Why capitalism is like a broken down car

Professor Muhammad Yunus was at his provocative best here at the World Economic Forum annual meeting in Davos.

In a special one to one debate with Rana Foroohar from Time magazine, he claimed that the current capitalist system simply had to be replaced altogether. He likened the current capitalist system to an old car. When you have an old car, he said, it starts to break down and you have to repair it. Then it breaks down again and you have to repair it again. This starts to happen more and more frequently until it is only logical to replace the old car with a brand new model.

Logic dictates, he maintained, that as the current capitalist system keeps breaking down it must be replaced with a completely new economic system. There was a glint is his eye when he said this because he knew that he caught everyone’s attention but he went on describe what a new economic system might look like.

He wanted new business models and ethics to be introduced. He said that all business should become social businesses where there no dividends were paid out and all profits were simply put back into the business so it could develop. He also wanted children to be taught enterprise at school.  There was far too much emphasis on children becoming job seekers and there should be there should be a way children could learn how to become job creators when they left school.

Yunus was full of ideas about what a sustainable economic system might look like in a world where poverty no longer existed. There has been a great deal of discussion in Davos this year about how to change the current economic model. The notion of “compassionate capitalism” is a recurring theme but the concept of a completely new economic system as outlined by Yunus took some of the discussion onto a different level.

As the engine of the current economic system seems to be straining and spluttering with high unemployment, so the idea of having a completely new car to deal with the challenges of today seems quite appealing. But what will this car look like and how do we get it on the road and then who will drive it? I applaud Yunus for asking these questions and creating an excellent debate.

What next then? Will 2012 see the introduction of a new car or will the current model be back in the garage for more urgent repairs?

Pictured: A man repairs a car on a street in Havana in this September 22, 2010 picture. President Raul Castro’s recent decision to almost triple the size of Cuba’s legal private sector from the current number of 143,000 self-employed is expected to accelerate cash flows from Cubans living abroad, experts say. REUTERS/Enrique De La Osa