Opinion From makers to buyers

How was the state under Deng pragmatic? Former US Secretary of State Henry Kissinger observed: “[Deng’s] pronouncements seemed pedestrian, and many were concerned with practical details. Deng spoke on the importance of discipline in the military and the reform of the ministry of metallurgical industry. He issued a call to increase the number of railway cars loaded per day, to bar conductors from drinking on the job, and to regularise their lunch breaks.” But this “pedestrianism” was actually a shift to pragmatism. Deng wanted economic development to proceed undisturbed by Maoist mass politics. His earthy wisdom was profound: “Black or white, a cat that catches mice is a good cat”, “One country two systems”, “Seek truth from facts”, “When you open the window for fresh air, some flies get in”. He wanted to replace mass campaigns and class struggle and “manage the economy by economic means”. He didn’t worry about inequality and said “we permit some people and some regions to become prosperous first for the purpose of achieving common prosperity faster”. Indian politicians needs to be less ideological, focus on what works and seek truth from facts.

Now, coming to Deng’s project of decentralisation. The worst episodes of the Chinese state (the Great Leap Forward, the Cultural Revolution, the Hukou system and the one-child policy) have come about as a result of orders from Beijing. The best achievement of the Chinese state — massive non-farm job creation — is the child of Deng’s “economic democracy”, which gave local officials the freedom to experiment because “under our present system of economic management, power is over-concentrated, so it is necessary to devolve some of it to the lower levels without hesitation”.

Deng started with agricultural experiments in the Anhui and Sichuan province that allowed farmers to move away from collectives (grain yields rose by 34 per cent between 1978 and 1984). He further permitted the functioning of a new species of business organisation called “xiangzhen qiye” or town and village enterprises, which were essentially private undertakings. And finally, he gave permission to local politicians that made China the factory for the world. SEZs were set up in Shenzhen (next to Hong Kong), Zhuhai (next to Macau), as well as Xiamen and Shantou (across from Taiwan). This decentralisation has created 375 cities with more than a million people (versus the 50 in India). India must deepen the recent recognition that 29 chief ministers and 100 real mayors matter more for job creation than one prime minister.

Last, we come to the job-creation-obsessed state under Deng. He would have been amused by recent Indian political jibes that derided job-creators as “suit-boot waale”. Deng believed that the only way to lift China out of poverty and backwardness was to create jobs. He would also have been amused at the marginally racist research a few years ago which implied that the West need not worry about Chinese labour or their capabilities in making the iPhone, since they only got 2 per cent of the retail price, or the leftist Indian rant about “software coolies”. Deng had a sophisticated understanding of the sequential process of economic learning, the importance of technology and the spin-off benefits of massive non-farm employment.

The Indian state needs to pray to only one god: the god of jobs.

There was nothing inevitable about China’s rise after Mao’s death in 1976. Millions of people had died because of
his nutty programmes, universities were shut, grain and cloth were rationed, and Deng found only $65,000 in the country’s foreign exchange reserves. Mao’s wife, Jiang Qing, attacked Deng as a slave to the West and hardline Chen Yun opposed him with his “birdcage theory”, according to which free markets in China should have had just enough freedom to fly like a bird inside the cage bars of a planned economy. But the opposition underestimated Deng’s courage and cunning. Indeed, Mao had once called him “a needle wrapped in a ball of cotton”.

Apple’s iPhone sales volume in China is a child of the most successful minimum wage programme in history, created by Deng. In fact, the lives of Steve Jobs and Deng had interesting parallels. They were both let down by people they helped bring to power (John Sculley and Mao), they used their exiles to reflect on lessons learnt, their second acts blew their first ones out of the water, and they both marched to their own drumbeat. But we should not stretch the parallels. Deng supported Mao, ordered the army into Tiananmen Square and often derided democracy. But the odds of citizens’ rights coming soon for the Chinese are higher with prosperity than with poverty. As
India debates its land and labour laws, we must remember Carnegie Mellon’s quip that the best way to help the poor is not to be one of them. But we must learn from Deng that workers can become consumers in one lifetime.

The writer is chairman, Teamlease Services