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Business News/ Opinion / The morality of markets
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The morality of markets

For a variety of reasons, India never had a sizable economic right wing or a political constituency committed to free enterprise

While campaigning in Madhya Pradesh, Rahul Gandhi launched a scathing attack on the principal opposition Bharatiya Janata Party’s (BJP’s) ‘capitalist politics’. Photo: Pradeep Gaur/Mint Premium
While campaigning in Madhya Pradesh, Rahul Gandhi launched a scathing attack on the principal opposition Bharatiya Janata Party’s (BJP’s) ‘capitalist politics’. Photo: Pradeep Gaur/Mint

Markets are both moral and efficient

“We are empowering India by giving the common man all kinds of rights," Congress vice president Rahul Gandhi said at a rally in November last year. “We run a government at the Centre which gives rights to the people...We believe in inclusive growth," he had said earlier in a speech at Aligarh in October. While campaigning in Madhya Pradesh, he launched a scathing attack on the principal opposition Bharatiya Janata Party’s (BJP’s) “capitalist politics".

Obviously, Gandhi intends the label as a slur. It speaks to how left his economic vision is when he describes the BJP as “capitalist". One could dismiss the Congress vice president’s pronouncements as borne of naivete and ignorance—but even technocratic voices within the United Progressive Alliance (UPA) government have made celebratory utterances of “rights-based development" that Rahul Gandhi has claimed is a “guarantee of progress".

The rights-based development paradigm fundamentally misunderstands both the reasons behind India’s poverty, and the direction governance in India needs to take to emancipate millions from destitution. This paradigm typically directs individuals to accept a pathetic quality of goods and services by insisting on having inefficient and incompetent government organs provide what private individuals and society can. This stems from the inability of politicians steeped in socialist thinking to separate the “how much" help that poor should get from the mechanics of “how to" help.

The perverse effects of government intervention cut both ways—when onion prices rise, the state snatches away an export bonanza for onion farmers. On other occasions it bans imports, raises procurement prices and adds various regulations just to sustain the corrupt political economy of agriculture.

Instead, the state should concentrate on helping the poor agnostically, irrespective of whether they reside in cities or villages and whether they work on farms or factories. Food inflation and private school access, for example, could be great topics based on which a talented politician could explain free market competition in rural India.

But as Centre for Policy Research president Pratap Bhanu Mehta has correctly written, the Indian Right has failed to link “purely economic arguments with an effective moral framework." The question of why the right has failed thus far is, indeed, an important one.

Economic arguments against socialism in mainstream Indian public discourse are themselves a recent phenomenon. For a variety of reasons, India never had a sizable economic right wing or a political constituency committed to free enterprise. Intellectual discourse on such issues from independence till the 1990s was stoutly against liberal ideas—the reform proposals of pioneering thinkers like B.R. Shenoy and Jagdish Bhagwati were ignored through the 1960s, 1970s and 1980s.

All opposition parties simply adopted different hues of the same left economic thinking that the Congress, as the pre-eminent political party in independent India, championed under Jawaharlal Nehru and then Indira Gandhi. The Jan Sangh differed consistently from the Congress more on issues of secularism, national identity and foreign policy than on economics. C. Rajagopalachari’s Swatantra party, which was the only formation explicitly committed to economic liberalism, was all but wiped out by Indira Gandhi’s jingoistic juggernaut of socialism.

The cardinal error ideologues on the right made was to accept the left’s charge that capitalism was about materialism. Political ideologues such as Deendayal Upadhyaya of the BJP’s predecessor, the Jan Sangh, articulated integral humanism as the guiding philosophy of the party that later emerged as independent India’s dominant right-wing force.

Upadhyaya believed that both communism and capitalism were unsuited to India and sought to amalgamate features of both philosophies into a new theory grounded in humanism. Though he rightly understood communism to be anti-individual, he narrowly viewed capitalism not as a force that favoured—and emerged from—individual freedom, but as one that promoted materialism at the expense of spiritual self-actualization.

But it is communism and socialism that promote materialism by placing primacy on achieving material equality for individuals through state coercion. The very notion that the material equality of individuals should be the yardstick by which to measure the morality of a society betrays the obsession of the left with materialism. The emphasis placed on material equality shows how leftists seek to impose their own obsession onto ideological opponents.

Capitalism, in contrast, creates space for individual self-discovery without regard for material equality. It is more egalitarian because it leaves each individual free to define their own standard for economic success as a subset of—but not the entirety of—their unique path to satisfaction and happiness.

To illustrate, a socialist economy forces individuals to enter a very specific pool of professions because those professions alone promise success in a barren economy. It also forces individuals to cultivate political connections, besides straitjacketing society into sacrosanct hierarchies—this is the experience India had till the dawn of economic liberalization in 1991, until when even the wealthy lived in fear of leading politicians.

In contrast, a capitalist economy accepts individuals as they are, and allows them to grow into what they want to become—whether its an entrepreneur, musician, actor, radio jockey, chef, business executive, danseuse, doctor, aerobics instructor, singer or stand-up comedian. It is no coincidence that the there has been an explosion of profession types in India only since liberalization took off.

The great American artist Andy Warhol had once thus observed the beauty of American-style capitalism: “What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking."

Moreover, the only economic system compatible with India’s spiritual heritage is capitalism, for both accept and allow for a panoply of pathways towards the end goal of self-realization. Capitalism is the economic analogue of the philosophy that pervades and defines the highest traditions of our spiritual life, if one agrees that our traditions are rooted in pluralism. It also follows that communism and socialism are antagonistic towards these traditions.

While some may have intuitively understood this, most politicians and thinkers on the right fail to see this linkage. Those who espouse the cause of the cultural right don’t see capitalism as a philosophy in consonance with their traditional values, because these values themselves were distorted by British rule, when a Victorian morality seeped into social life in India. Votaries of the economic right have failed to see our spiritual heritage as complementary to economic liberalism because they too have bought into the Victorian narrative.

For a billion plus unique dreams to be fulfilled, the appropriate economic model for India is free-market capitalism and not a stultifying socialism that has failed to end dignity-sapping poverty. India should embrace capitalism not just because for reasons of economic performance, but because it is in congruence with our moral and spiritual heritage.

Rajeev Mantri and Harsh Gupta are co-founders of the India Enterprise Council.

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Updated: 24 Feb 2014, 01:16 PM IST
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