actions which are difficult to recall. If CAI had succeeded, there is no way America could have countered China.
Agreement with China on Hold
Relocating Supply Chains
After Biden got elected, on 30 December, the European Union entered into a Comprehensive Agreement on Investment (CAI) with China. It was a slap on America.
Decoupling from China is going to be as difficult as China decoupling from other countries. It's not easy because it is like doing a major operation to separate two entangled bodies. The only way is to look at India.
Then something dramatic happened. In February, they raised the issue of human rights. In April, the EU Parliament asked to stop this agreement in which Xi Jinping had put his entire political might. He had opened the entire Chinese market for European products. The most important beneficiary was going to be Germany and Angela Merkel was driving this whole process.
There is a paradigm shift in the approach towards supply chain. The world used to look at cheap supply chain. Now, they are looking at safe supply chain. Geopolitically, autocratic China was seen as a stable and safe supply chain for 28 years. Democratic India was seen as unstable and unsafe, but this has changed after covid (where the role of China and America are both suspect in producing covid. America funded the production of Covid infection and this is a fact).
bodies. The only way is to look at India.
Everybody thought that the American space has shrunk, but in one turn, the whole thing stopped. The CAI collapsed in April. In June, three important summits took place, which completely turned the situation against China. One was the G7 meeting. Second was the NATO meeting. Third was the EU meeting. It all happened in three days. I have not seen great reports in India about this. G7 said that China is a systemic problem. The next day, the NATO meeting said that China is a systemic adversary. Last year, in 2020, Emmanuel Macron would not utter even one word against China in the NATO meetings. In twelve months, everything changed. The European Union endorsed the fact that the CAI won't be implemented. 43
JAN 2022
Many studies reported that India would benefit largely from businesses shifting from China and would be aided by Washington's strategic decoupling from China. Now you can understand why China is after India. In May 2021, Global Trade Review reported that India, Japan and Australia’s ministers met digitally to frame supply chain resilience initiatives to squeeze China out of critical technologies’ supply chain like semiconductors, batteries, etc. India is entering into a strategic investment and technology agreement with Taiwan, which is the leading semiconductor production country in the world. This is the shift that is taking place.
Why China? Why not India?
BUSINESS MANDATE
fountainhead of excellence
Forbes Magazine wrote an article comparing the three gorgeous dams that China built with the Narmada Dam built by India. ‘The three dams flooded 13 cities, 140 towns, 1,350 villages and displaced 1.2 million people. But China completed it in a decade.’
has regarded its past as dark. It has also regarded every
‘In contrast, the Narmada Dam inundated no city, no town, impacted just 178 villages and displaced less than one tenth of the people that the Chinese dams displaced. But how long did India take to complete the Narmada Dam? 48 years! Jawaharlal Nehru laid the foundation for it in 1961. The World Bank agreed to fund it in 1965 but went back after Narmada Bachao Andolan (NBA) began its agitation. The NBA moved the Supreme Court to stop the construction in 1995.’ ‘In 1999, the Court lifted the stay and limited the dam height to 88 meters. Then over 19 years, it raised the height in five painful instalments—90 metres in 2000, 95 meters in 2002 and 110 meters in 2004, 122 meters in 2006 and 139 metres in 2019 to its full capacity.’ If democratic India took five times more the time that China took to build the largest dam in the world, why will not China fly and India only grow? India's democracy alone is not the problem. We had four elections and seven Prime Ministers in ten years. The world had to choose between India and China, particularly the West and even more particularly America. Their choice of China was a bad one. It was a businessman's and a financial institution's choice. It was the choice of political miscalculation, which has made China as the biggest danger of not only India but also the west.
But the West has a problem. It
country's past as dark. Only in the enlightened world, they produced a Hitler and two world wars.
Now there are 572 neo-Confucian centres in almost all American universities and think tanks. They began this shift in 2005 and now Communist China has become Confucian China. In the hundredth anniversary of the party, Xi Jinping addressed ten million people and said, "Historical and cultural heritage not only vividly tells the past but also profoundly affects the present and future. It belongs not only to us, but also to future generations. Having gone through over 5,000 years of vicissitudes, the Chinese civilization has always kept its original roots."
China had a strange combination of Marxian politics with market economics. We had a strange mix of Marxian economics and democratic politics. Indian human rights will be highlighted by our media. Nobody even talks about Chinese human rights issues. There is a huge Chinese lobby in India in the media and the administration and in all the policy-making mechanisms. These are all real issues.
If the Indian Prime Minister talks like this, he may be called a backward looking man, communal and xenophobic. Xi in one speech destroyed the very idea of communism, about history, civilization, culture and values. He spoke as if communism did not exist at all. Has there been any article written in India pointing out that China is now looking to civilizational moorings, civilizational roots and civilizational inspiration, not only for the present but also for the future?
China Goes Back to its Past
Problems of the West
Many think that China's rise is because of trade, economics, geopolitics and military. But it has to do with its civilization. China is now paradigm shifting the word. Chinese have no respect for the past. They hate the past and focus only on moving forward, so much so, the Communist China was hating the Confucian China and demolished all his statutes, burnt all his books and termed him a person who was responsible for the downfall of China. They called his thoughts semi-barbaric.
But the West has a problem. It has regarded its past as dark. It has also regarded every country's past as dark. Only in the enlightened world, they produced a Hitler and two world wars. In fact, there was no enlightenment and it was just an anti-Christian movement. The entire Western history of enlightenment was about how to keep the Church away. But they continue with the same aggressiveness, dominating and world-conquering spirit and the colonising idea.
BUSINESS MANDATE
fountainhead of excellence
44 JAN 2022
father will educate his son. When I went to the University of California, Los Angeles, and asked the management students there as to how many of them were being supported by their parents, out of 300, not even two or three lifted their hand.
In India, if all Indians become like Americans, 60% of the people of India will be standing outside our Prime Minister's house for two square meals a day. Can India run this way? Whether there can be anything called Indian economy?
The western theory of enlightenment as the only source of modernity has been thoroughly demolished by their own intellectuals. Every country is becoming modern in its own way and there is no one source of modernity. They even advocated a one-size-fits-all model of economic development. In 1951, the United Nations issued an advisory to all under-developed nations that if they want to develop, they must give up their philosophies, social values and relationships. In short, it encouraged contracts-based societies. Everyone caught on to this paradigm and began introducing those concepts in education.
The Perils of Modernity Today, if a father scolds a child, it is not considered a responsibility of the father, but child abuse. Can you understand how those values have been interpreted and imposed on us? My neighbours have slapped me and corrected me in my village. I look at them as my teachers, mentors and guardians. Today, a teacher can't correct a child. We have transformed all relationships into contracts, jobs and transactional. This is the difference between modernism and civilization. We are a civilizational nation. The entire Asia is civilizational. It is not just a model of life, but it reflects in politics too. You will be stunned to know how civilizational democracies are faring—democracies where there is a relationship between the people, independent of the constitution and law. It is a normative society. We are living in a normative society. What is the economic consequence of it? In America, no son will take care of the father, and no 45
JAN 2022
When I addressed the same question in IIT Madras Management Institute, the entire audience lifted their hands. This is the difference between a civilizational nation and a contract-based modern nation. In the West, 55% of the first marriages end in divorce, 76% of the second and 73%, third. This is according to Psychology Magazine. What are the economic consequences of a modernity-based society? The Universal Social Security is a product of destruction of our relationships. In 1983, eleven economists including Milton Friedman who got the Nobel Prize in 1970 argued in an article not to interfere with the filial responsibilities of a father and the responsibility of a child, having handed over the kitchen to the multinationals. Kitchen is a rarity in an American family. May be, you can see a kitchen but no cooking. He pleaded, ‘If cooking and caring for children and caring for each other are the two important functions of the family, we have already destroyed one and let us not destroy the other. Don't bring universal social security."
Civilization Impacts Politics and Economics Universal Social Security has come to stay in the US. They have to pay social security tax for their fathers to be taken care of, children to be educated and all unhealthy people in the family to be taken care of. Individuals have no responsibility. The cost of these unfunded social security obligations of America today is $68 trillion, against which it doesn't have even $1. In India, if all Indians become like Americans, 60% of the people of India will be standing outside our Prime Minister's house for two square meals a day. Can India run this way? Whether there can be anything called Indian economy? We have a civilizational drive in India. This has political and not just economic consequence. The entire structure of liberal democracies is collapsing today, according to Freedom House. The voter turnout in liberal democracies is continuously decreasing. 35% of those below the age of 25 do not vote at all. They have no interest in public affairs. Can you run a democracy like this? The democratic paradigm is a vanishing act. Many citizens do not see politics as central to their identity due to many social and economic interests as per the study. Majority of the people are too busy for the
BUSINESS MANDATE
fountainhead of excellence
political involvement. This is because of liberalism which lays too much stress on individual liberty. When they have so much to enjoy, why should they bother about electing a Prime Minister?
Just printing money is no solution. America is printing
The Flawed Supremacy of Individuals
money. There is no alternative and all countries have
Since the 1980s, with the rise of Thatcher and Reagan, politically, the individual has been held at the heart of the society and with the radical rollback of the State, lassie faire economic policies have resulted in deregulating the market, privatisation and radical tax cuts. Citizens are being encouraged to become more self-sufficient and self-interested. I remember an incident in 1993 or 94. One of my business clients had an appointment with State Bank of India to discuss a high value settlement worth 200 to 300 crores. As he was driving out to go to the airport, his neighbour’s wife came and cried that her husband had a chest pain and had to be taken to the hospital. My client just went to the neighbour’s house and took that person to the hospital. As a result, he could not travel for that important meeting. It took him another seven years to reach a settlement. Did he regret missing that trip? He said, "If only I had gone for the bank appointment and something had happened to my neighbour, I can never have peace in my mind." This is our relationship even with our neighbours. This is not the relationship between an American father and a son.
Liberalism Led to Trumpism Social impulses produce economic results. Too much of freedom has undermined liberal democracies, which constitute just 13% of the world. The result of liberalism in America was the advent of Trumpism. It was a movement. It changed America once and for all. I wrote in the second year of Trump's rule that Trump may go, but Trumpism will last forever. Now Trumpism has not only become an American security, economic, trade and strategic policy, but it has become the policy of the European Union itself and it has been accepted by G7 and NATO. Trump was a poor articulator of his own policies. He failed to say what he stood for. Trump's political doctrine has now become the doctrine of the entire West vis-a-vis China. He identified China as the adversary of America. If Trump had not spoken about the 5G technology of America and banned Huawei, what would have happened to the world today? Trumpism has left United States completely divided between the liberal and civilizational US.
purchased that printed money, including China and India. mechanism.
Civilisation US feels that there is a higher US. Wokeism is the opposite of it. Huntington, in his book on Clash of Civilizations, wrote that in the post-cold war world, which is called the globalised world, liberal democracy and free market mechanism have won once and for all and that it constituted the victory of the west over the rest forever. Huntington was a poor representative of civilization just as Trump was a poor representative of Trumpism. Both Trump and Huntington promoted conflicts. America was shaken by terror on 9/11 and economically in 2008. It has not recovered still. If anybody feels that America has recovered as an economy, they have very little knowledge of financial economics.
A World Bound by Dollars Just printing money is no solution. America is printing money. There is no alternative and all countries have purchased that printed money, including China and India. The world has been co-opted by America into the dollar mechanism. So we are all praying for America's welfare. How long will this be sustained in a divided word? America has been running current account deficit from 1976 till today, except for two years in Clinton's period. The current account deficit incurred by them is in excess of $13.5 trillion. That is the extent of dollar that America has printed. In 1989, the Economist even wrote that the most profitable export-oriented industry of America is printing dollars. This mechanism is now being challenged not just politically but, in my view, civilizationally too.
BUSINESS MANDATE
fountainhead of excellence
46 JAN 2022
We have our civilization and value systems. We have our way of mothering children. Asia's rise is due to the rise of relationship based politics. It has its own problems but we are managing them.
The Importance of Values
India is the Golden Lining We have to compare Indian democracy with American democracy. The liberal democracy is failing. Their youth, poor and minorities are not voting. Is that the discourse in India? We are a very strong bottom spread economy. In India, we vote as castes, as villages and as families. We discuss as a family which party we should vote. This is civilizational democracy. We share everything, including votes and parties. Is destroying all these called liberal democracy? In Asia, as compared to 1960, the voting percentage has risen to 70. That is why, the civilizational democracy is strong. We want an elected government, which would work efficiently and work in the interests of the country. Whether somebody is free in his own house or not is not the test of democracy. In the West, the test of democracies is whether a child is free in its own family. An Indian lady fed her child with her hand in Norway and she was arrested. Can you believe this? We have our civilization and value systems. We have our way of mothering children. Asia's rise is due to the rise of relationship based politics. It has its own problems but we are managing them. The Brookings Institution came out with a paper in 2019 January saying that ‘all liberal democracies are shaken up. There is backsliding of the democracies in the Central and Eastern Europe. India is the silver lining and golden lining of democracies in the world.’ We can even live without a government. We have 6,68,000 towns and villages. We have just 12,800 police stations. Crime levels in India are lower compared to the West. India is a country with the lowest murder rate, lowest rape rate and lowest dacoity rate in the world. 47
JAN 2022
Policing does not reduce crime nor do the courts or law. It is the value systems which reduce crime. Carbon-copying the ecosystem in the west to an unsuitable and inappropriate, culturally different ecosystem is not correct. Which society doesn't have a problem? American problems can never be resolved. Research psychologist Robert Epstein has recommended the Indian marriage system to solve America's relationship problems. In India, the boy or girl to be married is chosen by the entire family. This has its own impact in politics and sociology. This civilizational paradigm has suddenly gained prominence in the post COVID world. The Western liberal democracy and Indian civilization democracy, both have to work together, if autocracy has to be resisted. Without India, the West and the US cannot fight China. This is the USP of India. This is a strategic position which we have gained. The roots of Indian democracy are civilizational. Freedom House in its report based on the annual survey they did in 1999-2000, stated that there is a strong correlation between electoral democracy and Hinduism and there is a significant number of free countries among traditionally Buddhist societies like Japan, Mongolia, Taiwan and Thailand. We are going to be one of the major influencers of the course of the world. We need a very courageous intellectualism in India to articulate this and speak the truth. We have to empty our thoughts and think afresh. This is my appeal to all Indian intellectuals.
BUSINESS MANDATE
fountainhead of excellence