Accounting agreements require capital expropriation in the company’s balance sheet and expenditures and income in the profit and loss statement. This is common for all companies, whether it is a business, a government agency or a “non-profit” organization. Businesses use their balance sheet to occupy their assets in their land, machinery and money in banks. Humans only appear in the profit and loss statement. Wages and other costs associated with employment are shown as expenses.
Financial investors of a business (who are its owners by law) expect their managers to make a profit for them. They reward CEOs who create financial value for them; they don’t care much about the lives of their employees. When human efforts (whether blue-collar, white-collar, or management) are no longer needed (for example, in a downturn in the business) to make the business produce what they expect, or when humans replace humans with lower expensive machines, good business management shows that good business management shows that humans should give up to reduce costs.
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Adam Smith explained, taking the example of a PIN plant, the labor force is needed to increase the productivity and output of a company. Frederick Winslow Taylor systematically applied this principle to develop a “scientific management” model. He divides the complex working process into simple and repetitive tasks of long-term production chain assembly. This improves worker productivity and efficiency in large plants. This approach allows human efforts to generate more financial capital.
Henry Ford uses Taylor’s approach to create the world’s first mass-produced car factory. Taylor and Ford also offered scientific management advice to the communist government in Russia, when it began its feudal system after a revolution in 1917.
Humans are not machines. If they are motivated and enabled, they can improve their abilities.
Douglass McGregor of the MIT School of Management compared two management paradigms in the 1960s: “Theory X and Theory Y.” Theory X assumes that workers are lazy and must be managed with carrots and sticks. It is suitable for machines, and its performance must be programmed by an external manager. McGregor’s research supports theories that humans essentially want to do their jobs and should achieve. Theoretically, Y companies can be more productive and competitive without paying the maximum wage. After World War II, Japanese industry proved this theory on national scale.
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Economists today must rethink their concept of value and the means to create it by applying the “three-model” framework. First, they must have a good psychological model, i.e. the nature of the entity or human beings they want to improve. Second, how the entity improves its own model if possible. Finally, a model strategy to help entities explode themselves. The strategies that work for machines are not suitable for humans.
In the economy, the only job considered valuable is a job that makes money, because its value is measurable. It is time for economists to reflect on the work humans have done and reconsider its importance.
Since the dawn of mankind, our mothers have been working hard to bring us into the world. They worked hard to nurture us without getting paid. This is natural human work that provides satisfaction. The work of our mothers and other caregivers has also helped society, although it has not increased GDP. We must respect those who have cultivated our work throughout history. If we don’t do this, we won’t live longer.
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For centuries, farmers have kept their own food. The masons have built the houses we live in. While we don’t pay mothers for their work, we pay farmers the food they grow and the construction of workers. But how much monetary value do we have for their work? How does its price fix in the economy?
The owner of the stock has the right to control the price of market resources. The price of the work done by farmers and workers is fixed between trade and buyers of agricultural products. One party has its own labor, skills and time. Another one has to pay for money. Money can be stored in a vault.
Those with the wealth can wait for better time to pay, while those who work can’t wait. Farmers must pay before the produce rots. The worker must pay before the sweat is dry. Their work has no shelf life. In the economy, people who control money always have greater bargaining power.
India’s economy must increase in size. In order for its growth to be sustainable, more people must find jobs and their income must also rise.
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Mahatma Gandhi was neither a communist nor a capitalist. He is worried about the human condition. He said: “Doing and dying, not questioning why” seems to be the life of workers in industrial enterprises in capitalist and communist economies. He noted that while workers theoretically have capitals in communist countries, the decisions on creating surpluses were not made by workers but by economists and bureaucrats.
Gandhi recommended small “human scale” businesses and larger businesses, consisting of smaller businesses, where ownership and power remain with the people who create value. It is time to apply some “Gandhi economics” to incorporate humanity into capitalism and make economic growth more inclusive.
The author is a former member of the previous Planning Commission and the author of Shaping the Future: A Guide to System Leaders.
