by Misha Lepetic
By now the scrappiness of the emerging economies’ entrepreneurial class has become a recognized trope of the folklore of globalization. Starting with Muhammad Yunus’s initial investments in the microfinance concept, to Tata Motors’ Nano, Western observers are being treated to an ever-increasing flow of news celebrating how doughty innovators are operationalizing elegant solutions to sticky problems that developed nations have, for many decades now, attempted to solve with boatloads of aid money, much of which was eventually misspent, misappropriated or outright stolen by its recipients, their governments and/or various inexperienced or misguided middlemen.
Now, augmented by the newly formulated war-cries of sustainability and climate change, these kinds of innovations and the drive behind them seem to be taking on even greater importance. In these neo-liberal, post-regulation end-times, the narrative tells us: Let a thousand flowers bloom. But what is it that we really see, and will we get what we expect?
Before we can understand what our expectations might be, we should ask about measurement, since what and how we choose to measure ultimately reflects back to us the criteria for its success. In the language of business and the capital markets, there are narrowly defined criteria that determine success factors, such as return on investment, cost of goods sold, and depreciation and amortization of tangible and intangible assets. Some of these criteria are little more than fictions spurred on by tax considerations, but each plays a crucial role in whether a firm decides to make an investment in new product development, how it may choose to commercialize this development, and most importantly, at what point it will consider the product a success, or withdraw it from the marketplace.
There are, of course, serious lacunae here. Currently accepted practices do not compel firms to take into account factors such as waste stream management, or greenhouse gas production, or carbon footprint. Nor do relevant regulatory bodies consistently provide incentives, such as tax write-offs or R&D subsidies, that would serve to introduce these exogenous costs into mainstream financial decisionmaking.

The late economist Hyman Minsky wrote that after fortunes inflate on the back of a speculative bubble, and after investors’ irrational optimism and overvalued assets inevitably collapse, an economy enters a “period of revulsion,” when people remember that it’s risky to bet big on an uncertain future. Likewise, it’s always during the depths of a hangover that a drinker remembers how whiskey invites its own overconsumption and swears that the only way to avoid another descent into this purgatory is to never touch the stuff again. But after the fog leaves and with a clear head regained, he forgets the pain after the party and declares another Manhattan to be an eminently reasonable investment. Of course, the trick is to recall at just that moment how miserable you’ll be after another three. A pessimistic economist faces the same cyclical popularity as a tee-totaling friend; a consoling voice the morning after becomes a buzz killer as soon as night falls again.