Professional Documents
Culture Documents
Ideas
in
Subverting
Capitalism
&
Democracy
Systemic
faults
that
caused
the
financial
crisis
Rahul
P.
Deodhar
Summary
The
ideas
presented
in
the
book
are
summarised
below.
Chapter
I) Dominated
by
Finance
1) Bargaining
power
helped
finance
take
over
the
organisations.
Chapter
II) The
Rule
of
Organisations
Chapter
III) Bargaining
Power
2) Bargaining
power
can
be
understood
using
Michael
Porter’s
five
forces
model.
a) If
applied
iteratively
we
might
be
able
to
create
model
of
our
economy,
as
it
exists
today.
b) Economy
therefore
seems
to
be
an
emergent
system.
It
is
fractal
in
nature.
Chapter
IV) Money
and
Banking
1) Money
has
two
roles,
medium
of
exchange
and
store
of
value
a) The
role
of
money
changes
as
new
information
that
changes
the
value
of
money
arrives.
b) Money
itself
is
a
commodity
whose
value
changes
with
its
own
demand
supply
equation.
2
3
c) Thus
mal‐investment
is
created
16) Households
do
not
fully
understand
the
concept
of
debt
Chapter V) Excess Money Paradigm
Chapter
VI) Growth
at
Individual
Level
1) We
need
new
metrics
to
measure
growth
at
an
individual
level.
Two
possible
metrics
we
need
are:
a) Wage
content
of
job
b) Job
profile
of
a
wage
2) It
is
possible
that
inflation
targeting
may
be
restricting
income
growth
of
certain
people.
a) We
need
more
investment
in
productivity
enhancement
for
this
class.
4
Chapter VII) Markets and Government
Chapter
VIII) Politics
and
Power
1) Financing
political
set
up
is
still
a
challenge
that
needs
to
be
resolved.
It
is
promoting
hidden
agenda
within
government.
2) We
need
restoration
of
upper
house
of
parliaments
to
their
rightful
role
of
long‐term
strategy
formulation.
3) We
need
to
examine
how
we
select
political
candidates.
We
are
faced
with
election
vs.
selection
dilemma.
4) Political
parties
have
copied
bargaining
power
elements
of
organisations.
However
they
have
not
copied
the
essential
elements
of
efficiency
and
information
systems.
Chapter
IX) Attribution
5
Chapter X) Law and Regulation
1) Role
of
regulation
is
to:
a) Define
ownership
rights
and
responsibilities
b) Define
action
c) Define
the
timing
of
action
2) Regulation
suffers
from
necessary
and
sufficient
condition
problem
3) To
contain
too‐big‐to‐fail
we
need
a
systemic
risk
focussed
regulation.
a) Size
is
not
a
valid
criteria
4) We
need
to
expand
the
scope
of
law
to
prepare
for
next
century.
We
need:
a) Micro‐contract
enforcement
b) Cost
scalable
enforcement
mechanism
Chapter
XI) The
burden
of
Media
1) Media
deserves
a
lot
of
blame
for
failure
to
report
the
crisis.
a) Media
has
a
flawed
business
model
that
allowed
organisations
to
take
over.
b) Media
faces
same
dilemma
as
ratings
agencies.
c) We
need
to
withdraw
the
special
rights
to
non‐
journalist
d) We
need
to
redefine
journalism
to
exclude
“celebrity
experts”.
6
Disclaimer
The
contents
of
the
book
represent
the
views
of
the
author.
The
views
do
not
represent
any
advice
to
buy,
sell
or
deal
in
any
financial
instruments.
The
author
expects
the
reader
to
exercise
caution
and
judgement
in
dealing
with
the
ideas.
The
author
will
not
be
liable
for
any
actions
arising
out
of,
but
not
limited
to,
misinterpretation
or
wrongful
application
of
ideas
represented
in
this
book.
7
About the Author – Rahul Prakash Deodhar
Rahul
is
a
buy‐side
financial
analyst.
He
has
over
10
years
experience
spanning
manufacturing,
consulting,
investment
banking
firms.
He
has
advised
a
wide
range
of
clients
including
Fortune
500
companies,
banks,
hedge
funds
and
private
equity
funds
among
others.
He
is
interested
in
the
changing
equations
of
value,
the
next
chapter
of
wealth
creation
and
its
implication.
His
interests
centre
around
four
areas
viz.,
investment
management,
economics,
poverty
alleviation
and
development
of
education.
Rahul
is
based
in
Mumbai.
He
is
a
mechanical
engineering
and
MBA.
A
lot
of
his
ideas
are
shared
freely
on
his
website
and
his
blog.
He
can
be
reached
at
rahuldeodhar@gmail.com.
Links
http://www.rahuldeodhar.com
http://rahuldeodhar.blogspot.com
(finance
and
economics)
8