Tag Archives: Economics

Al Qaeda, Adam Smith and the Arabian Revolutions


What is the connection between Al Qaeda and Adam Smith? Absolutely nothing, at first glance. While the former is a ruthless terrorist organization responsible for the deaths of countless innocent people, the latter is a highly respected and scholarly person who is widely considered to be the founding father of free market economics. But if we actually think about it, we realize that Al Qaeda has, inadvertently so, been following Adam Smith’s principles of a free market economy.

In the last few years, thanks to the relentless drone strikes and global pressure on terrorist havens like Pakistan, Al Qaeda has been significantly weakened. Being constantly on the run, without having any safe sanctuary except in the Pakistani Wild West, Al Qaeda has not been able to launch any successful terrorist attack on any nation. However, they have fostered a spirit of “entrepreneurship” among their radical followers. Like in a free market economy, there is not much “central planning” and “state/central intervention” in the “framing of policies”; rather the “center/state” has created conditions for the “blooming of private enterprise”. That is to say that, though there is no organizational level planning from the Al Qaeda central leadership with regards to terrorist strikes, their vitriolic messages of hate have encouraged and influenced a host of small time morons to take up arms for delusional causes. This is clear in the recent attacks: the Nigerian Underpants bomber, the Times Square bomber and the parcel bombs from Yemen. These were all low cost and unorganized missions put together by a bunch of wannabe terrorists. But it is precisely these kind of attacks that become hard to detect and will increase panic and unrest in an already scarred society. Eg: the TSA pat downs at US airports.

The only way to prevent such attacks is to remove the deep rooted causes that fuel such hatred. But this is easier said than done. Top on the list of grievances is the Israel-Palestine issue, which shows no signs of heading towards a peaceful resolution. Another major cause for concern in the Islamic/Arab world is the US and Western support for oppressive military dictators. These despots, hated by their own people, are staunch allies of the US. When they fall, as all despots eventually do, the people turn their resentment towards the global allies of the tyrants i.e US and Europe. This is what happened in Iran and indirectly influenced the Al Qaeda.

In 1953, a US supported coup brought back the ousted Iranian Shah to power, much to the chagrin of the Iranian people. When the Shah was ousted in 1979, the Iranians fearing another US coup attacked the US embassy and held the diplomats hostage for 444 days. An incensed US supported Iraq in the following Iran-Iraq war, funneling weapons and money to Saddam Hussein. A power hungry Saddam then attacked Kuwait in 1991. The US intervened and threw him out of Kuwait, but stationed troops in the Arab countries as a counter to Iraqi imperialist ambitions. This presence of US troops and their support for the autocratic Arab regimes gave fuel to the newly jobless Mujahideen created by another US backed dictator: Zia Ul Haq.

As we can see, this has been a vicious cycle of violence. To win this war on terror, we can’t just be content with dismantling one or two organizations. Al Qaeda is still a dangerous if somewhat diminished threat. The world needs to make a cohesive effort to address the root causes that make educated urban youth in US, UK and even India to propagate violence against innocents. The recent revolutions in the Arab world has left the US and the western world in a bind. Should it support its dictator friends for the sake of stability or support the people and risk radical fanatic political parties coming to power? I think the world needs to support democracy and the freedoms of people in the Arab world. Only this would lead to stability and peace in the coming century.

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What makes an Entrepreneurial Society?


If there are two countries in this world that have an Entrepreneurial spirit embedded deep within their genes, its USA and Israel. What has caused this? Why have these two countries turned out to be fountainheads of entrepreneurism? What makes these two societies hold their Entrepreneurs in such high esteem? Its not simply a matter of having an economic system favorable to this cause, for there are affluent European countries which have liberal capitalistic economies and yet have shown only feeble signs of Entrepreneurism. Though Americans have descended from the Europeans, why are the former so entrepreneurial and the latter very much less so? One can argue that Europe has a more socialist mindset but then that would be missing the wood for the trees.

Im currently re-reading the book ‘O Jerusalem’, the fascinating account of how the Jewish state of Israel came into being, sixty years ago. That’s when I realised why this Entrepreneurial spirit is found in abundance in Israel and by a similar analogy in America.

The book illustrates the travails of the early Jewish settlers who migrated from Europe into the Holy Land(Palestine) in the early 20th century to build the state of Israel. They came from all parts of the world. They were of all shapes and sizes. All colors and hue. But they all had a single goal: To build a state on their traditional land so that they would never have to face persecution at the hands of non-jews again.(How valid it was to do so in Arab Palestine is a violent debate that has not ended even today.) But all these early settlers had was the land that they had bought. A desert for most part. They had to make the desert bloom if they wanted to establish a suitable home for themselves and the future generations of Jews that would come to inhabit those lands.

These settlers then set to work on building the farms, industries and institutions which would be needed to sustain a modern nation state. They may have had successful professions in their old homes in Europe. But here they were all alike, starting on a blank slate. So, lawyers dug ditches, pianists milked cows, teachers laid bricks etc. Whatever was needed to be done. They did not have the vestiges of past civilizations to fall back on. Everything that was needed  to run a country had to be built ground-up, brick-by-brick. And these settlers rose up to the challenge and how. Everyone took responsibility for building a pillar for Israel. Everyone became an entrepreneur.

Entrepreneur: a person who starts or organizes a business company, especially one involving risk.

What better example of entrepreneurs than these brave Jews who established Israel? What greater risk than doing it in the middle of a desert surrounded by hostile forces? Despite all the political turmoil, Israel remains one of the economic marvels of the world. Having built everything themselves is the reason I suspect that Israeli society holds Entrepreneurship in such high esteem.

A similar analogy can be extended to USA. North America was settled by peoples from Europe. Here too there was no legacy of civilizations ancient. Everything had to be started from scratch and the earliest settlers did just that. As the East coast became populated, the settlers ventured into the unknown lands of the West. The settlers initially struggled to cultivate the lands of the Mid-West due to the thick upper-crust soil. A man called John Deere then invented a steel plough which enabled the settlers to cultivate the land successfully. John Deere is now a massive farming company. The settlers overcame other odds too. Wind-pumps were used to draw up water from deep down, for irrigation and animals. Dry Farming, special ploughing and other methods were used to conserve moisture. Hard winter wheat (e.g. Turkey Red), introduced by Russian immigrants, was found to be suitable for the climate. New machines were invented.

Here too, like in Israel, development came on the back of immigrants and settlers. People who had left behind their pasts and took ownership of their futures. People who did not conform to the standards of comfortable living and constantly pushed boundaries, literally. Its only natural then, that with such a rich history, the societies of USA and Israel have entrepreneurship embedded in their cores.

In Europe and Asia it was different. Ancient civilizations had left behind sound structures and systems that did not have the need to be replaced. Occupational patterns set in the days of yore continued unquestioned. There was never a need to build anything from scratch. A well established order then, held back these societies from toying around with ideas of self-ownership to the extent done in America and Israel.

I guess entrepreneurial societies are a function of their historical legacies.