A PHILOSOPHY OF BUSINESS

Summary

Delivered as the A. D. Shroff Memorial Lecture at the Calcutta Centre of the Forum of Free Enterprise on 27 October 1971, this pamphlet is S. S. Kanoria’s attempt — written as the then-President of FICCI — to articulate a positive ‘philosophy of business’ for Indian private enterprise. Kanoria opens by honouring Shroff as an industrialist-economist whose convictions inspired the Forum, and uses Keynes’ dictum about the long reach of ideas to argue that India’s economic debates are at root a ‘battle of ideas, a struggle for men’s minds’. He rejects two extremes: the laissez-faire of Adam Smith and the Manchester School, which he calls ‘as dead as the dodo’, and full state ownership and centralised planning, which he treats as its dogmatic mirror image.

The philosophy he advances is that of a mixed economy in which private enterprise is ‘infused with social purpose’ and accountable to consumers, workers, investors, the state, and the local community. Drawing on Gunnar Myrdal’s Asian Drama, he attacks discretionary administrative controls, industrial licensing, and the bogey of ‘concentration of economic power’, arguing that the diffusion of economic power through small and medium enterprise and broad-based shareholding — not its transfer to the state — is the proper liberal remedy. He cites Hayek’s Road to Serfdom and Mahatma Gandhi on the dangers of state aggrandisement, defends profits as a signal of efficient resource use, and rejects the doctrine of class war.

Kanoria closes by stretching the philosophy outward and forward. Echoing Galbraith’s New Industrial State, he welcomes the rise of professional management; drawing on Kuznets, Bauer, Yamey, Streeten and others, he insists that human-capital expenditure (health, education, training) is genuinely developmental, citing the post-war recovery of Germany and Japan. He warns against the ‘soft state’ diagnosis that would trade democratic freedom for social discipline, arguing instead that India’s mission is to demonstrate that rapid development of an underdeveloped economy is achievable within a democratic framework. Business, he concludes, must be the vanguard of a ‘relevant radicalism’ — outward-looking, export-competitive, and constructively engaged in eradicating poverty.

Key points

• The lecture honours A. D. Shroff and grounds the Forum of Free Enterprise’s mission in Shroff’s life and convictions.

• Kanoria rejects both classical laissez-faire and Soviet-style state ownership, arguing for a mixed economy where private enterprise is regulated in the common interest.

• He insists that ‘dogmatism’ in the name of socialism has turned what should be a philosophy of business into a theology, hardening orthodoxy in policy circles.

• Profits are defended as the seeds of growth and an indicator of efficient resource use — including by reference to public-sector underperformance in India.

• He attacks discretionary administrative controls and industrial licensing, drawing explicitly on Gunnar Myrdal’s distinction between positive/negative and discretionary/non-discretionary controls in Asian Drama.

• The supposed problem of ‘concentration of economic power’ is treated as a political bogey; the remedy is the spread of small and medium enterprise and broad shareholding, not statisation.

• Citing Kuznets, Bauer, Yamey, Streeten and others, he argues that investment in human capital — health, education, training — is itself developmental and crucial to growth.

• Closing the lecture, Kanoria argues India must demonstrate rapid development is compatible with democratic freedom, and calls for a forward- and outward-looking ‘relevant radicalism’ rooted in private enterprise.