The approaching election in Uttar Pradesh resembles an imminent surgery in the hospital. Both have a way of crowding out all other thoughts from the mind. The world is in the midst of a major crisis of confidence in its economic system-- that is called capitalism--but the people of UP are hardly aware of it, and do not much care about anything except who will rule from Lucknow. Both Europe and America are in a bad state economically. Even India’s economy has slowed down, and the recent debate about foreign investment in retailing shows that we are still suspicious about the market.
 
Indians increasingly believe that markets do deliver greater prosperity, but most of us still think that capitalism is not a moral system. We continue to believe that morality must depend on religion. This is a mistake for human self-interest can go a long way to ensure good behaviour. A seller who does not treat his customers with fairness and civility will lose market share. A company that markets defective products will lose customers. A firm that does not promote the most deserving employees will lose talent to its competitors. A buyer who does not respect the market price will not survive. Lying and cheating will ruin a firm’s image, making it untouchable to creditors and suppliers. Hence, free markets offer powerful incentives for ethical conduct, backed by state institutions that enforce contracts and punish criminal behaviour.
 
If the market is based on an inbuilt morality, why are there so many crooks in the marketplace? The answer is that in every society there is a natural distribution of crooked people, and the market has its share of them, which is why we need effective regulators, policemen and judges. We should design our institutions to catch crooks and not harass innocent people as we do too often.
 
Some Indians believe that capitalism has been forced on us by the imperial West. This too is a mistake. Friedrich Hayek, the Noble laureate, called the market a spontaneous order--it is natural for human beings to exchange goods and services—and in the process every society evolved money, laws, conventions and morals to guide behaviour in the marketplace. These are natural products of human endeavour. Nature’s morality in the marketplace begins with idea of freedom—the freedom of the individual to choose to buy or sell any product, or get a job of one’s choosing. Both competing and cooperating also come naturally in the market economy. Eeven two farmers, who do not particularly like each other, will cooperate when it is in their interest to do so. Teamwork is vital in modern enterprise since everyone is inter-dependent. 
 
People are suspicious about capitalism because they mistake “self-interest” of the market for selfishness. A selfish person transgresses on the rights of others, but self-interest is normal rational human behaviour. For example, if it rains, I will carry an umbrella—there is nothing selfish about that. Our desire to buy at the cheapest price and sell at the highest price is an expression of rational self-interest. Whether we like it or not, India is headed in the direction of some sort of democratic capitalism, and every time an election rolls around it is our duty to punish those politicians who announce free giveaways and reward those who educate the electorate about liberal institutions like the market. This is how we shall conquer the pervasive poverty that has characterised the lives of the majority of our people in history.

The most damaging fallout from the global economic crisis may well be a loss of trust in the democratic capitalist system, especially if those who are unemployed and suffering begin to believe that "anything goes" in an unfair world. In the rush to rewrite the rules of the game, policy makers might consider the message of dharma which offers a more nuanced answer to moral failure and the ethics of capitalism.

Dharma can mean virtue, duty or law, but is mainly concerned with doing the right thing. It is the moral law that gives order and balance to each human being and the cosmos. The concept is uniquely suited to guiding us through our present economic and regulatory quagmires because it is concerned with the achievable rather than the ideal. It recognizes that happiness comes from upholding a certain balance, by living according to a system of beliefs that restrains and gives coherence to our desires.

Dharma is exemplified in the story of Draupadi in the Mahabharata. Draupadi asks her husband, Yudhishthira, about unmerited suffering: "When everything was going so well for us, why was our kingdom stolen in a rigged game of dice?" she complains. She exhorts her husband, who gambled away the kingdom, to raise an army and get their possessions back. But he reminds her that he has given his word to his enemies to remain in exile for 13 years as punishment for losing the game.

"What is the point of being good?" she persists. "Isn't it better to be powerful and rich than to be good in an unfair world where those who steal and cheat sleep on sheets of silk and pillows of down while those who are good have to settle for the hard earth? Why be good?" To this he replies in the only way that he knows: "I act because I must."

Yudhishthira 's answer represents the uncompromising, compelling voice of dharma. All of us would feel reassured if more CEOs of our companies would also say when faced with dharma sankat: "I act because I must." For good acts produce good karma, and these acts eventually change the balance of dharma in the universe. If people did not keep their commitments, the social order and the rule of law would collapse. Dharma is needed by everyone to live a happy, flourishing life.

Dharma draws a fine line between rational self-interest and selfishness. If envy is the sin of socialism, greed is the sin of capitalism. As capitalist nations grow, the resulting wealth creates enervating influences. Generations of savers are replaced by spenders. Ferocious competition is a feature of the free market and it can be corrosive. But it is also an economic stimulant that promotes human welfare. The choice for policy makers today is not between free markets and central planning but in getting the mix of regulation right. No one wants state ownership of production where the absence of competition corrodes the character even more. Dharma's approach is not to seek moral perfection, which leads inevitably to theocracy or dictatorship. It recognizes that it is in man's nature to want more and it seeks to give coherence to our desires by containing them within the discipline of an ordered existence.