More than 80 years ago, Harold Hotelling, the economist who first investigated the nature of economic and political competition, bemoaned that such competition leads to cider being too homogenous, the Methodist and Presbyterian churches being too alike and factories making shoes that were too similar.
It is common to hear a similar refrain in India today. Wal-Mart will kill local flavours. The main political parties, the Congress and the Bharatiya Janata Party (BJP), are virtually identical and so is much of modern life: empty and homogenous.
But is that so bad? The fact is that for India’s progress, strong economic growth is a must and that is under threat today. Regional parties simply cannot promote growth for various reasons and only the big national ones (the BJP and the Congress) can do that. The dominance of two parties has been the political foundation of growth in most democracies. Hotelling’s contribution lay in showing how competition between two dominant parties leads their policy positions to be broadly identical. Political competition in India is producing similar results, with some local peculiarities, of course.
Hotelling’s model is simple. Imagine the population of a country being spread homogeneously on a “line” from 0 to 100. Suppose there are two political parties—a “left” party that attracts voters from 0 to 25 and a “right” party that has supporters from 75 to 100. Voters on extreme ends (0 to 25 and 75 to 100) are “captive”: they cannot switch their allegiance to a different party as they prefer the one “closer” to them in terms of ideas, ideology and other preferences.
Both parties, in turn, know this and want to attract more voters, forcing them to move towards the “centre” (around point 50). Both follow broadly similar policies. The spectrum, in terms of economic policymaking, is quite narrow: on the “left” a bit of redistribution, but within the framework of a reasonable degree of capital accumulation; greater focus on job creation and a faint air of progressivism. On the “right”, a greater emphasis on growth; keeping inflation under control and greater freedom for the markets. This is the observed pattern in the US, the UK and broadly in Europe.
The Indian variant—at least where the Congress and the BJP are concerned—is more or less similar to what is seen globally. There are some operational differences, however. In the case of the Congress, experience suggests the pattern during its rule is that of long spells of populism/redistribution, followed by a sudden correction in favour of the markets and growth during a crisis or as a crisis approaches. There are three data points that indicate this clearly: Indira Gandhi’s rule in 1971-1974 (garibi hatao) to her return in 1980 when she effected a course correction. A repeat once again from 1984 to 1989 and a correction in 1991. And in the latest round from 2007 to 2012. The difference in these instances lies in the intensity of the swing from the pole of populism to correction.
The evidence in the case of the BJP is a bit sketchy. In its first complete term in power at the Centre from 1999 to 2004, it broadly confirmed this trend. The deepening of economic liberalization in the footsteps of what the Congress had initiated was the keystone of its run in power. Today, for all appearances, it’s a changed party: it is against foreign direct investment in multi-brand retail and opposes increases in fuel prices. So does India violate the Hotelling pattern of party behaviour in democracies?
Not really. This similarity in party positions on policy questions leads to efforts to highlight “differences” between these parties that can be used to attract and mobilize support from the electorate. In the US, this turns into the race question. In Europe, immigration and the fear of xenophobia spell the differences between political parties.
In India, the difference between the BJP and the Congress boils down to “minority appeasement” vs support for secularism. As elsewhere, the closer the position of parties on economic policies, the greater the noise over alleged differences on other issues and so it is in India. The additional complicating factor in the present day is the presence of regional parties that have acquired a Congress-like taste for redistribution, but don’t care a whit for growth. The BJP is jostling in this space and hence its pro-forma protests. Had it been a party in power, its position would have been different.
So what should the two main parties do to regain their depleted strength? Many a commentator and analyst have bemoaned that if only the BJP could be less communal, matters would then be different in India and for the better. Hence, the suggestion that the main axis on which Indian conservatism ought to be defined should not be the Hindu-Muslim question, but an economic one, separating two parties along liberal vs social democratic lines. This is unlikely to work and is unnecessary, if only for instrumental reasons. In India, the lines of distinction are caste—something already appropriated by regional parties—and, of course, religious/secular distinction. If the two main parties remain wedded to economic growth, then it is important they mobilize on issues that are emotional and have a high noise-to-signal ratio. As for homogeneity, don’t worry: the regional parties are concocting a heady brew that tastes different in every state.
Siddharth Singh is Editor (Views) at Mint. Reluctant Duelist will take stock of matters economic, political and strategic—in India and elsewhere—every fortnight. Comments are welcome at email@example.com
To read Siddharth Singh’s previous columns, go to www.livemint.com/reluctantduelist