Whither Capitalism…

Note, the first word in the title of this post is not “whether;” it is: “whither.”

While writing and updating my last post, many memories began surfacing. This post, again, is based on a particular, in a way trivial incident which occurred during my initial years with Objectivism. But there is a reason to share that incident because it shows a few things relevant to the debates concerning introducing capitalism in India today.

The time was 1984 or thereabouts. My friends from COEP and me had graduated from COEP (1983), and had begun “tasting” work-life and organizations (i.e. companies). Criticism of government, esp. over taxes, was a norm in the corporate life even back then, and generally, any young trainee engineer could easily come to appreciate that there was something to be said about economic freedom, even though no corporate honcho or intellectual would directly mention Capitalism or Ayn Rand as such.

The most prominent and honorable exception to this rule came from JRD, the then Tata Group chairman, who later on was most justifiably honored with a “Bharat-Ratna,” India’s highest civic award. Way back (I suppose perhaps as back as in the 1960s), JRD had financed production and distribution of pamphlets to managers (working anywhere, both in and out of Tatas), expressly meant for defending capitalism. These pamphlets did mention all of the three words: “Laissez-Faire,” “Capitalism,” and “Ayn Rand,” I have been told. (I myself never saw one of these pamphlets, but was told by very reliable people, senior managers teaching at management institutes or so.) Another similar exception was Rahul Bajaj. I don’t think he went so far as mentioning Ayn Rand herself. But he was a ruthless critic of the license-quota raj, of bureaucracy, and of mixed economy. Both the facts: his being a Bajaj, and his being a Harvard business school graduate, meant a lot in those days. He used the platforms and fora such as those provided by the Pune-based Mahratta Chamber of Commerce and Industries, very effectively. (Agriculture still was not included in the title back then; it still was only MCCI in those days.)

So, many freshly working engineers, who otherwise had never bothered with economic ideas, with isms, as engineering college students, had sort of discovered during their first few years in jobs that it was OK, perhaps even respectable, to discuss the “pros and cons” of different economic systems in a way that can be pro-business, so to speak.

Having nothing to do in life in the evenings (back then, engineers with even five years of experience could not get or afford scooters; the scene had just begun changing with the entry of the new Japanese collaboration bikes such as the Ind-Suzuki and the Yamaha RX 100), we, then fresh engineers, would often eat each others’ brains out in the evenings. A few had decided to give MPSC/UPSC a try, and therefore, were especially in the “knowledge” and “discussions” mode. Many had begun pursuing part-time MBAs, and therefore, were reading up economics in a serious way for the first time in life anyway. Others had ambitions of going to IIMs. Many of us shared apartments, in a “hostel” sort of life-style. Naturally, discussions were aplenty.

In one of such evenings, this same guy from the Jamnalal Bajaj Institute who I mentioned in my last post (the COEP + Bajaj graduate through whom we had come to know of Objectivism), was visiting Pune. We were eager to ask and discuss with him, about many things, both Objectivism and business and life in Mumbai in general—the sort of things young COEP juniors might ask one of their seniors. He had MBA in finance, and would talk in awesome terms about “strategy.” After a while, the discussion naturally turned to economics.

Now, since many of these other guys had not shown any interest in Objectivism earlier, they had no idea as to what precisely capitalism would mean, require, and imply. So, some time in that discussion went in that direction. Those few (3 or 4, myself included) who had read Objectivism did come from a moral angle. That satisfied the basic curiosity of almost every one. And yet, the UPSC types were still unsatisfied. This is all OK in theory, they thought, and perhaps would also hold out in practice if some of us were insisting it would, they said, but neverthless, they continued in an anxious way: “If this issue of Capitalism vs. Socialism comes up, what the hell do I tell the UPSC interview committee—i.e. if I at all make it to the interviews stage?” That was their basic question. In other words, it was OK if Capitalism is not politically correct (the term was unknown back then). But is it at least within the bounds enough to be used at the XPSC group discussions and interviews?

Confronted with this question, almost every one (but certainly not me) tried to think of a smart way that would combine both an enlightened advocacy of Capitalism and a killer impression on the UPSC interview committee. None could succeed. Few realized that a success in matters such as these simply isn’t possible. Yet, the atmosphere seemed to be settling towards a pro-Capitalism position. Plus, it was not yet time for the evening mess, and so the discussions could certainly continue.

At this point, I introduced a question that had bugged me a lot for sometime back then. Actually, I would have been more happy to ask it to some professor from a management institute (or the Gokhale Institute of Economics and Politics). But having a senior who had read Objectivism was good enough for me. So, I blurted out something like the following (which is a streamlined description of a lot of discussion by way of clarifying the question itself):

If Capitalism is to be introduced in India, then for a country as large, complex, and ancient as ours (even if as a nation we were young), its obvious that it can’t be done in one day.

Our lawmakers and the rest of politicians, and our bureaucrats, would obviously be against it. (Back then, I said so more out of the then lawmakers’ ideological convictions/inclinations rather than out of a consideration of their concern for protecting their turf/power-base/corruption-base, though both were considered and introduced by me in the subsequent discussion.)

Now, the world history shows that all deep systematic changes at the scale of a nation involve a lot of readjustments in the least, even pains many times. (Revolutions also happen.) A change in system involves pains. Since Capitalism is good, broadly speaking, I said, only the bad can experience the pain, the good won’t. Yet, the pain will be there. The entrenched interests of politicians, bureaucrats, and the life-sucker’s “rings” around them would be certain to experience it—and fight against the change using whatever means. (This observation had made a lot of serious impact without having to labor the point; the Emergency still was less than a decade in the past.)

If so, given the entirety of your knowledge of economics, of India, and of the current state of mixed-ness of India’s mixed economics, what do you think, I asked, would be the specific areas, or sectors, or industries that can be the best candidates for freeing up the economy, so that the requisite slow change towards Capitalism can occur with the least pain—so that, I added, we don’t lose out on whatever popular support for Capitalism that we can have. Implicit in the change is that the dishonest/corrupt people who lose their power would start barking, defaming Capitalism in the process. The question is: which areas etc. of the economic/political life of India offer us the best path for opening them up to free markets—and what could be the overall sequence or direction, in specific industries/economic sector terms, in which we could pursue such a program.

Well, none had an answer, not even a vaguest possible scheme by way of an answer, back then in 1984. None had even a speculation back then. The general agreement was that this was too complex a question. The senior friend then added that to the best of his knowledge, even Ayn Rand had not addressed this question, possibly because it was too complex even for her. I was not convinced. An approximate answer or a range of options could be good enough, I said. The point is, why not do this kind of thinking?

It was almost as if for most thinkers back then, even the advocacy for the moral nature of Capitalism itself had seemed to involve an uphill battle.

The reason I mention this question today is that even 26 years after that incidence, almost 20+ years after the fall of the Berlin wall and the collapse of the Soviet Russia, and some 18+ years since “privatization,” “globalization,” etc. began in India, people still are not able to feel free enough to think of beginning addressing this particular question.

Yes, there are advocates of “Capitalism” today, in India, and they have been vocal for some time now. During the BJP regime, they were busy asking why they can’t run a beer bar at the basement of their house, without mentioning in entirety the rational basis for Capitalism—and of course, without mentioning Ayn Rand. And, the Congress party was attacking the BJP for picking up for privatization only those government-run companies that were actually profitable, and selling them for a price far inferior to what their true worth would be, to foreign investors. (Hints of the “cut” made in selling these companies also were in circulation.)

Having made such charges back then, after coming to the political power, the Congress has completely forgotten about this entire privatization program. This is not a neutral position as might be supposed—it does help statism get entrenched in the system out of sheer intellectual inertia. People do silently draw some implicit conclusion to the effect, which, if wordified, would run something like this: “the government interference in economy has always been a ‘done’ thing in our country; it’s the normal state; may be it should be increased.” Since economics, like all areas of human endeavor and condition, is a dynamic phenomenon, not static, with finite limits (including the finitude of life-span), a seeming “neutral,” in matters like these, is not at all a neutral; it *is* a bias for statism, for coercive government controls.

And then, of course, apart from thus subtly stopping the privatization program in its tracks, the Indira Congress has since then also gone ahead with a whole array of welfare programs, thereby returning to such glorious pre-1991 times as under “Rajiv-ji” and “Indira-ji.” (If you don’t believe me, continue reading, for example, Shekhar Gupta. Or, Prabhu Chawla.)

Thus, all in all, the position is not even neutral; it is: increasing statism.

In Indian politics, as in the American one, political Opposition has always been avoiding any principles-based policy. No not that, they have been avoiding even a talk that is in any consistent way refers to principles. They don’t see their role of democratic political opposition, in terms of principles at all! All that they are interested in is blowing up this corruption scandal vs. that scandal. …

Ok. That is a political necessity, I can understand. You have to show the man on the street something dramatic every few months, else you lose even the basic touch with him—and together with that, your own political future. So, sure, corruptions and scandals have to break with some regularity. … There is a deeper malaise behind it. In a mixed economy, the media is always influenced by the government—i.e. by the political party that happens to be in power. So, a rational, even-handed media coverage is of course a first casualty. Therefore, just to stay in place, the opposition has to keep throwing up in the citizen’s mind one scandal after another. Corruption-related stories and scandals have their place.

The crucial question therefore becomes: Does the spectrum of opposition’s political activity *end* with these scandals? Or does it *begin* there? Do they then also go and offer some robust policy program that is based on rational principles—in this case, a morally based defense of capitalism?

If the answer to the above question were to be yes, then the opposition (today, the BJP; a sometimes, the Congress) would have not only released a blueprint of what they want to privatize first, but they would also have shown how and why. Alternatives in privatizing can exist. The political parties are the ones who are supposed to do their home-work in this regard and take a stand—not just vague talk, but a definite stand in terms of concrete courses of action.

Neither the BJP nor the Congress, in their roles as Opposition, have ever even dreamt of doing such a thing.

To the Congress, repeating catch-phrases like “aam aadmi,” “secular” etc. is enough—even if in de facto pursuing pragmatism, they have been ending up looking even worse than the Left. If you think this is far-fetched, then, considering the actual evidence of their actual government spending programs, and ambitions for the same, ask yourself: who is better (or worse): a Somnath Chatterjee or a Sonia/a Rahul/an XYZ from the Indira Congress? You may be hard-pressed for the answer.

As to the BJP, they are *not* pragmatic. Their long-term program seems to be clear: First, uplift India into the Hindu counterpart of the Islamic Republic of Pakistan. Then (or simultaneously), try to dissolve both Pakistan and Bangladesh under a single pan-Indian sub-continent Hindu dictatorship, based on the pre-Renaissance, pre-enlightenment variety laws given by the like of, say, Manu, Chanakya, etc.

Neither is concerned with Capitalism—certainly not the Indira Congress, but not even the BJP (no matter what Atany Dey’s, and his blog-commenters’ convictions).

And it is for this reason that people—not just ordinary people but even the most “right” among our intellectuals—really are far away from even considering a question like the above, viz., what would be the best path to Capitalism in today’s India, what sectors/areas/industries should be freed up first—and the reasons thereof. Questions like these are so remote to them that they don’t even have the reality of a fiction to them. Capitalism is actually reduced, by them, only to a convenient catch-phrase, a phrase that means nothing in particular except perhaps a “feelgood” glow in the heart, a term that may be abused any which way. That’s how Capitalism remains an unknown ideal even to those who say they are pro-Capitalism.

It’s a pity that the best of our public voices still discuss “Whether Capitalism,” not “Whither Capitalism.” [With my limited knowledge of English, I think, the word “whither” can be used here. If not, please let me know.] The word “whither” here is to be taken in the sense: which areas do we choose to begin freeing up such that greatest positive impact is made towards the popular support for Capitalism, and least political resistance is encountered.

Any ideas or suggestions on this topic would be welcome—whether as comments/replies to this blog, or as posts at your blogs, or as independent essays or articles in the media. If you know a better word than “whither,” please do let me know. Thanks in advance for both.

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A Song  I Like:
(Hindi) “main jahaa chalaa jaaoon, bahaar chali aaye…”
Singer: Kishore Kumar
Music: Laxmikant-Pyarelal
Lyrics: Anand Bakshi

[I may revise/streamline this post a bit later on.]
[E&OE]

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