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The India model

The India model
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First Published: Sun, May 16 2010. 08 42 PM IST
Updated: Mon, May 17 2010. 11 36 AM IST
The China model—or Beijing consensus—is shorthand for a suite of political and economic attributes that appear to have characterized China’s success. The essence of the idea is the combination of political authoritarianism with a version of capitalism that combines free market competition and some elements of state control. Perhaps this is not such a new model. Nineteenth century Germany and pre-World War II Japan both followed development models that did not feature the Anglo-Saxon combination of democracy and markets. But China is bigger, and China is the future. Moreover, the historical trajectory of those other two authoritarian capitalist countries does not provide comfort.
China’s leaders downplay the idea that they are providing a rival to the American world view, which shares values emphasizing the primacy of democratic structures with more egalitarian countries across the Atlantic. Of course, this is merely superficial: China’s actions implicitly bestow blessings on regimes that pay no attention to democracy. One could argue that US actions (from Latin America to West Asia to South-East Asia) have often had the same effect, but at least much of its population has perceived such cases as violating core national values.
The idea of a China model can also be seen as a projection of “soft power”— achieving co-option and attraction based on values, culture and institutions. The 2008 Beijing Olympics and the current Shanghai World Expo are examples of projecting soft power. Interestingly, hard power, based on coercion and payment, requires economic capabilities that increase with economic growth, and these same capabilities underlie the two soft power examples. In 2007, Chinese leader Hu Jintao told his Communist Party Congress that China needed to increase its soft power, and perceptions of the country appear to be improving. Success has many friends, in any case.
In contrast to China, India, the other fast-growing national giant, is a raucous democracy that has projected soft power much more naturally, in areas such as music and film, literature and philosophy. Paradoxically, its national image has not been on par with this cultural and intellectual diffusion. Perhaps soft power is overrated. India’s image has also become more positive as its economic success has increased. This success lags substantially behind China’s. Yet, in the long run, perhaps it is the India model that will prove to be more robust.
The India model, like the West, emphasizes democracy. But Europe and the US mostly built democracies on common religions and languages. Homogeneity often was imposed or achieved through conflict, making it easier thereafter to be “democratic”. In this sense, the Chinese approach to national identity is not dissimilar to Europe’s past. In contrast, India embraced a pluralism of language and religion that has remained a key feature of its polity. Europe and the US are only now coming to grips with the kind of pluralism that India has worked with for six decades.
The India model may also have the potential to shape the evolution of the marketplace. China took to factory production, in a repetition of the West’s industrial revolution. India has struggled with achieving manufacturing prowess, but things may be about to change. In a recent talk in Silicon Valley, Pankaj Chandra, director of Indian Institute of Management, Bangalore, pointed out that Indian firms have been winning a significant number of Deming awards— the international gold standard for manufacturing quality. He also gave examples of Indian firms overcoming constraints of infrastructure and resources by creating networks of producers, suppliers or component designers, for a variety of products. If the China model has been about replicating US-style factory production at huge scales, perhaps India will achieve larger scale for the flexible mass customization of production that has been characteristic of regions such as northern Italy.
In sum, India’s combination of pluralistic democracy and decentralized production may be a model that is ultimately more attractive to other developing countries. Hard and soft power will develop together, in a natural co-evolution. The strains of the China model are recognized, both inside the country and by outside observers. India has its own problems of inequality, conflict and poorly functioning institutions. But its democracy seems to have developed some self-correcting mechanisms for these problems, and dynamism and innovation may have taken hold in its private sector, in a manner that will sustain change. Bangalore and Bollywood may ultimately be a powerful combination, and the India model more robust and long-lasting than its Chinese counterpart.
On that optimistic note, I close my final column for Mint. I began by writing on public finances, and ranged over health and education, finance and management, crises and opportunities. My Eye on India has been in the context of a rapidly changing, volatile world, where history matters, and where complexity challenges us daily. The India model is well suited for this world, and can be a humane path for the future.
Nirvikar Singh is a professor of economics at the University of California, Santa Cruz. Your comments are welcome at eyeonindia@livemint.com
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First Published: Sun, May 16 2010. 08 42 PM IST