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Business News/ Opinion / Online-views/  More localization will make the world better

More localization will make the world better

Fundamental changes in the prevalent approach to economic growth need to be considered

India’s GDP growth has been quite good for some years, but not enough good jobs and sustainable livelihoods have been generated. Photo: MintPremium
India’s GDP growth has been quite good for some years, but not enough good jobs and sustainable livelihoods have been generated. Photo: Mint

India is facing many challenges, as are countries all around the world. Three of India’s most prominent challenges are: a crisis in the agricultural/rural economy, a need for much faster and more widespread generation of jobs and livelihoods, and rapid degradation of the environment.

Cries for attention to the rural/agricultural crisis are becoming louder, with suicides of farmers in many parts of the country. It was thought that this was largely a monsoon problem—too little rain or too much—which interfered with the production of crops. However, farmers’ demands for relief have become more loud this year, despite good rains last year and, consequently, higher production. This makes it clear that the problem is in the pattern of the rural economy, not in nature.

The problem of “jobless growth" has begun to receive the attention of policymakers who seemed to be fixated, so far, on higher gross domestic product (GDP) as a panacea for all problems. India’s GDP growth has been quite good for some years, but not enough good jobs and sustainable livelihoods have been generated. Indeed, the agriculture/rural crisis is a consequence.

India is staring at an enormous environmental crisis. Cities are getting choked with solid waste. Air pollution in Indian cities is the highest in the world. Groundwater levels are reducing very fast in urban and rural areas. The health of the soil has been degrading for decades.

These problems are created by the pattern of growth. More growth will not reduce them. In fact, if the pattern of growth is not changed, the environmental crisis will become worse with more growth. Therefore, one must consider fundamental changes in the prevalent approach to economic growth.

Begin with the obvious. That is, the economy, society and ecology are integrated in a system. Changes in any one of these components will affect the others. Components of systems must coordinate with each other for the system to remain healthy. Moreover, there must be harmony amongst the components wherever they come together for the whole system to remain healthy. The blood, the flesh and the bones must be adjusted with each other in all parts of the body. If there is disharmony amongst them in any part, the body becomes ill. Similarly, if society, economy and ecology fall into disharmony in any part of the world, trouble will grow and spread. Disharmony in the Middle East is affecting the whole world. Urban India cannot be well if rural India is not.

The problem is, we mentally break a complex system into parts and then try to improve them separately. Thus, economists worry about the economy, and sociologists about society, and ecologists about ecology. And they quarrel with each other. Economists think ecologists are coming in the way of growth. Sociologists think economists do not understand that human beings are, well, human beings and not factors of production. Each part of the complex system is managed by specialists reporting up to the top of organizations and governments. There, they try to coordinate the whole system. All have their programmes and their budgets and each passes down instructions to its subordinates in the localities who are responsible for only a part of the system. Not surprisingly, the system is not integrated on the ground where it should be.

The obvious solution to this systemic problem is to devolve responsibility for the governance of the system to the localities. However, the experts at the top are reluctant to let go of their power. They claim that the locals will not have the capability to manage, and so the centre must take on the burden of managing the locals. M.K Gandhi advocated the devolution of power to the villages. However, Jawaharlal Nehru’s vision of centralized planning and large-scale projects prevailed.

The 20th century witnessed a great war of ideologies: of communism versus capitalism. Communism failed to deliver a better solution than capitalism. However, capitalism has failed too, to resolve issues of inequity and ecological degradation. Both these politically different ideologies subscribe to the same gods of “centralization" and “scale" in methods of production. Communist factories and capitalist factories are organized in the same way. The only difference in the two systems is in the ownership of the assets. In communism, the assets are owned by the state. In capitalism, the assets are accumulated and owned by capitalists. In both systems, local producers become parts of large supply chains, sending their produce upwards, and receiving value-added products for consumption downwards.

Gandhi’s charkha (spinning wheel) is known as a quaint symbol of local industries. But it is greatly misunderstood because the depth of his knowledge of systems management is not so well known. These ideas are cogently presented in an excellent book, The Web Of Freedom: J.C. Kumarappa And Gandhi’s Struggle For Economic Justice, V.M. Govindu and Deepak Malghan. Kumarappa and Gandhi understood from extensive experience, on the ground, that local management, at the village level, was the only way that an integrated system, of the economy, society and ecology, would be improved. Their ideas were flying in the face of the drive for large scale, centrally managed enterprises—in both the Soviet Union and the US.

Small industries could not compete with the efficiencies of large ones, with mass production technologies dominant in the 20th century. Now, with the internet, Industry 4.0 and smartphones, technologies to make small enterprises competitive are widely available. Small enterprises, connected into large networks, can have a great reach to markets. They can obtain resources of finance and information more easily. Village enterprises, and village-level governance, are feasible ideas now. They will help address the multifaceted economic and ecological challenges India is facing. What is required is a change in mindsets to empower local governance and networks of small enterprises.

Arun Maira served in the erstwhile Planning Commission.

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Published: 03 Jul 2017, 01:23 AM IST
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