Comparison of SMEs in India and the UK

Comparison of SMEs in India and the UK Chapter 1: Introduction: Background of study: Small businesses have been the soul of every economy in the world. India and UK have also been thriving on the performance of this sector. The performance of the sector is highly influenced by the government policies and the availability of finance. Purpose of Study: In this study, the author investigates the performance of the Small and Medium Enterprises in India and UK. The contribution of this sector to the society on the whole. This study focuses on the importance of the SME sector in both the countries from the point of view of its contributions to the economy. This study evaluates the importance of financing activities and the Government policies in order to support and nurture the growth of this very powerful sector. Overall Aim and Objectives of Research: The overall aim of this study is to evaluate the role of Government and financial institutions in the development of the small and medium enterprises in India (Developing country) and UK (Developed country.) Objectives: Problems faced by the SME sector in India and UK. Role of Government policies in India and UK. Role of financial institutions in providing better financing options to the sector. Background of SMEs: Small and medium sized enterprises (SMEs) are one of the principal driving forces in economic development. This sector has been recognised as growth engine around the globe. A healthy and vibrant SME sector contributes in a high and sustainable economic growth. They encourage private ownership and entrepreneurial skills, they are flexible and can adapt quickly to changing market demand and supply situations. They provide employment opportunities to the masses, help diversify economic activity and make a significant contribution to exports thereby increasing foreign trade. Small and medium enterprises have been defined in various ways in different countries. In India, it is known as the Micro, Small and Medium Enterprises (MSMEs) which is defined in terms of investment required. The MSMEs include all the enterprises in which the total investment does not exceed more than Rs. 50 million. The European Commission defines SMEs on the basis of the work force employed, total turnover of the business and the balance sheet total. In the US, the criteria for recognition is based on the work force employed. The main factors which give a firm the status of SME are employment and investment in fixed assets. Many economies have acknowledged the need for growth and development of SMEs for industrial restructuring and have formulated national SME policies, programmes and enterprise development policies. Enterprise helps boost productivity, increased competition and innovation, thereby creating employment and prosperity, and revitalizing the communities. SMEs contribution to the foreign trade has been ever increasing. During the last decade, there has been a considerable increase in the foreign trade arising from the products of these SMEs. The open trade policy has been a great success. The policy makers in developing countries like India, Sri Lanka, Pakistan, and many other South Asian countries have been continuously reviewing their policies to help the functioning of these SME units. Chapter 2: Research Methodology: Research is defined as an activity which is undertaken in order to find out things in a systematic way, thereby increasing knowledge (Saunders, et al, 2003). As the definition says, it is important that the study is carried on in a systematic ways which means the study should be logical and should be carried by systematic interpretation of data. (Ghauri and Gronhaug, 2002). According to Saunders, et al, (2003) the research should highlight the following features: Data used for study should to be collected systematically. Data should be interpreted systematically. The research should be carried out with the intension to draw a conclusion. According to Williman (2001), research is not merely collection of facts or information without any purpose. The research should relate to collection of facts and information with a specific purpose. The reassembling or restructuring of facts and figures without any interpretation also is not termed as research. A proper research should be a mixture of facts and figures being interpreted and should provide an answer to the research question. The data is of two types depending on the source from where it is obtained. Primary data is the data which is obtained by the researcher for some specific questions. It includes interview of the object of study. The answers are then observed closely to draw a conclusion. Secondary data is the data which is obtained from literature review and the internet. The gathering and analysis of primary data adds value to the dependability of the results of the research, in my chosen topic of study there are not enough opportunities within the time and reach of the researcher to resort to research methods of interviews or survey through questionnaires, since the firms are widely scattered and the small and medium enterprises in India dont disclose their secrets to anyone. Hence, the data used is secondary data which is available through internet and through various government publications. There is a lot of literature on the selected topic; they can be treated as trusted source of data to carry on the research. The essential research principles while using the secondary sources are Qualitative and Quantitative approach to research, out of which this research paper uses the qualitative and descriptive approach to conclude the research question. Therefore the secondary research has been used for completing the study. Limitation of Study: I have tried my level best to produce this report to be as fruitful as it can be but there are some serious limitations that this study suffers. There is a lack of study and not many scholarly articles are available on the problems faced by the Small and Medium Enterprises in India and UK. There are many articles which describe the importance of this sector. I had to take the use of various print media and internet sources of government portal in order to draft down the problems faced by them. Also, the grants and government policies that are provided are in exhaustive; hence the study focuses on only the main grants and policies which have contributed largely to the sector. The small and medium enterprises sector is very huge and widely scattered, which comes as a constraint to collect primary data for the study. Chapter 3: Literature Review Role of Small and Medium Enterprises (SMEs): SME have an important role in a countrys economic development and growth and also have been achieving the same kind of progress over the last couple of years. India as an example shows the importance of SMEs towards the growth of the economy and the employment generated with the help of labor intensiveness and thus, bringing efficient distribution of resources through labor intensive production. This segment also helps in lightening poverty and sustaining growth. Equal distribution of income also comes into picture thereof. And all this happens when the scarcity of capital exists. (Das, K. (2006)) Some of the characteristics of this typeof policy include formation of multi-storied and flatted industrial estates for micro industries, liberal floor spaces index in plotted development of 1.5 to 1.75 for industrial sheds and 2.5 for multi-storied industrial units, 50% rebate on stamp duty and registration charges for micro and small enterprises in industrial estates and industrially backward areas. Globalization has made possible the fragmentationof all forms of production of goods and servicesacross countries and enterprises. Where large players go for a different form of business models which includes bringing alongtheir traditional partners, suppliers or distributors at a different level, SMEs are experiencing a new form of functioning in the value chain byevolving from a traditional manufacturer in the domestic market to that of an international partner. SMEs undergo the effects, both positive and negative, of outsourcing led restructuring of production at the international level. Because of the advantage of their flexible nature of operations, SMEs face lot many opportunities in the form of the demand for new products and services. But the things get a little nasty when theinadequate availability of managerial and financial resources, lack of working capital, innovation and personnel training come into picture. (Das, K. (2006)). The Indian Small Scale Sector- An Overview: A SSI in India is defined as a unit where investment in plant and machinery, either in the terms of ownership or lease, does not exceed Rs. 10 million. In the same way, micro enterprises or the so called tiny units does not have investment in them to be exceeding more than Rs. 2.5 million. The Small Scale Industries of India have a fortune of have been built through enterprise, dynamism and renewal. Since the end of the colonial rule, India has re-established itself and has transformed itself from 80,000 units to 3.3 million. The last decade of the 20th century showed steadiness. This sector of SSIs alone contributes 7 % of GDP in India. (Sahu, P.P. (2005)). Market liberalization and de-regulation are the two forces behind SMEschanging their business strategies for survival and growth. These changes have particularly been in the terms of acquiring quality certifications, creation of e-business modules, diversification to meet competition, etc. SMEs involvement in the foreign trade has to be supported by Globalization, Liberalization and WTO for the benefit of access to markets, technology, skills, finance infrastructure and tax-friendly environment. (Ecotec Research Consulting (2004)). Production and Investment in SMEs: There has been an extraordinary 18% growth in the production at current prices of SMEsin FY07 as compared to the previous years15.8% thereby bringing a rise to Indias GDP to 15.5% during the year. The growth in the production has been there because ofconducive policy measures, growing domestic consumption, export market, improving production methods, technology, etc. SMEs did maintain equal growth rate in respect of the industrial sector during the FY03-07 with a growth of CAGR of 17%. (Sahu, P.P. (2005)). The SME sector has also reported growth higher that the overall manufacturing sector. The sector does not only provide output in the form of final goods but also capital goods which further form the input to heavy industries. The table below is indicative of the growth of SMEs in the Indian economy. The SMEs in India: Present Scenario: As quoted by Business World, Jan. 2007, small companies seems to have been performed much better as compared to their larger equivalents as between 2001-06, net companies with net turnover of Rs. 1 Crore 50 Crores had a higher growth rate of 701 per cent as compared to 169 per cent for large companies with turnover of over Rs. 1,000 Crore. (1 Crore Rupees is equal to 10 Million USD). The all time high of Rs. 1, 89,200 Crores of total SSI production reached in 1989-90 dramatically dropped in the next 10 years and increased later only 2001-02. After that, the production growth increased at a much greater pace in terms of units, production, employment and exports. (Ecotec Research Consulting (2004)). Currently, some of the SMEs, mostly ancillaries and export-oriented, are acquiring companies abroad as part of the Globalization process, catering to the needs of global manufacturers and suppliers like in Auto Industry. Some of these units have also invested in RD globally and taking help of outsourcing, in the fields of manufacturing and services, to emerge as a global leader because of the factors such as labor-intensive manufacturing, lower transport costs, lenient labor policies of the small scale sector. The next step to this would be a government initiative providing a risk-free environment, start-up capital, technology and training updates. No matter the Micro, Small and Medium Enterprises Act, 2006, which has been passed by the Government with the help of 300 industrial associations, many government departments and lot many stake holders, is a legal framework for providing capital investment to this sector, but the implementation of it involves a lot many agencies to come to gether and achieve it jointly. (Government of India (2005) The Micro, Small and Medium Enterprises Act, 2006: The Government of India passed The Micro, Small and Medium Enterprises Development Act in June 2006 after wide consultation with more than 300 industry associations, different government departments and multiple stake-holders across the country. The Act is geared towards promotion and enhancing the competitiveness of Micro, Small and Medium Enterprises. The Act tries to accomplish many long standing demands of multi stakeholders in the MSME sector. Another issue was the lending facilities to SMEs but as the mindset of the banks seems to change because of entry of large no. of private banks, which in turn led to increased competition and multiple financial options, the increased lending to the SMEs is actuated because of the compulsion from the market and the expansion of the companies. The lending to SMEs from the banks grew by 69% between 2000-01 and 2005-06. (Government of India (2005)). The UK SME Sector: The UKs SME sector forms the business backbone no matter it may be the restaurant or the web designer, by providing over 33% of the GDP and over 50% of employment. There are 3.6 million SMEs but 99.5% employ less than 200 people. Every year around 175,000 businesses register themselves for VAT and most of them survive by the end of the first year but, then onwards mortality rate takes hold and by the end of the third year approximately one third have failed. As per R3, the association of Business Recovery Professionals, as on one case, the worst places to start business would be Peterborough, Sunderland, Manchester, Bolton and Belfast with the highest failure rates, on the other hand, Llandrindod Wells, Truro, Southwest London, Guilford and Carlisle had the lowest failure rates. The failures occur because of the management failing to protect margins thus increasing its responsibility to 50%. Because of this Academy of Business Consultants believe that the founders of these businesses need the best assistance. (Sandesara, J.C. (1993)). The Qualitative Challenge: The World Banks `Doing Business 2007 Report places UK in the ninth position out of 175 in the world for starting a business. But when it comes to enforcing contracts, employing workers, and dealing with licenses, then it is not a rosy picture, as they are ranked as 22nd, 17th and 46th respectively. This led for a need of change in the current status of SMEs. (Kondaiah, C. (2007)). SME growth: the stylized facts: The international data available also claims that smaller and younger businesses experience wider variations in growth as compared to their larger and mature counterparts. However, only a bunch of these smaller and younger businesses account for bulk of employment, output or sales and producing spectacular growth fighting through the competitors. Keeping a sense of proportion: Apart from all this, the factors like innovation and economic activity still forms to be a disadvantage for the SMEs side. In the European Union it has recently been estimated that the mean share in activity of the largest four enterprises across a large sample of industries and countries was 20% with a maximum of 87%. These ratios appear to have been rising rather than falling in recent decades. (Kondaiah, C. (2007)). SMEs are generally backbone of the Industry. Napoleon said that British are a nation of shopkeepers. He was right much as Britain and a nation small and Medium sized enterprises.(Sandesara,J.C 1993) In the UK the Large enterprise consist of 1% and the rest 99% is small enterprises. If we consider the total working population that is 30million out of that 14.3 million is employed by SMEs. The GDP growth of U.K is 7.4% which would be impossible without the growth of the SMEs as disclosed by BERR. U.K SMEs account for 1.8 trillion pound GDP despite being half the picture of the whole industry. The UK Public sector which contributes up to 1/3rd of the total UK economy attracts strong political focus. This makes the UK SME sector to be considered as fragmented and also at times ignored. But the SME sector is of vital importance as it provides to be the stepping stone for the other large enterprises to be. According to the BERR statistics for 2007, the Small and Medium Enterprises which employ more than 100 employees but fewer than 200, employs 4.4% of the total working population but contributes 5.6% of the total UK GDP. The small enterprises are outperformed by the medium enterprise s in this context. Also, the enterprises that employ more than 50 employees but less than 100 also employ 4.4% of the workforce with an overall contribution of 5.7% to the total UK GDP. There is a lot of evidence that proves that the UK economy thrives on the performance of the SMEs and that with an improvement in the performance of this sector will benefit the improvement of the UK economy on the whole. There is a need for the Government to work closely with the sector to develop the sector and also for rapid growth of the UK economy. The SMEs, mostly ancillaries and export-oriented, are acquiring companies abroad as part of the Globalization process, catering to the needs of global manufacturers and suppliers like in Auto Industry. Some of these units have also invested in RD globally and taking help of outsourcing, in the fields of manufacturing and services, to emerge as a global leader because of the factors such as labor-intensive manufacturing, lower transport costs, lenient labor policies of the small scale sector. The next step to this would be a government initiative providing a risk-free environment, start-up capital, technology and training updates. No matter the Micro, Small and Medium Enterprises Act, 2006, which has been passed by the Government with the help of 300 industrial associations, many government departments and lot many stake holders, is a legal framework for providing capital investment to this sector, but the implementation of it involves a lot many agencies to come together and achieve it jointly. (Government of India (2005) Measuring innovation: Any attempt to assess innovative activity and performance must begin with the definition of suitable metrics. These usually fall into the two categories of input and output measures. Inputs usually include expenditure on RD, and measures of the staff employed in RD. Output measures include patents and measures of the incidence of product, process and logistic innovations. Distinctions can also be drawn between innovation new to the firm, (which may be diffusing from a de novo innovation activity in another firm), and more novel innovation which is new to the firm and to the industry. Each of these may lead to measures of innovation intensity in terms of innovation counts, as well as measures based on the distribution of sales by novelty of product or service innovation. Broadly speaking there are two approaches to obtaining data on innovation outputs. There is evidence to suggest that the object approach underestimates the innovative activity of smaller firms, in particular diffusion or incremental activity which the object approaches may overlook (OECD (1992)). The CBR has pioneered the subject approach in relation to UK data for SMEs and consequently its work directly complements UK Office for National Statistics data collected for CIS2, which has along with many EU countries limited coverage of the smallest firms (Cosh, Hughes ands Wood (1998)).The discussion in the rest of this paper draws on data based on the subject approach. Innovation in the EU In reporting innovation activity in the EU this paper relies on the results of the second Community Innovation Survey (CIS2), of 1997/1998, from which charts 1 to 6 are drawn (Cosh and Hughes (2001)). Twelve European States took part in the survey (all EU Member States except Denmark, Greece, Italy and Portugal, plus Norway). The survey was intended to cover allenterprises in manufacturing with 20 or More employeesand all service enterprises with 10 or more employees. These can be split into three size bands small (10 to 49 employees), medium (50 to 249 employees) and larger (250 or more employees). This allows a comparison of innovation activity by broad sector and size over the three-year period 1995-7. The results of CIS2 reveal that innovation activity rises with enterprise size in the EU as a whole which also shows that the result holds for both Manufacturing and Services. In the specific sense that the proportion of enterprises reporting one or more product or process innovations rise with size classes it seems that bigger is better. These results are at an aggregate EU level; it is instructive to disaggregate them by country, as well as size. To do this and to illustrate the relative innovative activity of the small firms in the UK the following charts 2-6 rank countries in terms of innovation performance of small firms, weaker countries are at the left and performance rises as we move to the right. Successive charts report on the proportion of product or process innovating enterprises in manufacturing, and the proportion of product innovators in manufacturing. The same measures are then shown for services, and then the final two charts report on the proportion of novel product innovators in manufacturing, and the proportion turnover due to new or improved products. Taken together these charts reveal that UK small firms are ranked in the top 4 in Europe in Manufacturing, and in the top 5 in Europe in Services. Moreover an inspection of the column pattern for medium and larger firms also reveals that UK small fir ms do better relatively than UK large firms and especially better than medium firms. In that comparative sense smaller is better. Analysis of innovation constraints and the innovation/ performance link using CBR survey results In order to probe behind these results and in particular to examine patterns of innovation constraints and the innovation/performance link we can use the results of the regular CBR biennial survey of SMEs in the UK. These cover 2500 enterprises in Manufacturing and Business Services employing between 1 and 500 employees. The latest results are based on the 4th survey of 1999. The surveys generate subject-based data on innovation inputs and outputs and over 200 company specific variables on enterprise structure and performance. (A full discussion of the dataset and the results summarized here can be found in Cosh and Hughes (1998) and Cosh and Hughes (2000a)). To conclude, we have substantial matter to prove that UK economy is supported by SME and that encouraging them and working with them will bring a positive effect on the UK economy. Chapter 4: SMEs: An Overview Contribution of SMEs: SMEs are the backbone or the key drivers of the industrial economy. They can also be described as the engines of growth of the industrial sector. Although they are individually small, collectively they play a multiplayer role in the development of an economy. They have a multiplayer impact in developed as well as developing economies. The main USP of SMEs is low cost production i.e. the ability to manufacture low volumes profitably, meet niche requirements, capitalize on local skills and resources, provide outsourcing opportunities and most importantly create jobs. The sector has been consolidating over the years. What is new is the articulation and recognition of this process and its pump priming role. Therefore national SME policies, programmes and enterprise development policies have been formulated to support smooth working of SMEs and to overcome major obstacles such as lack of legislation, promotion and infrastructure. This can be done in the form of promotion programmes, positive discrimination hand holding and advocacy. Policy initiatives seek to highlight basic SME skills in low cost production. SMEs have an impressive presence in service industry ranging from the simple and traditional organisations to the most modern and hi-tech ones. SMEs contribute not only in terms of quantitative factors such as output, employment, income, investment or exports but also in terms of qualitative factors viz the synergies they promote with large industry, their contribution towards balanced regional growth, their contribution in nurturing entrepreneurial spirit, innovation and in providing a nationwide pool of skilled and trained manpower. While the comparative advantage of SMEs are well acknowledged, SMEs also have their share of pros and cons which prevent them from realising their full potential. They have to face some problems such as lack of proper guidance in the initial stages, lack of funds in the times of crisis, lack of proper marketing strategies, stiff competition from big players, lack of access to latest technology, no proper infrastructure etc. Therefore, although new SMEs are emerging very rapidly worldwide, the number of SMEs closing down every year is also very high. Also because of the twin forces of globalization and free trade policy of WTO, there is a serious threat to the SMEs sector. It will have to reorient and reinvent itself to overcome these challenges. This can be done by restructuring the small scale organisations, and if nothing works, they have to be closed down. Closures are undesirable but sometimes they are advisable from the resource allocation point of view. Thus the high rate of entries and exits reflect the dynamic nature of this sector and also explains why it is seen as an industrial incubator. As mentioned earlier, SMEs play a very important role in the development of an economy, especially from the employment point of view. They are very effective for the generation of employment for both skilled as well as unskilled workers. Therefore labour extensive countries should opt for SMEs. Even the underdeveloped or developing countries which are capital intensive and labour extensive, SMEs can be a great help. There has been increasing growth of SMEs worldwide in the recent past. The government of the developed and developing economies have been formulating policies which promote smooth working of the SMEs. SMEs have contributed significantly in the developed as well as developing countries. In the European Economic Area (EEA) and Switzerland there are more than 16 million enterprises; of which less than 1% comprise large companies while the rest are SMEs. Two thirds of the job opportunities are provided by SMEs in this region and the remaining one third of the job opportunities are by large companies. SMEs are considered the backbone of Asia Pacific region as they account for 90% of enterprises. They provide around 32% 48% of employment and their contribution to Gross Domestic Product is around 60% 80% in individual Asia Pacific economies. Even in the United States, SMEs contribute greatly. It contributed at around 43% of the net employment opportunities from 1990 1994.SMEs are considered the engine of economic growth in both developed and developing countries not only because of low cost production but also because of low unit cost of persons employed as compared to large scale enterprises. Thus they provide a significant share of overall employment. Also SMEs assist in local and regional development by regional dispersion of economic activities, thus helps achieving fair and equitable distribution of wealth. SMEs not only contribute towards the GDP but also towards the export revenues. Although SMEs are at a disadvantage in terms of finance, technology, human resource development and networking; SMEs involved in foreign trade are very dynamic. This may be due to its low-cost labour intensive nature of its products; and since these units generally use indigenous raw-materials; they have a positive effect on the trade balance. For example, SMEs in OECD member states produce about 26% of OECD countries exports, and about 35% of Asian exports. Also SMEs increase flexibility in the provision of services and the manufacture of a variety of consumer goods and competitiveness of the market place and thereby curb monopoly of large enterprises. All this leads to fostering of self-help and entrepreneurial culture by bringing together skills and capital through various lending and skill enhancement schemes. Thus SMEs not only enables an economy to maintain a reasonable growth rate but also imparts resilience to withstand economic upheavals. Chapter 5: Indias SME scenario: The Indian Small and Medium enterprises sector formally known as the Small Scale Industries (SSI) has had a notable importance since the period of Mahatma Gandhi. SSIs were set up in the rural parts of India with a view to inculcate the habit of self reliance amongst the people. Later on, after independence, the SSI units were an important source of income to the people of India. Indian policy makers had noticed the importance of this self reliant industry and had always been striving hard for their progress. After achieving independence in 1947, India drafted and adopted the Industrial Policy of 1948 which meant that the government would act as both an entrepreneur and also as a governing body. With the beginning of the planning of a free India in 1951, the role of SMEs has been earmarked specially. In its industrial policy, the government started announcing special schemes for the growth of the SMEs in India. It was in 1956, during the Second Five Year Plan that the government announced the Second Industrial Policy, clearly stating the importance of the SME sector. This gave an impetus to the development of SMEs in a manner that made it possible for them to achieve the objectives of: High contribution to domestic production. Significant export earnings. Low investment requirements. Operational flexibility. Low intensive imports. Capacity to develop appropriate indigenous technology. Import substitution. Technology-oriented industries. Competitiveness in domestic and export markets Today, small and medium enterprises (SMEs) are the ladder of progress for a nations economy, especially in case of developing countries. They contribute handsomely to the exports, the industrial base, the Gross Domestic Product (GDP) and the Gross National Product (GNP) of the nation. Small and medium enterprises help provide employment and various facilities to the society. In 2006, the Government of India passed an Act known as the Micro, Small and Medium Enterprises Act (MSMEDA), 2006 to define SME sector of India. This Act defines micro, small and medium enterprises in India on the basis type of sector namely manufacturing and the service sector. In case of manufacturing sector, the size of the enterprise is decided on the basis of investment in plant and machinery. In case of service sector enterprise, the size is decided on the basis of investment in equipment required to set up the industry. Strategic Importance of Indian SMEs: In Indian economy, the SMEs occupy a place of strategic importance due to its contribution to the overall output, exports and employment. The total number of SMEs has been increasing rapidly. The total number of registered enterprises has been around 3million and has been increasing at an even fas

Capitalism and Individualism in Robinson Crusoe Essay

In popular imagination Daniel Defoe’s Robinson Crusoe has become an adventure story for children, for which the original novel is not responsible, but the abridged and bowdlerized versions must be blamed. A close reading of the original text reveals a novel of enormous significance. In many ways the novel can be said to be defining the modern citizen of capitalistic society. It is also widely regarded as being the first modern novel. In fact this latter claim is not unrelated to the previous proposition. The modern novel is not only a mirror to the modern psyche, but also bears an organic relationship to it. A general proposition is that literature was the means by which the modern psyche came into being, and the modern novel is particularly instrumental in this sense. In this regard Robinson Crusoe not only sets the agenda of modern capitalism and individualism, but was also a key phenomenon that helped bring about its realization. The German sociologist Weber made the observation that the character of Robinson Crusoe was the ideal example of the Protestant work ethic in action (118). In his desert island isolation Crusoe makes the discovery of God, and establishes personal communion with Him through his newly found faith and the aid of the Bible. Therefore he is the quintessential Protestant. Weber’s general thesis was that the Protestant nurtures an ascetic relationship to work. In the absence of supporting church and societal structures, the Protestant falls upon his worldly activity to express his devotion. According to the doctrines set out by Luther and Calvin, the Protestant establishes a personal communion with God, justified by his faith in Jesus Christ as the Savior, and in the Bible as the word of God. This was the doctrine of â€Å"justification by faith†. It necessitated that the Protestant maintain an intense relationship to work, this being the only means by which to establish piety and purposefulness. This is what Weber calls the Protestant work ethic. There is no doubt that Robinson Crusoe exemplifies this principle. The overriding characteristic of the Protestant is his isolation and individualism. In normal circumstances we would think of a Protestant as spiritually isolated. But in Crusoe’s tale this isolation is magnified and made tangible. He is physically isolated from society, marooned on a desert island, and his spiritual isolation comes in tandem. He discovers God in the worst depths of his despair, and it is a discovery born purely of his own life circumstances, and the signs that God has transmitted to him therein. He comes to God in complete isolation, with his own experience and the words of the Bible alone pointing the way. The rest of the novel can be seen as his continuing conversation with God. On Crusoe’s part the conversation is carried out through a constant strengthening of faith, along with diligence in his work to maintain himself on the island. The responses of God are to be read in the improving circumstances of Crusoe, as he gradually becomes more and more master of his own dominion. This is exactly what the Protestant expects. Salvation is through work, which is a form of piety. Weber’s further contention is that modern capitalism is result of the Protestant work ethic. In the following passage he explains the process whereby religious enthusiasm brings about economic activity: Those mighty religious movements whose significance for economic development lay primarily in their ascetic and educative impact, commonly only exhibited their full economic effect after the high point of purely religious enthusiasm had already been passed; when the convulsive search for the kingdom of God was gradually beginning to dissolve into sober, vocational virtue, the religious root was slowly dying out and giving way to utilitarian worldliness. (Ibid) Diligence was the prime virtue of the Puritan from the very beginning, even though it did not appear to be capitalistic at first. In the early days, after the Protestant Reformation, much of the Puritan zeal was transmitted into revolutionary activity. The English Civil War, the overcoming of monarchy, the uprooting of the old aristocratic order, the annulment of organized religion, all this stemmed from Puritan zeal. Eventually the Whigs, the moderate Protestants, took over the reins of power and began to persecute the Puritans in turn for their zeal. In time the religious enthusiasm mellowed and was channeled, as Weber describes, into â€Å"sober, vocational virtue†. Utilitarian worldliness was only the end product of this evolution, and in which form we recognize it as modern capitalism. Weber goes on to cite the Shakespearean scholar Edward Dowden, who places Defoe’s novel at exactly this point of sociological transition. It was where â€Å"Bunyan’s ‘Pilgrim’, hurrying past ‘Vanity Fair’, filled with his lonely inward striving after the kingdom of heaven, was replaced in the popular imagination by ‘Robinson Crusoe’, the isolated economic man who pursues missionary work on the side† (Ibid). Dowden tends to belittle the religious element as false, and wants to define the character of Crusoe as unflinchingly and ruthlessly capitalistic. Weber, however, does not make this mistake. Religion and worldly diligence go hand and hand, and is an attitude without which capitalism is impossible. Material greed does not deliver capitalism. Only if the profit-making endeavor is undertaken as an act of asceticism is it possible for all the gains to be ploughed back into industry and thereby keep the machine of capitalism in motion. Weber made a thorough analysis of all the major civilizations in order to show that they were not capable of producing capitalism because the ascetic relationship to work was absent. Any tendency in this direction would be defeated by the ills bred by covetousness and greed. Karl Marx was also tempted to jettison the religion of Crusoe and analyze him in terms of being an â€Å"economic man† alone. â€Å"Of his prayers and the like we take no account,† he says, â€Å"since they are a source of pleasure to him, and he looks upon them as so much recreation† (Marx 47). It is a lead followed by many modern economists. For example Peter Mathias describes it as â€Å"a sophisticated myth of the ascent of man, of economic growth by dint of the work ethic, of the imperative of ‘improvement’ and the determination to master nature† (17). It is plain to see why economists are tempted to invade the island of Crusoe. It is because the analysis of economics is restricted to personal needs and their fulfillment. The only cognizance made towards the existence of society is in the introduction of the exchange mechanism, so that the surplus product of one’s labors can be exchanged with that of another’s to mutual benefit. In this process society is minimized and personal needs are maximized. The obsession of the economist is with personal desires, and so he is happy to push society to the distance. In Robinson Crusoe’s plight Defoe has created a situation which attracts the gaze of the economist compulsively. Defoe does not disappoint; along with the religious awakening of Crusoe we are also given a meticulous account of his economic situation. Once set on his task of survival he surveys his situation dispassionately, seeing himself as a creature of needs, placed on an island of limited resources, and his own capacity of labor to transform the resources into products of use, i.e. commodities that are able to meet his needs. He cultivates some land to plant barley and rice. He makes a fishing rod to catch fish from the sea. After a few years of such effort he gets the measure of things and realizes that he should avoid being wasteful. He calculates that he cannot consume more than forty bushels of barley and rice in one year, and settles thus the amount that should be planted for harvest each year. â€Å"I had no competitor, none to dispute sovereignty or command with me: I might have raised ship-loadings of corn, but I had no use for it; so I let as little grow as I thought enough for my occasion† (Defoe 118). But a bad crop one year makes him reproach himself for his laziness, and he duly plans for insurance against future disasters. â€Å"I resolved for the future to have two or three years’ corn beforehand; so that, whatever might come, I might not perish for want of bread† (Ibid 144). But apart from this there is little of economic analysis to be pursued in his situation. This is because, beyond future insurance, he has no need for surplus production, and more importantly, because there is no exchange. After he recovers gold coins from the wreck of the ship he realizes the intrinsic futility of money when it has no exchange value. This has led Rich Whately to comment that â€Å"Robinson Crusoe is in a position of which Political Economy takes no cognizance† (5). While this is true, the fascination for the economist still holds. This is probably because Crusoe exemplifies the inner heart of capitalism, that which political economy tries to overlook or deny. For example, social cost is a concept that has only recently forced its way into the discourse of political economy, and only after degradation of the global environment on a massive scale. But to Crusoe it appears immediately. After he has cut down some wild vines he muses: I thought those beautiful vines and those slender young trees were free goods; they belonged to nobody. I thought the costs were all external. But I didn’t realize that when I cut them down, I would be depriving myself of this intangible source of pleasure. Since I am the only one on the island and will be here for some time then it is clear that I did not correctly evaluate my true costs of production. (Ibid 91). Crusoe also exemplifies the ascetic impulse involved in capitalism, that which totally escapes the scrutiny of political economics. While he has become seemingly immersed into the world, he makes contrary claims, saying that he now sees the world as something remote. â€Å"I had nothing indeed to do with it, nor was ever likely to have, so I thought it looked, as we may perhaps look upon it hereafter – viz. as a place I had lived in, but was come out of it† (Ibid 117). Through his isolation, and his discovery of God, he has found a purpose that lies beyond the confines of the world. If he was yet physically in it, his diligence was but an expression of his piety. Without this otherworldly presence he would be consumed by greed and covetousness. Crusoe is always conscious of the fact that he has escaped these evils by being distanced from society. He sees the hands of Providence in this design, that he should be marooned on a desert island, â€Å"removed from all the wickedness of the world here,† in order that his soul be saved (Ibid). He comes to see the island as a veritable Eden, capable of cleansing sin from anyone who finds himself in his own situation: â€Å"The most covetous, griping miser in the world would have been cured of the vice of covetousness if he had been in my case; for I possessed infinitely more than I knew what to do with† (Ibid 118). Another aspect of modern capitalism is the inalienable rights of the human, which we also find delineated in the novel. Locke has established the concept of human rights on a philosophical basis through his Two Treatises on Government. The premise to his analysis was the individual as an isolated element in society, and therefore he works on the basis of Protestantism. That which Locke derives through philosophy, Defoe presents to us in vivid narrative form through the situation of Robinson Crusoe. The first step is his removal from society, and the second step is his removal from the world, through his discovery of God, and the realization that his diligence is but a means of worshipping God, and beyond this he had no truck with material existence. But the more and more diligent he becomes, therefore, the more and more he strengthens his communion with God, the more and more conscious does he become of his mastery over his own dominion. As Philip Zaleski puts it, â€Å"This conversion does not go unrequited; as Robinson surrenders to God, the island surrenders to him† (40). His purposefulness is otherworldly, but the worldly mark of it is the right of possession that he establishes over his territory. It is part of the conversation that the Protestant establishes with God. If he is justified by his faith, and that alone, God will convey this message to him through his worldly circumstances. In many points of the novel we find Crusoe becoming conscious of his inalienable rights, and marveling at what he possesses by the grace of God. In one guarded moment, while ambling through a scenic valley, he rejoices in his sense of possession: â€Å"I was king and lord of all this country indefensibly, and had a right of possession; and if I could convey it, I might have it in inheritance as completely as any lord of a manor in England† (Defoe 92) This is indeed a novel conception of right, and one that was overtaking the feudal and aristocratic rights of old, rooted in primogeniture. Only through his pious diligence has Crusoe come to possess this piece of land. The example of Crusoe is a microcosm of capitalism staking its right over the commodity products of capitalistic diligence. This sense of mastery and possession eventually extends to people too. He saves a prisoner of the cannibals, who occasionally visit the island to ritually consume their captives. He enslaves him in turn, calls him Friday, converts him to Christianity, and more importantly, teaches him awe towards European civilization, and thereby establishes between them the colonial master-slave relationship. Most modern commentators find this aspect of the novel hard to stomach. James Joyce said of Robinson Crusoe, â€Å"He is the true prototype of the British colonist†¦ The whole Anglo-Saxon spirit is in Crusoe: the manly independence, the unconscious cruelty, the persistence, the slow yet efficient intelligence, the sexual apathy, the calculating taciturnity† (qtd. in Phillips 33). The feminist critic Ulla Grapard comments that the self-sufficiency of Crusoe is misleading, for it fails to take into account the slavery he imposes on Friday. There is also the suggestion that civilization is the product of European man and his communion with god, with the exclusion of women and others, and therefore â€Å"imposes boundaries separating those who belong in economic discourse from those who do not† (Grapard 33). These are all valid complaints, but fail to take into account that colonialism and male-centeredness are inextricably part of capitalism. Not only the contents of Robinson Crusoe, but the medium itself was a revolutionary phenomenon. The novel form was an innovation that proved ideal to capture the spirit of individualism, as well as portray the plight of the individual in context of capitalistic modernity. According to Chesterton, the novel concerns itself with relationships. He also calls it a feminine medium, because understanding social relationship is the forte of women (39). Many consider Aphra Behn to be the first novelist, who published a generation before Defoe. But Oroonoko does not dissect social relationships to any extent, and is more intent on plain narrative, even though long. When the novel came of age in the Victorian era the female practitioners of the form advanced the medium greatly, among them Jane Austen and Charlotte Bronte. But there is good reason to call Robinson Crusoe the first novel, even though it is set far from human society, and therefore cannot deal with human relationships greatly. Defoe’s effort is the first novel because it considers the relationship that precedes all others, which is the relationship between man and God. Because of his physical isolation and instinct for survival, Coleridge saw in the character of Robinson Crusoe â€Å"the universal representative, the person for whom every reader could substitute himself† (qtd. in Keane 51). For a novel to succeed the reader must be able to identify with the protagonist in some way. In the case of Crusoe the reader’s identification is not only universal, but also works at a very fundamental level. Walter Allen call it a dramatization of â€Å"the inescapable solitariness of each man in his relation to God and the universe† (28). It is something that the individual must come to terms with before he can relate to others. Weber contends that Protestantism gave birth to the individual of modern capitalism, and identifies the Protestant work ethic as the means by which this became the social norm. But he fails to recognize the extent to which literature was also the instrument. Even before the advent of the novel literature was thoroughly engaged in the process of creating a â€Å"secular† instrument of creative expression. In the Christian era literature was overwhelmingly devotional, and even then limited by the parameters of Church doctrine. Like Bruno, Savonarola and Galileo, many were the martyrs and victims to the cause of self-expression. With the Protestant Reformation the authority of the Church was overcome, resulting in the emancipation of literature. It did not just express individualism, but was the means by which the individual discovered a new voice. For example, instead of composing paeans to the saints, Ben Jonson wrote flattering poetry aimed at his aristocratic patrons, and meant only for circulation in aristocratic circles. Even when the content was religious there was bound to be a personal or metaphysical element associated, as we find in the poetry of John Donne and George Herbert. The specific genesis of the novel can be traced to the search for scientific clarity and objectivity in literature. The Royal Society of London, apart from fostering scientific experimentation, also encouraged a style of writing that reflected scientific precision. The trend emerged of keeping diaries and journals; such a process was thought to mimic the procedure of scientific and empirical observation. The early members of the Royal Society were avid keepers of diaries, notable among them Samuel Pepys and John Evelyn. Diaries of prominent people were published posthumously. These served as the blueprints for the first novels. We notice that in Robinson Crusoe, Defoe is straining to follow the diary format in order to infuse credibility to his tale. There is even a section which is strictly in the diary format, which Defoe abandons after a point, with the excuse that Crusoe had run out of paper and ink. In truth it is a desperate attempt at realism, and Defoe only discards it when he sees that it is impeding the flow of the narrative, and that the last is more important. It must be kept in mind that Robinson Crusoe is not yet a novel, but is striving to become one. The greatest effort is made to camouflage the fictional aspect. The frontispiece of the original edition emblazons the word â€Å"LIFE† from the full title, which reads â€Å"The Life and Strange Surprizing Adventures of Robinson Crusoe, of York, Mariner†. To Defoe it was vital that the work be read as autobiography. The desired effect was realism, and to achieve this Defoe employs the style of the diarist. David Marshall comments: â€Å"From the outset, the narrative is preoccupied with autobiography itself as Robinson Crusoe engages in repeated and at times almost compulsive acts of autobiography† (899). Believability and the willingness of the reader to identify with the protagonist is crucial. To the modern novelist this comes naturally, for he creates his characters and immediately engages in their mutual relationships, which makes them both identifiable and believable. But for Defoe such a technique was not to hand. Nor did the circumstances of his protagonist allow for such. He has no option but to strive for realism through the context of autobiography. However, even the most vivid realism would not have made Robinson Crusoe a novel, if it was not for the continuing conversation that Crusoe establishes with God. This is the accidental feature that qualifies this work of literature as a novel. Not only this, but because the relationship that it considers is the most fundamental one, it becomes the protean novel, i.e. that starting point from which all other novels stem. It accomplishes the most difficult task, which is to establish the individual though his relationship with God and the universe. After this all subsequent novels can engage in the simpler task of exploring the relationships between individuals. This is why the mood of the novel is extremely somber throughout. It has led Charles Dickens to comment â€Å"Robinson Crusoe should be the only instance of a universally popular book that could make no one laugh and could make no one cry† (599). It is too serious for the ordinary emotions. Dickens himself wrote novels that made the nation laugh and cry with abandon, and such is what we normally expect from the medium. In conclusion, in Robinson Crusoe, Daniel Defoe has created a character that establishes the individual of modern capitalism. In his circumstance of isolation on a deserted island, and also in his discovery of God therein, Defoe finds the opportunity to demonstrate the Protestant work ethic in action. Through the portrayal of the work ethic we discover the emergence of capitalism and individualism, both advancing in tandem. As Crusoe strengthens his communion with God he discovers his individual self, and at the same time senses more and more his mastery and possession over the island. At the same time we notice the emergence of a new literary form, the novel. It is not only the ideal medium for the expression of capitalistic individualism, but was also historically the means by which it came to be established. Works Cited Allen, Walter Ernest. The English Novel: A Short Critical History. Boston: Dutton, 1955. Chesterton, Gilbert Keith. The Victorian Age in Literature. Oxford, UK: Oxford University Press, 1966. Defoe, Daniel. Robinson Crusoe. ICON Group International, 2006. Dickens, Charles. Selected Journalism, 1850-1870. Ed. David Pascoe. New York: Penguin Classics, 1997. Grapard, Ulla. â€Å"Robinson Crusoe: The quintessential economic man?† Feminist Economics.1.1 (March 1995): 33-52. Keane, Patrick J. Coleridge’s Submerged Politics: The Ancient Mariner and Robinson Crusoe. Ann Arbor: University of Missouri Press, 1994. Marx, Karl. Capital: An Abridged Edition. Contributor David McLellan. Oxford, UK: Oxford University Press, 1999. Marshall, David. â€Å"Autobiographical Acts in Robinson Crusoe.† ELH. 71.4 (Winter 2004): 899-920. Mathias, Peter. â€Å"Economic Growth and Robinson Crusoe.† European Review. 15 (2007): 17-31. Phillips, Richard. Mapping Men and Empire: A Geography of Adventure. London: Routledge, 1997. Weber, Max. The Protestant Ethic and the â€Å"Spirit† of Capitalism. Translated by Gordon C Wells, Peter R Baehr. New York: Penguin Classics, 2002. Whately, Rich. Introductory Lectures on Political Economy. 4th ed.; London, 1855. Zaleski, Philip. â€Å"The Strange Shipwreck of Robinson Crusoe.† First Things: A Journal of Religion, Culture, and Public Life. 53 (May 1995): 38-44.

Karl Marx And Friedrich Engels s Communist Manifesto

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Homeland Security And Law Enforcement - 3126 Words

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