Towards economic democracy

Towards economic democracy
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First Published: Sun, Jun 24 2007. 11 58 PM IST
In his seminal book, India after Gandhi, Ramachandra Guha quotes Babasaheb Ambedkar’s warning about India remaining a “mere political democracy”.
Ambedkar cautioned: “In politics, we will have equality, and in social and economic life, we will have inequality. In politics, we will be recognizing the principle of one man-one vote and one vote, one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man, one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we shall do so only by putting our political democracy in peril.”
In the rekindled debate about remuneration of company CEOs, it is this warning by Ambedkar, about the denial of economic rights, that assumes significance.
Nobody in their right mind can, or should, contest what any company decides to pay its CEO, least of all the state. These are the fruits of economic liberalization that these companies and their chief executives are enjoying.
If one accepts the reforms-preach that economic liberalization and market economics are a good thing for India, and that they will help roughly two-thirds of India’s billion plus population alleviate their economic status, one needs to seek a time frame. We certainly have a right to know exactly what the state is doing to ensure that the vast majority of Indians, who remain on the periphery of the market economy, are brought into the system, and brought there fast.
It is clear that the state has not done enough, and the present debate is a feeble attempt to divert attention from its own failure, and focus on the success of the Indian corporate sector.
But what should be a serious concern, and an issue for debate, is often being ignored. And that is the opting out of the economic elite from the political discourse. Economic liberalization has created a situation where the prosperous minority has been able to exclude itself from the political process completely, leaving it for the poor.
The rich have assiduously created for themselves a system that protects their economic rights without them having to participate in the political discourse in any meaningful manner. The poor are free to become politically active and aware, but have no avenues to assert their economic rights.
Indian democracy faces the twin challenges of retaining the economic elite in the political system and eliminating economic disparities.
These challenges can be addressed by the state collaborating with the corporate sector.
One obvious area where this collaboration is already occurring between the state and the corporate sector, albeit in an insignificant manner, is corporate social responsibility (CSR). All important corporate entities in India have, over the last decade or so, developed a serious CSR programme that voluntarily gives something back to society. However, one cannot get away from the feeling that a lot more can, and should, be done by the corporate sector under this programme.
Is it not time that a larger portion of profit by individual corporate entities be allocated compulsorily to CSR?
If the Indian corporate sector is operating and deriving profits from the utilization of resources that are the common wealth of society, then what it gives back to society should not be determined only by the company but by society as well.
The state represents society so, clearly, the state has the right to decide how much a company should contribute towards CSR.
One can almost feel the outrage in some of the influential sections of our society: “For God’s sake, they are already paying taxes. CSR is that extra effort by the company towards society.” The argument is valid, but if the corporate sector as a whole is as serious as it claims to be at helping the state eradicate long-surviving developmental lacunae, there will have to be an element of compulsion and greater resource commitment to the CSR effort.
Given the state’s penchant to waste resources, it would be unwise to entrust a larger corpus to the state. This would lead to more wastage. This is where the non-governmental organizations (NGOs) have a role. The reality is that the affected population (not merely project-affected, but reforms-affected) has developed a comprehensive distrust of both the state and the corporate sector. But, as the past two decades have shown us, they implicitly trust the NGOs.
The NGOs will bring accountability to the CSR effort which, if left entirely to the corporate sector may ignore society’s requirements, and if left to the state, may result in nothing but corruption.
For CSR to become meaningful, the state will have to institutionalize the roles of the corporate sector and the NGOs (along with itself). Perhaps equally significantly, the effort may re-engage the economic elite in the political process.
Mayank Bhatt is a writer based in Mumbai. Comments are welcome at theirview@livemint.com
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First Published: Sun, Jun 24 2007. 11 58 PM IST
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