Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

Opinion | Social harmony is good for economic growth

Economic growth seems to have been made by some economists into the ultimate goal of public policy, and even the purpose of all human endeavour

Prime Minister Narendra Modi promises to eliminate corruption in India. His signature economic reform—demonetization—was supposed to be a masterstroke to uncover black money and reduce corruption. It back-fired and stalled economic growth instead. Growth is required to create more jobs to increase citizens’ incomes and lift more people out of poverty. Can we have both: less corruption and higher growth in a developing economy?

Some economists and political scientists suggest that corruption is a lubricant for faster growth. Comparison in Europe between 1950 and 2000 reveals that the country whose economy grew the fastest was Italy. Poor and devastated by the war, its economy grew to become as large as the UK’s by the end of the century. Italy was also estimated to have the largest “parallel" economy among all large European countries. Robert Klitgaard says in Controlling Corruption, “The optimal level of corruption will not, in practice, be zero." Samuel Huntington suggests in Political Order In Changing Societies that proceeds of corruption can bind together otherwise unstable social groups. This phenomenon can be observed in India, in the politics of Uttar Pradesh, Bihar and Tamil Nadu, where the acquisition of power by historically suppressed communities as well as corruption grew at the same time.

Growth is the panacea for all problems according to some economists. According to them, anyone who may point to the undesirable side-effects of rapid growth, as pesky environmentalists do, and equity advocates too, is “anti-growth" and therefore intellectually weak. The question for growth evangelists is this. If corruption (though by means not quite clear), seems to produce more economic growth, should one tolerate corruption? Indeed, should not more corruption be encouraged to produce higher gross domestic product (GDP)?

The fallacy in the “growth first and the rest later" thesis (of which “grow the pie before you distribute it" is a popular statement) is that it seems to deny that societies and citizens may value some other things too, which they are not prepared to sacrifice merely for the sake of more economic growth. Among these other things are social cohesion, the sense of fairness and justice.

Though many things matter to people, economic growth seems to have been made by some economists into the ultimate goal of public policy, and even the purpose of all human endeavour. To promote any public policy, whether for education, or health, or even more justice, the test seems to be whether or not it will increase economic growth. Consider this. A recent study by Damian Ruck and Daniel Lawson, in the journal Science Advances, has generated a lot of interest because it has estimated how much “secularism" contributes to economic growth. It reports that an increase in a single unit of a quantitative measure of secularism corresponds to an increase in per capita GDP by $1,000 after 10 years, $2,800 after 20 years, and $5,000 after 30 years. I, for one, welcome all arguments in support of secularism. I wonder though how one can make quantitative estimates of something as complex, and intangible, as “secularism". And why is it necessary to show that for something to be valuable, it must contribute to economic growth?

Corruption and secularism are intangible concepts. On the other hand, the environment, land, water, and trees around us are concrete (albeit not in the “cement" sense, though unfortunately becoming too much so). Whereas it is not easy to see the relationship between economic growth and intangibles like corruption and secularism, the impact of rapid growth on the environment is clear. Yet, the environment is sacrificed for faster growth. Forests are cleared, waters misused, and the air is polluted for the sake of faster economic growth. Those who protest are anti-growth.

The “economic growth first, everything else later" argument is not working for the environment. In Gurugram, India’s “Millennium City", buildings are reaching into the sky. Penthouses poke into densely polluted air. Indeed, Delhi and Gurugram are among the most polluted cities in the world. Beneath these tall buildings, another environmental problem is becoming a crisis. The level of the underground water table is falling rapidly in Gurugram and throughout north India. Nasa’s satellites have revealed that ground water levels in north India are falling on average by one metre every three years, and in Punjab by a metre a year. This in a country in which 60% of agriculture, and 85% of domestic water supply depends on ground water.

The recent collapses of several high-rise buildings under construction in the National Capital Region provides a metaphor for the dangers of rapid growth without strong foundations. Growth is good. But other things are necessary too to create a better world for everyone, such as equity, respect for others, equal opportunity, social harmony, and environmental sustenance. The ideology that economic growth is the end, and everything else is the means, has it backwards. Economic growth is not the end: but it can be a means to enable the growth of these necessities of good societies. Therefore, it is not the quantum of growth that matters as much as the pattern of growth, so that these other qualities are built along with growth.

Corruption takes many forms and affects development in many ways.The discourse on public policy is being corrupted by an economic fundamentalism that places economic growth alone (and GDP as its measure) on an altar; and which seems to shut down, as infidels, all those who question the high priests of this narrow ideology. More serious is the corruption of public discourse by social media technologies, which are causing divisiveness, spurring violence, and destroying social harmony. This, according to studies cited, will reduce economic growth, job creation, further fuelling unrest and violence. If people on both sides of the dangerous divides tearing Indian society were to stop tweeting barbs at each other, and hug each other instead, social harmony will improve, and economic growth will also increase.

Arun Maira was a member of the erstwhile Planning Commission.

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