Opinion | Adam Smith’s ‘man of the system’ retains its resonance
Directing people in ways inconsistent with their preferences tends to deliver poor results
PremiumThe protests across India last week against the Citizenship (Amendment) Act (CAA) and a potential National Register of Citizens (NRC) were dominated by students, who also had placards on the severe slowdown of the economy and lack of opportunities for the youth. These protesters demanded that the government focus on boosting the economy instead of creating social divisions.
Economic and political authoritarianism may feel different in their imposition, and have different implications for our daily lives. But the dichotomy between the economic and social, as an either/or, is false because both the economic crisis and the CAA+NRC crisis can be traced to a common attitude. The problem is a mindset that believes society and the economy can be engineered, and that a government, with its army of bureaucrats, is equipped to do so.
In The Theory Of Moral Sentiments, Adam Smith wrote, “The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board."
To men of the system, like pawns on a chessboard, the purpose of individuals is to protect the king, often by being sacrificed. The only costs and benefits that matter are those faced by the system. The costs borne by individuals because of invalidated currency or lack of identification or citizenship papers are irrelevant in their calculations.
The problem with Indians being treated like chessboard pieces is that we are human. The unanticipated human response to demonetization led 99.3% of invalidated currency back to the Reserve Bank of India. There were few benefits and enormous costs in trying to go after black money. The action revealed a misunderstanding of how humans navigate a complex economy under stifling regulations. Similarly, the human response to a poorly conceived goods and services tax and its harsh enforcement has shown up in a severe contraction of economic activity. Humans, unlike chess pieces, form expectations, make inferences and display emotions such as anger, resentment and fear. Governments that tinker with gross domestic product growth numbers, and pretend that the economy is doing swimmingly well, make humans nervous about making long-term plans and investing. People do not necessarily feel relieved when they are told that they have misunderstood the government’s intentions.
Policies like demonetization and the proposed NRC have far more in common than is visible at first glance. The NRC is the latest in a long line of policies that the Narendra Modi government has formulated that treat Indians like chess pieces. And again, we have failed to live up to and execute the plan, as our individuality, diversity, sympathy and morality get in the way.
As is evident from last week’s protests, India is complex and diverse, even when coming together to protest a government’s actions. The interests and agendas of protesters are not uniform. What people are protesting is the discriminatory effect of the CAA combined with an NRC. Some people in border states are against the CAA as they do not want their states (and by extension, India) to provide a safe haven to any outsider. Many others believe the CAA does not go far enough since it excludes persecuted Muslim minorities. Yet others want not just religious but also linguistic minorities who have suffered persecution, like Sri Lankan Tamils, to be included.
It is important not to forget that people have identities, affiliations and sympathies that are not limited to religion. The majority in Parliament won by the Bharatiya Janata Party appears to have been misinterpreted as a mandate for a majoritarian agenda. But it is too simplistic to identify 1.35 billion Indians by their religion alone. Tamil-speaking Hindus may have more in common with Tamil speaking Muslims, Christians and Buddhists, than with Hindi-speaking Hindus. Syrian Christians and Dalit Christians may often have opposing agendas, while Dalit Buddhists and Dalit Christians may share far more common ground. The NRC in Assam has left both Hindus and Muslims off its rolls, but many Assamese consider a Bengali Hindu as much of an “outsider" as a Bengali Muslim. The reason India can only work as an inclusive society is because its pluralism cuts across so many dimensions, and with so many interests, that no single uniform identity can be ascribed to all. The prejudices, bigotry and biases as well as the liberalism, inclusiveness and pluralism of Indians tell us the same thing—that Indian society is too complex to be re-engineered on the basis of a monolithic identity. Using single-dimension blunt instruments like the CAA-NRC combination for social outcomes, or demonetization for economic results, will always be very risky.
That Adam Smith so accurately managed to describe the mindset of the system man 260 years ago shows the persistence of such thinking over the centuries. What Adam Smith realized was that directing people in ways inconsistent with their preferences would lead to poor results.
Shruti Rajagopalan is a senior research fellow with the Mercatus Center at George Mason University, US
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