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Wednesday, September 23, 2020

Production, devolution, universalism, market-building key to wrest narrative

Markets are allocation mechanisms, information processors, ways of being social. Markets long predate capitalism; they will outlast it. Progressives need to learn to design and engineer them for workers and farmers.

Written by Anush Kapadia | Updated: August 17, 2020 9:36:03 am
india coronavirus, india policy making, indian economy, india coronavirus impact, india coronavirus impact on marketsThe value of e-way bills, suggesting improvement in intra and inter-state movements of goods, also picked up strongly in June over May across states. (File)

The right-wing has captured the “reform” narrative. Progressives focus almost exclusively on amelioration rather than transformation. What then is the progressive vision for the economy?

We naturally need amelioration given our wretched, entrenched poverty. Yet to lead with social security is to constantly play on the back foot. It is to operate as a “small-c conservative”, focussed on small-bore, targeted policies through well-calibrated schemes. It’s all very technocratic and plumbing-oriented.

Meanwhile, the revolutionaries are to be found on the right. True, they often have scant regard for the important plumbing details, but they capture hearts and minds. Their policies drive inequality, instability, and ecological disaster, yet people keep voting them in. Well-meaning progressives lament the irrationality of the masses while ossifying into what George Orwell called a “permanent and pensioned opposition”. Generations of progressives remain untested by the rigours of rule and lose sharpness.

The right never lets a crisis go to waste. Crises are used to roll out policies that think tanks have had sitting on the shelves. Progressives are always caught short, never missing an opportunity to miss an opportunity. What then should Indian progressives seek for the economy? What are our big ideas? We can outline some general principles, necessarily incomplete. Let’s call these production, devolution, universalism, and market-building.

The first principle must be production. “Self-reliance” captures this rhetorically, but that is hardly a new thought. The symbol on our flag is there because colonialism (associated, let us recall, with free trade) led to de-industrialisation and “drain of wealth”. This was a common colonial experience so most post-colonial nations opted for “import-substitution industrialisation” (ISI). That the right-wing is now reheating this old chestnut surely points to its salience. But ISI 1.0 was a disaster above all because it was an economist’s vision, all production functions and no real sense of production. Development is more than a collection of capital goods. It is the process of import-replacing done right. Being more productive means being able to make yourself what you imported yesterday, allowing you to import better stuff tomorrow.

It is popular to say that the export route to prosperity is now closed with the end of hyperglobalisation. But what applies to normal-sized nations does not apply to us. As if we need reminding, we are an extremely uneven continent. Our poorer regions still have a shot to “export” their way to prosperity, with richer regions playing consumers. Our current pattern is just the reverse: Rich states import labour from poorer states and send them manufactured goods along the colonial pattern.

Production, therefore, means focusing on cities and towns in poorer regions of India, leading to the second principle of devolution. Fiscal power must be transferred to the state and local level if we are to get policies form-fit for specific markets and conditions, if we are to reverse our internal colonialism.

Welfare is critical, but its governing principle must shift to universalism. The technocratic obsession with targeting, fuelled by electoral competition and fortified by cold middle-class morality, must cease. Dividing people into scheme-based categories also divides us politically. We can only explain the current crisis if we accept that we do not really see each other as full citizens, but merely as objects of welfare under some scheme. Entitlements must be universal rights. We need a universal basic income and universal healthcare now.

Finally, market-building. Progressives have to stop thinking about “The Market” as a den of vice. There is no such thing as “The Market,” only specific markets that do specific things. Markets are allocation mechanisms, information processors, ways of being social. Markets long predate capitalism; they will outlast it. Progressives need to learn to design and engineer them for workers and farmers.

Production, devolution, universalism, and market-building can all be given higher specification in detailed policies. But policy without vision only leads to a permanent and pensioned Opposition.

The writer is assistant professor, Department of Humanities and Social Sciences, IIT Bombay

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