Western ideas, Indian ends

Western ideas, Indian ends by Sauvik Chakraverti

India’s renunciation of desire can be reconciled with capitalist theory, which was developed in the West

The great classical liberal, Ludwig von Mises, who single-handedly battled the erroneous doctrines of socialism through much of the 20th century, remarked in passing that the Buddhist ideal of renunciation of desires is “vegetative”. The science of economics, he wrote, looks instead at its polar opposite—how we undertake “actions” to satisfy our desires. Economics has nothing to say on the vegetative ideal. This is the difference between Eastern and Western philosophy, he added.

Just as modern capitalism is of Western origin, its true understanding also comes from the West. What was begun by Adam Smith in Scotland culminated in the towering achievements of the School of Vienna, led by Carl Menger, whose teachings have guided his followers, and upon which they have built a truly imposing structure. Menger’s Principles of Economics is dated 1871— he was the product of a Vienna under the Hapsburgs, with its brilliant intellectual culture. Both Mises and Friedrich Hayek began their intellectual lives in Vienna. The science of modern subjectivist economics is, we must admit, decidedly of Western origin.

It is also true that in Indian philosophy, all our concerns have been with the “vegetative ideal”: the renunciation of desires. It is this, many believe, that is the pathway to moksha (release from the cycle of rebirth)—the fourth and final “end of man”, after dharma (duty), artha (management of resources) and kama (sensuality). These three are about the real world; moksha must be about the other world.

Indian civilization has never produced philosophers who investigated market phenomena

What concerns the economist is not moksha, but artha. A popular history of economic thought is aptly titled The Worldly Philosophers. Economic science is about comprehending the real world of markets, of phenomena associated with them, including prices and production, and the meaning of the concepts we use while engaging in purposive behaviour in markets, such as capital—the word that lies at the root of “capitalism”. It is this Western science that must inform India today—because artha comes first (after dharma, of course, for the idea is to pursue moral gains). Our civilization accords the pursuit of artha its much deserved pre-eminence (it is ranked above kama) but our civilization has never produced philosophers who investigated markets and market phenomena.

And the key difference is exactly as Mises found it: We thought about the renunciation of desires, while they thought of “human action” to satisfy desires. We thought of moksha; they thought of artha. We are other-worldly; they are worldly philosophers. If our civilization wants to succeed in the real world, we have much to learn from the outstanding scholars Hapsburg Vienna produced.

Let us now turn to a “development economist” who always opposed Indian planning and forever championed free markets: Lord Peter Bauer. Margaret Thatcher once directed a group of developing world leaders at a Commonwealth conference to “go read Peter Bauer”. And they should.

Lord Bauer wrote that in most parts of the developing world, he found the phenomenon of “needlessness”: Because nature had given these people all they needed, they were not required to labour. This is, of course, true wherever nature has been bountiful—as in Goa, where the motto of the people is “susegaad”, which means “relax”. It is also true in Assam, where they say “lahay lahay” or “slowly slowly”.

Yet, according to economic science, such vegetative philosophies must be seen as ruinous. As the Viennese emphasized, all human action occurs in the category of time. We must save time just as we must save labour. It makes no sense if all our highways and railways operate on the susegaad or lahay lahay principle. A thorough comprehension of the teachings of the Viennese indicates that the highest priority in India must be accorded to transportation. A revolution in transportation will improve the productivity of all Indians. This is especially true for farmers, fishermen and milk producers, whose output must reach the market within a specific time if they are to sell at all. Many cash crops such as flowers, fruit and vegetables would flourish if India’s roads were fixed.

Lord Bauer had something important to say about “needlessness”. He said the best thing to do was to unilaterally declare free trade and allow all our energetic trading communities to tempt these needless people with their offerings. Seeing a television set, the Goan villager would abandon his feni and siesta for a few days, harvest his coconuts and sell them to buy the TV set.

The lesson: Work is disutility— we do not maximize work; rather, we maximize the rewards that can be gained by work. From M.K. Gandhi to Manmohan Singh, this vital understanding has precluded us. We are still producing work out of tax revenue. Our trade minister is invariably a staunch protectionist. Public opinion sustains these schizoid policies because the public is miseducated— by the same state. We proceed from one error to another—because we do not understand “human action”.

Yet, moksha remains a destination for man. There is an age for artha, an age for kama—and an age for other things. As we learn from them, the West can learn a lot from our “vegetative” ideal, which does not imply the end of personal growth. Quite the contrary.

Sauvik Chakraverti is an author and columnist. He blogs at www.sauvik-antidote. blogspot.com. Comments are welcome at theirview@livemint.com

Relevance of Frederic Bastiat

Sauvik Chakraverti SPEECH AT THE RELEASE OF

“THE ESSENTIAL FREDERIC BASTIAT”

We are gathered here to honour the memory of a man whom the world forgot, but at its own peril.

 

Frederic Bastiat and Karl Marx were contemporaries, but it was Marxism that attracted half the world, including India, while the Liberty that Bastiat upheld was sacrificed at the altar of socialist equality and statism.

 

Unfortunately, when false theories of society are put into practice, horrendous consequences inevitably follow. This does not happen immediately, but in the course of a few decades it slowly becomes apparent that something has gone very wrong.

 

This is the position that much of the world, including India, is in today. The former Soviet Union and its East European satellites have all abandoned their past beliefs, as has Communist China. Marx is seen by everyone in these countries as a false prophet. At such a moment of time, it becomes pertinent to place before our fellow-Indians the writings of a man who, 160-170 years ago, flew the flag for the other side: classical liberalism, free international trade and free markets, justice and the rule of law, and individual claims to private property. The world has lost more than a century chasing wrong ideas. Let us lose no more time; let us study Bastiat instead of Marx; and let us strive for that harmonious world of natural liberty that every educated European and American believed in between 1700 and 1850.

 

Frederic Bastiat died more than 150 years ago. To read him is to appreciate the fact that people like me cannot be called ‘neo-liberals’. There is nothing ‘new’ about liberalism, which has deep classical roots. Rather, socialism and communism are ‘new’ ideas, as indeed are ‘social democracy’, trade unionism and the welfare state. Mankind seems to be ruled entirely by new, previously untried ideas. Let us therefore turn back to old, tried and tested ideas. These have worked in the past, and only these can work in the future. Bastiat’s writings represent the hallowed traditions of liberalism – a belief-system so old that it deserves the title ‘classical’.

 

What makes us all very proud of this volume we are releasing here is the sad fact that almost no one today has heard the name Frederic Bastiat. This great man is almost entirely unknown in the country of his birth, France, a nation that took to socialism in such a big way that it ultimately lost its dynamism and became the ‘sick man of Europe’. When Margaret Thatcher told a Paris audience that her favourite economist was the Frenchman Bastiat, not a single person present could lay a claim to having heard of the man, let alone read him.

 

In my own case, as I have recounted in my foreword to this book, I first heard of Bastiat from a dentist – and this, after having studied Economics for over 20 years!

 

There are innumerable histories of economic and political thought, from John Kenneth Galbraith’s “A History of Economics” to Lord Eric Roll’s “A History of Economic Thought”, that make no mention of Bastiat. Newer editions of Heilbroner’s popular “The Worldly Philosophers” do mention Bastiat, but in passing. I sincerely doubt whether students anywhere in the world are exposed to Bastiat’s writings.

 

In such an atmosphere of neglect it is indeed highly creditable that a think-tank like India’s Liberty Institute should take the lead and produce the first ever ‘essential’ Bastiat, a collection of his most representative as well as profound works. It is a boon for students, for journalists, and for all those citizens who take a serious interest in serious matters. I am confident that they will enjoy this book and be enlightened by it. Thereafter, it is hoped that they will all work to ensure that the memory of Frederic Bastiat never dies. I may add that if, after enjoying this sample of his works, they want to read every word Bastiat wrote, then www.econlib.org, the website of Liberty Fund, is the place to visit.

 

Allow me to proceed to a description of this book that we are releasing to the public and the press today.

 

A very valuable contribution to this book has come from Dr Detmar Doering of the Liberal Institute in Potsdam, Germany, who is himself a great fan of Bastiat. Without this detailed description of Bastiat’s life and times, this book would have been woefully inadequate. Now, the reader will get to know the real man: a frail orphan working in his grandfather’s shop in a port city, thereby getting interested in the economic and social effects of tariffs; setting up a self-study and debating society where such serious issues are discussed; becoming a justice of the peace; becoming infatuated with Cobden, Bright and the Manchester Free Trade Movement; as a political activist for free trade; as a journalist and pamphleteer; and finally as a parliamentarian. Bastiat was not an armchair philosopher at all. Thanks to this excellent contribution from Dr Doering, the reader of this volume will now get an authentic flavour of Bastiat, and the politically troubled times he lived in.

 

We begin Bastiat’s writings with “To The Youth”. I have chosen this piece to open his account because the youth are the future and the future is theirs in turn. If they believe, like Bastiat, in natural liberty, this country will surely change. India is a very young country, and the vast majority are young. It is to them that this book is dedicated. Allow me to quote the first paragraph:

Eagerness to learn, the need to believe in something, minds still immune to age-old prejudices, hearts untouched by hatred, zeal for worthy causes, ardent affections, unselfishness, loyalty, good faith, enthusiasm for all that is good, beautiful, sincere, great, wholesome, and spiritual—such are the priceless gifts of youth. That is why I dedicate this book to the youth.

This opening paragraph reflects Bastiat’s love for young people, and I am confident that this sincere love will be reciprocated. That is why I have chosen this as the opening essay.

 

The second essay on “Natural and Artificial Social Order” is important from a philosophical point of view, because it presents the old classical liberal belief that when all men are guided by legitimate self-interest, harmony reigns, and the whole of society benefits. I do believe that these two essays will have every young reader hooked. They will see why socialism is actually ‘sociopathic’, seeking to destroy the natural harmony of a people – a natural harmony that socialists despise, because they cannot understand it.

 

These two opening essays contain the germ of the classical liberal world-view, but with a clarity and passion that surpasses all previous efforts, including those by Adam Smith himself. Bastiat is easier to read than Smith, his examples from real life are infinitely superior, and for this reason he is far more convincing.

 

The other essays in Part One will only expand the reader’s understanding of the essential role of competition (competition is liberty and the absence of competition is tyranny), the nobility of the idea that each man is for himself and by himself (and not ‘all for one, one for all’ – which is socialism), and how to end all wars forever, by promoting trade between warring nations.

 

Part Two showcases Bastiat as a free trader, beginning with his justifiably famous “Candlemakers’ Petition” – a satire on protectionism in which the candlemakers of France petition their government to pass laws banning all windows because they cannot compete with the sun, which gives free light half the day. The reader will love Bastiat’s wit, so rare among economists, so much so that Economics has for long been called a “dismal science”. There is nothing ‘dismal’ at all about Bastiat’s prose. On the contrary, his writings possess an electrifying quality.

 

However, there are 11 more essays in this section on Bastiat the free trader, and all of them are equally worthy of note, beginning with his essays against ‘reciprocity’ in trade. No economist before him and no economist since has examined the notion of ‘reciprocity’ – and dismissed it as totally false and baseless. Bastiat stood for unilateral free trade. That is: Free trade without a WTO.

 

Of the other essays in this section, there is one called “Protectionism, or the Three Aldermen” which is in the form of a play in four acts. This exposes the corrupt politics of “import-substitution industrialization”, as well as the beggaring of society that inevitably results from its practice. I hope that in schools and colleges throughout India, students will enact this play.

 

Part Three of this book is entitled “The Genius of Bastiat”, and contains 3 essays on political economy, of which “The Law” is the most famous. Liberty Institute published “The Law” as a single monograph many years ago, and this timeless defense of private property is presented here once again, when in Nandigram and Singur the Communists are overriding the ‘just’ claims of the people to their own lands. Indeed, Bastiat begins “The Law” by saying how the law, under collectivists, becomes guilty of the very crimes it is meant to punish. The Law is meant to punish theft; but in Nandigram, Singur, and countless other cases, including the nationalizations of banks, coal mines, Air India, and insurance companies, it is the law that has been guilty of robbery. This essay is the work of a classical liberal whose interests went far beyond Economics, to the very soul of government, which is the law. In a nation like India, whose constitution does not grant the citizenry a fundamental right to property, this essay deserves to be widely read, if only to understand how dangerously false socialist and communist ideas of “collective property” (which is fiction) really are.

 

“What is Seen and What is Not Seen” is another work of sheer genius, but this time as an economist of unmatched perception. Bastiat begins with the example of a window-pane being broken by a hoodlum. He then proceeds to show how the fact that the town glazier now gets 100 francs to replace the window-pane does not mean that the town has benefited from this destruction of property, because the owner of the window has had to sacrifice the new coat he was saving for in order to pay for the replacement window. That is, the coat-makers loss of business (what is not seen) is the glazier’s gain (what is seen); but the town has ultimately lost, because property has been destroyed. This is a powerful essay against all kinds of wrong-headed ideas, from the widely-held belief that wars cause business gains because re-construction is required, to the hoax called ‘employment generation’ in India, where the same amount of employment would ensue if tax-payers spend the money themselves. It is noteworthy that the great American libertarian author and journalist, Henry Hazlitt, wrote his “Economics in One Lesson” based entirely on this essay of Bastiat’s. I am positive everyone who reads this essay will be thunderstruck by it. According to the Nobel laureate Friedrich Hayek, Bastiat deserves to be called a genius for this essay alone.

 

The short essay “The State” is satirical, but a work of genius nonetheless, in this instance as a political scientist. Bastiat begins by asking the citizenry, all the ladies and gentlemen present, to relate their favourite ideas on what should be done for the country’s benefit – and it invariably turns out that all their ideas involve a huge role for the State. This will ultimately lead to a situation, Bastiat says, when the State becomes ‘that fictional entity by which everyone tries to live off everyone else’. Bastiat then calls for a State whose only role is the administration of Justice.

 

Finally, in Part Four, we present Bastiat’s personal manifesto as he sought to be elected to parliament in 1846. It is a remarkable document because it reflects the parliamentary programme of a liberal. Bastiat wanted government to be ‘confined to its limits’ and he even opposed State education (because the State would teach false theories). He also wanted an end to the French colonization of Algeria. I hope all aspiring ‘representatives of the people’ benefit from reading this, as do those who might elect them. This manifesto has been recently unearthed by Jacques Guenin of the Cercle Bastiat, and is appearing in a book for the first time.

 

I conclude with a para from “To the Youth”, the essay with which this book begins. Here, Bastiat tells us who his real enemies are, and against whom he is writing:

Predatory men, you who, by force or fraud, in spite of the law or through the agency of the law, grow fat on the people’s substance; you who live by the errors you disseminate, by the ignorance you foster, by the wars you foment, by the restraints you impose on trade; you who tax the labour you have made unproductive, making it lose even more than you snatch away; you who charge for the obstacles you set up, so as to charge again for those you subsequently take down; you who are the living embodiment of selfishness in its bad sense; parasitical excrescences of faulty policies, prepare the corrosive ink of your critique: to you alone I make no appeal, for the purpose of this book is to eliminate you….

We too need to eliminate such ‘predatory men’ from our midst. And, more importantly, the erroneous ideas which prop them up, and which they disseminate – what with the ‘education cess’. My own book “Antidote: Essays Against the Socialist Indian State” (Macmillan India: 2000) argued that ours is indeed a “predatory state”. This is because it is based on wrong ideas – like socialism. It is because of this wrong idea that in India today, even the police are predatory, snatching away the surpluses of all small traders. This is how false social theories lead to barbaric governmental practices. There can never be any compromise with false theory. And, following that, there must not be any compromise with the predatory state, and its police, either.

 

It is noteworthy that one of Bastiat’s closest friends and allies was the economist Gustave de Molinari, who further developed and radicalized Bastiat’s ideas to a fully-fledged anarcho-capitalism, where even the “production of security” – i.e. police and judiciary – were to be privatized. If India is to be free, we must proceed beyond Bastiat. We must head for the private production of security that Bastiat’s friend Molinari was the first ever to contemplate. There is now a Molinari Society in the USA. Let us hope that Liberty Institute will publish an ‘Essential Molinari’ someday soon!

 

Thank you all for being here at the launch of “The Essential Frederic Bastiat”.

 

I wish you all a delightful as well as extremely enlightening read.

Go to Pot

Go to Pot by Sauvik Chakraverti 

20 Jan 2006, 0000 hrs IST, 

Devprayag lies north of Haridwar and Rishikesh, and the great thing about the place is that there are no pilgrims at all. But it must be an even holier place, because here the Alaknanda and Bhagirathi meet, and it is only thereafter that the river assumes the name Ganga.

At the confluence, I was met by a solitary priest. He asked me if I wanted to offer a puja, and I agreed. I tossed some grains of rice and some flower petals into the Ganga and said some mantras.

I then paid the priest some money. That is when I decided to perform 'an experiment with truth': I inquired of the priest: "Panditji, main is pavitra sthaan mein ek chillum peena chahta hoon.

Aap kuch intezaam kar saktay hain?" Translated: "Respected priest, I would like to smoke a chillum at this sacred spot.

Can you make the necessary arrangements, please?" The priest immediately turned to some caves higher up the mountain slope and shouted, "Bhoothnath! Oi Bhoothnath!" Soon a tall sadhu with dreadlocks emerged.

The priest told him to get me the needful and within no time Bhoothnath and I were blowing chillum after chillum at the extremely sacred spot. The priest kept sitting by himself in peaceful contemplation while Bhoothnath and I smoked.

The point is this: Cannabis has always been an integral part of our culture, unlike alcohol. If I had decided to open a bottle of beer at the confluence, no doubt the priest would have thrown both me and the bottle into the Ganga.

There are no words for "Cheers" in any Indian language. There are a thousand salutations to Shiva used when lighting a chillum.

It is a shame that our democratically elected legislators have outlawed the one way of getting high we can truly call Indian. It starkly demonstrates the break between state and civil society.

It is as absurd as the German parliament passing legislation outlawing beer. Cannabis is non-addictive, unlike tobacco or alcohol. Making it illegal is absurd.

So let us all call for a repeal of this repressive, unrepresentative legislation that assaults our own culture. Branded cannabis will deliver better quality than what is available underground. And tourism will hit the roof.

http://timesofindia.indiatimes.com/articleshow/msid-1378353,flstry-1.cms

We No Longer Need Economists

We No Longer Need Economists by Sauvik Chakraverti 

6 Feb 2004, 0000 hrs IST, The Times of India 

Our adversaries rail at us liberals for being ideological; they say we are full of empty theories. So here is a simple travelogue. For some months now, I have been living in Mangalore, an ancient city on the west coast. A 13th century Kannada poet has marvelled at the fact that as many as 38 different kinds of coinage circulated in the city’s markets then. It becomes obvious that the city owes its existence to overseas trade: At the centre of the old city is the Bunder, the port.  

It is another ancient trading city that came up by the sea, like Alexandria or Venice. They were all glorious centres of civilisation although there were no economists then. In modern Asia, Hong Kong and Singapore are thriving port cities and neither has produced a single economist of note. The other day I was taken to a beach just beyond the New Mangalore Port Trust. What struck was the wall. The entire port is surrounded by a 20 ft high wall. 

So, because of some theory, Mangalore has moved away from having a port open for the citizens to trade, and now possesses a walled port to which citizens are denied entry. The gates to the walled port are manned by armed guards paid for by the taxpayer. Also at the taxpayer’s expense are a whole lot of customs officials who do not permit trade without prohibitive exactions. All this must be justified by reams of economic theory, for there is an economics department is St Agnes College here, the oldest women’s college in south India. There is a Mangalore Economics Association. 

Driving along the wall, I passed some towering examples of industrialisation: Nehru’s theory. A sizable amount of prime beach-side land is occupied by a phenomenally ugly public sector iron ore exporting plant. 

There is a fertiliser factory which surely survives on production subsidies. So the dealbetween New Delhi and Mangalore is clear: We stop you trading and then we give you industrialisation. There is, at the taxpayer’s employ, an entire Indian Economic Service wedded to this theory. The wall is bad for sailors as well. I was with a ship’s engineer when he suddenly announced his departure, saying that if he did not return by 10 p.m., he would get into trouble with the personnel manning the wall. He said that even an ordinary sailor spends at least $20 a day while ashore but here the wall keeps them on board. 

Mangalore is a dream city for eating and drinking out, famous for its cuisine. The seafood is superb, and much, much cheaper than Goa. Mangalore also possesses many establishments where what is offered might be called cabaret. Surely anyone will realise that we do not need economists to know what is good for Mangalore. What sense does the wall make? The path to commercial success and the regaining of the city’s old glory should be obvious. The citizens of Mangalore should do to the wall precisely what Berliners have done to theirs. Then, as with the old Bunder, they should set up a big market there. After all, didn’t God promise Jerusalem greatness by making it a mart for all nations? The mayor of New Jerusalem should issue externment orders to all the customs officials and the armed guards. 

The prime land occupied by the ugly iron ore plant and the fertiliser factory ought to be seized and auctioned so that hotels, shopping malls and beach resorts take over the landscape. Within a decade, this will be India’s leading city, especially considering the fact that all the others, including Bangalore, are perishing. To unravel the sophisms in the theories justifying the wall, I recommend Frederic Bastiat, who did not have a formal education in economics, who never taught at university, and who was just a journalist and pamph-leteer. In one essay he put the point across thus: There is this steel magnate in France. He sees cheap steel imports coming in from Belgium and this threatens his profits. He now has two choices. One, he can hire a posse of men and arm them with guns, with instructions to shoot anyone who brings steel into France from Belgium. But such a course is highly inadvisable. 

So there is the other option: Go to Paris and pay some politician there to do it for you. He will deploy armed men at the borders at the taxpayer’s expense. And the two of them will share the profits, while the taxpayers who paid for the guards will now pay out even more for steel. After reading Bastiat I arrived at a conclusion: We don’t need the WTO; we need unilateral free trade. Get every government out of trade. And every trade economist too. 

The late professor B R Shenoy, a classical liberal who studied under Hayek himself, was the only economist to dissent officially with Nehru, and in writing. His daughter, Sudha Shenoy, an eminent liberal economist, in a recent interview, said that nearly every economics depart-ment in the world could be shut down without having an ill-effect on the world of ideas. 

Strong words indeed. She bemoaned the sad fact that economists do not study the real world of human action any more; they are all lost in theories and models and mathematics and statistics. I entirely agree. The wall proves it. 

http://timesofindia.indiatimes.com/articleshow/477732.cms

Population breeds no poverty

Population breeds no poverty by Sauvik Chakraverti

Tuesday, June 24 1997, The Indian Express  

Consider the economist: he notches up a credit on the national income accounts every time a farm animal is born. Yet, when a human infant arrives, he reduces per capita income appropriately and falls prey to the delusion that population is somehow a major problem that has to be tackled with strong state action. Such a belief is widespread in India, and the strong-armed methods used by a probationary dictator to tackle the population problem should be fresh in our minds.

The other viewpoint -- that of the free-marketeer -- has never been prominent in Indian development economics. It could not, for it did not believe that strong state action was required at all. Lord Peter Bauer has for long been writing that economics begins with the activities of traders -- not manufacturers. Hence a free trade regime can foster development better than one in which state action to restrict markets props up an inefficient manufacturing industry -- what was called ``import-substitution industrialisation''. On population, Bauer was equally free from state's bias: open up commercial contracts between people of different nations and, with prosperity, birth rates will stabilise -- development as the best contraceptive.

Mancur Olson, the leading public choice theorist of the Chicago School, recently presented a paper in Delhi in which he examined the possible reasons for the differences between rich and poor countries. One of the factors Olson examined was population -- the delusion that human numbers cause poverty. Here, the critical indicator is population density: number of persons per square kilometre. If this is uniformly high for poor countries and low for rich countries, then we can identify population to be a cause of national poverty. The actual figures gave a different answer. Germany, Belgium, Holland and Japan had higher population densities than India -- and they are rich. Zaire and Argentina have very low densities -- yet they are poor. Some of the richest parts of the world -- like Hong Kong and Singapore have astronomically high population densities. Olson arrived at the conclusion that the only factor behind the differences between rich and poor countries was ``national boundaries''.

Julian Simon from Maryland has been tackling a big group that believes in the population problem: environmentalists. His research, which led to a Columbia University debate with the environmentalist Norman Myers, has featured on a BBC ``Horizon'' programme. Simon takes the anti-statist position regarding the environment: that it is with prosperity and freedom and knowledge that the world can be cleaned up and nature managed; strong state action is not the solution. Human population growth does not demand it.

Today, India and China are both seen, not as future population explosions, but as the two Big Emerging Markets. The notion that population causes poverty therefore deserves burial. It survives in India on impressionistic grounds. Astronomically high real estate values are not on account of population pressures on scarce land, but because of inadequate investments in roads. Wherever money is not diverted from public goods to development schemes, cities decongest and the countryside is populated. This spreads prosperity. This also reduces real estate values by adding more land to overall supply. Some leave the city for the village; population and prosperity spread. The key: investments in public goods like roads. The Planning Commission invests in a spoils system based on unsound economics.

There is an entire host of literature in development economics that comes from free-marketeers. This is neglected. That is because it fundamentally brings to question the basic belief on which planned economies rest: that `development' requires strong state action. The Indian state lauded Gunnar Myrdal when he won the Economics Nobel Prize in 1974. Myrdal advocated strong state action by an intellectual-moral elite: planning. The man with whom Myrdal shared the prize, Friedrich August von Hayek, represented the other point of view. And it is this latter school of thought that needs to come to the forefront here. We need to have a clash of ideas. Not more of the same.

Chakraverti is a freelance writer based in Delhi

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.

http://www.indianexpress.com/ie/daily/19970624/17550363.html

Long Live the King

Long Live the King by Sauvik Chakraverti   

1 Jun 2005, 0014 hrs IST, The Times of India 

Multiparty democracy with universal adult suffrage is a very recent phenomenon in human history. Europe had Hohenzollers, Hapsburgs and Romanovs till the end of World War I. My point is this: Since libertarians believe in minimal government, what could be smaller than a king? Hong Kong and Singapore are prospering without democracy. Why can’t Nepal do the same? Adam Smith, writing in the mid-18th century, gave three tasks to the king: "The sovereign has only three duties to attend to: The duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of establishing an exact administration of justice; and thirdly, the duty of erecting and maintaining certain public works and public institutions". So, according to Smith, if the king looked after defence, justice and public goods, society would flourish like never before. If the king of Nepal can do these things, the poor people of Nepal will be free to generate wealth for themselves. 

The solemn oath to ensure justice lay at the heart of mediaeval kingship in England and France. The same was true for the rulers of the Indian princely states. In the book, Lives of the Indian Princes, the Maharawal of Dungarpur makes it clear that justice was a prime value to Indian princes. He is quoted saying: "I was head of theexecutive and head of the legislature. As far as the courts were concerned, there were practically no pending cases — and that was a characteristic feature of the Indian (princely) states". The king of Nepal can recruit good judges from the international skills market.Simultaneously, if he declares unilateral free trade and the judges preserve property rights, the Nepali people will realise they don’t need democracy and party politics. Instead, they will seek their sustenance in the free market and their security and justice under their monarch. With free trade and property rights under the rule of law, Nepal will gallop from feudalism to full-fledged capitalism. The lure of Maoist ideology will fade as free markets and the resulting prosperity kick in. Then, democracy can be ushered in. Democracy now is a bad idea. 

The writer is a regular freelance contributor.  

http://timesofindia.indiatimes.com/articleshow/1156865.cms

Employment Guarantee a Hoax

Employment Guarantee a Hoax by SAUVIK CHAKRAVERTI

 Posted: Aug 06, 2005 at 0000 hrs IST The Indian Express

The UPA government, with an eminent economist at its head, is attempting to perpetrate an economic hoax on the nation under the pretext of guaranteeing employment for one and all. This hoax can be unraveled at four levels.

First, is the government there to see that everyone is gainfully employed? In the bad old days of socialism, the state did emerge as the nation’s biggest employer. It still is. Even today, one in every fifty Indians is employed by the state. They perform not a single task well, and society would be much better off if the state did not employ such a huge army of ne’er-do-wells. It would make far more sense for the government to cut down its flab, cut down its expenses, and perform the tasks expected of it efficiently, employing far less people. In a free market economy, people are expected to generate wealth for themselves either through kaam or dhandha. They are not expected to survive on alms from the state.

Second, anything the government does must be paid for by taxes. If the government pays money to A in order to employ him, then it takes the money from B, who is already employed. This is the ‘‘zero-sum game’’ of the politician (and his economic advisers): B loses while A gains. If the government did not tax B, and let him spend his own money, then B’s private spending would generate as much employment as government spending, if not more, considering that a lot of money is lost from the government’s ‘‘leaky bucket’’. Thus, government spending generates fewer jobs as compared to private spending. The government is an agency that taxes and spends; it does not create wealth. It cannot create wealth. If the government employs hordes of daily wage earners in public works, what is of relevance to the tax-paying citizenry is the public works, not the employment. Public works like roads and bridges are required by the people, yes, and the aim should be to build good roads and bridges; not shabby roads and bridges with the aim of employing as many people as possible.

Thirdly, as industrious individuals, we do not seek to maximize work; rather, we seek to maximize production. So should the nation. India and all Indians would be better off not by working more, but by producing more. Increases in productivity are what we should be pursuing, not increases in work: the sweat theory of value! Indeed, increasing productivity is the only means of raising the wages of the poor. Our productivity today is extremely low. For example: a truck covers 250 miles a day on Indian highways; they do more than 800 miles in the rest of the world. Productivity increases occur when more is produced given the same time and effort. These productivity increases would occur if we revamped our transportation system and employed the latest technologies in whatever we seek to do. Then, every Indian would earn more, by producing more with the same time and effort.

Fourthly, the government is actually a destroyer of jobs because of the innumerable restrictions and bans it imposes on the people. 75,000 dancing girls have just lost their jobs in Bombay. Will they spin and weave in rural India, or work carrying stones for road-building works? Restrictions imposed on economic activity in India are an enormous hindrance. We are ranked 122 in the World Economic Freedom Index, bare notches above the ‘‘economically repressed’’. We would be far better off if the state were to get off our backs.

The socialists and communists who make up the UPA government should give up the idea of guaranteeing employment, and public opinion should be garnered in this direction. All that India needs are complete economic freedom, free trade, property rights under the rule of law, and sound money (freely tradeable money without inflation). Apart from that, we could do with good roads and clean cities and towns. In such a scenario, the state will be minimalist, with only one task to attend to: going after the bad guys while leaving the rest of us alone. In such a ‘‘haven of freedom’’, poor Indians will survive far better than they do today, even by selling peanuts, for they will not have their surpluses stolen by the petty kleptocracy. The government will not guarantee employment; rather, it will guarantee a free and fair business environment. That is what the country needs of the state in a free market system.

The writer, a journalist, coloumnist and an author of books, can be reached at: sauvikc@yahoo.com 

http://www.indianexpress.com/oldstory.php?storyid=75729

The economics of false philanthropy

The economics of false philanthropy by Sauvik Chakraverti  

03 January, 1998  The Indian Express 

Watched some dhotiwallahs and topiwallahs arguing on TV as to which party was most `pro-poor'. They all seem to want to help our unfortunate fellow-citizens. But what do they give the poor, and what do the poor really need?

When I studied economics in Delhi University in the '70s, they taught us something called `The Theory of the Vicious Circle of Poverty'. This stated that, because the poor had low income, they had less to save and invest, and so were stuck in poverty. The only way out: statal subsidies.

Lord Peter Bauer says that if this theory was true, the world would be still in the Stone Age. The world is a closed economic system: no resources have come in from Mars. Every country that is `developed' today started off underdeveloped. Impoverished migrants built America -- and Hong Kong. What is poverty then?

Poverty is nothing but the absence of economic achievement. If you seriously want to tackle mass poverty, you must vastly expand the opportunities for poor people to make these achievements. How?

Economic achievements are made in markets. Here, you can sell something: your labour, some guavas, or perhaps a ripe pumpkin. If you're lazy, and people are charitable, you can hang around in some corner and beg. Many do. Observe any Indian market and you'll see them all: the big shops, the small shops, the hawkers and peddlers - and the beggars. Certain principles emerge.First, that markets are urban. Therefore, poor people will flock to urban centres to look for economic opportunities. If you truly want to help poor people you must nurture and expand the urban economy. Singapore had 250,000 hawkers in its Central Business District in 1965. They created special hawkers' markets in newly built outlying residential areas. Today, the very same people are part of Singapore's tax paying middle class. Here, a `pro-poor' communist government simply chucks out Calcutta's teeming hawkers and calls it Operation Sunshine! South Asia's `informal' economy is growing two times faster than its formal counterpart. Here, a `pro-poor' politico-bureaucratic set-up eats up subsidy money, completely neglects urban areas and allows petty municipal and police functionaries to prey on the surpluses of the informal sector. You don't have to look very far: huftha money is collected from ice-cream vendors on Rajpath, right under the President of India's nose, because they stay open till very late at night. In Singapore, they pay great attention to `nightlife'. Cities shouldn't sleep. Our urban economies, unfortunately, shut down every evening.So, all that statist economics with its vicious circle of poverty does is divert scarce resources to finance a politics of false philanthropy. By teaching this ridiculous theory in universities, the state creates `economists' who view poverty to be something incurable without direct statal subsidy. These economists study poverty intensely. Many JNU dons have written weighty tomes on poverty.

Real economists study prosperity, and prescribe means my which prosperity is attained. Adam Smith looked into the `wealth of nations' - and prescribed free markets. Statists don't believe in markets. They believe the poor need the state - not the market. How can they ever make this country prosperous?So what is all this `pro-poor' talk really? Just this: false love. Thesedhotiwallahs and topiwallahs just talk of how their hearts bleed for the poor and the downtrodden. They espouse high socialistic ideals. In reality - and this is fairly obvious today after 50 years of false love - they simply milk away our economic surpluses, from both formal as well as informal sectors, and fund expensive `schemes' based on nonsense economics.

What the poor really need is urbanisation with an eye on the urban economy. This is a country with 10 mega-cities, 100 cities, 5,000 big towns and innumerable small towns. The STD index still doesn't list them all. Highways and inter-city rail connections are horrible. The poor have no chance to make economic achievements because the state has not enabled them to do so. We must do away with this subsidy-culture fast, and invest in an infrastructure that generates prosperity.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.

http://www.indianexpress.com/old/ie/daily/19980103/00350304.html

Road to the future

Road to the future by Sauvik Chakraverti, 
Saturday March 22 2008 18:21 IST

Street Smart:
Competition, Entrepreneurship and the Future of Roads
By Gabriel Roth
Transaction Publishers and  
The Independent Institute, $30  

Gabriel Roth is a libertarian with a passion for roads, that is, roads as private businesses. His earlier book Roads in a Market Economy (1996) revealed that Western nations had deeply erred by making roads into government monopolies funded through taxation and provided by politicians.

It offered capitalist nations the way out of this ‘Soviet-style roads system’.

His new book is a collection of brilliant essays by a wide variety of specialists on various aspects of roads. Bruce Benson, for example, a formidable authority on Law and Economics, has contributed two fascinating essays: The first on ‘eminent domain’, its misuse, and why it is really not required for road-building; and the second on the history of the 'turnpike trusts' of 18th and 19th century England, which were private efforts at building, maintaining and tolling roads. Indeed, the history of private roads in both England and America are recounted in this book, and there are many lessons to learn.

The essay on eminent domain is particularly instructive, since it dispels the false idea that roads cannot be built without invoking these authoritarian powers. This paves the way for a deeper understanding as to how businessmen can easily assemble the land required for such projects. The examples of the misuse of these powers in western countries tells us a great deal about the politics behind a similar misuse in India such as in Singur and Nandigram.

There are 20 essays in all and they present a wide array of issues and perspectives. John Semmens talks of privatising vehicle, driver testing and licensing and it becomes clear why better safety standards will be promoted if insurance companies, with a direct financial interest in safety, took over this vital function from a corrupt and useless government bureau.

Gopinath Menon, who teaches traffic management at Singapore’s technical university, has contributed an excellent piece on the city-state’s Automatic Road Pricing system and the history of its development.

This history confirms the old adage that ‘Rome was not built in a day’ and that traffic and transportation was always an area of critical focus for their government, right from independence in 1965. It is also time for our government to give up the ‘looking after poor’ bullshit and deliver knowledge-based solutions to traffic congestion and mayhem in all our cities and towns.

While each and every essay is noteworthy, those that deserve mention in this review are the two on city streets as ‘private sector public goods’ and the account of the Private Roads Associations of socialist Sweden, which provide and maintain a major share of that country’s rural roads. Rural roads are a critical area for India, as are city streets, and these essays are hugely illuminating.

Another essay that is extremely relevant to the Indian situation is on ‘the role of the private sector in managing and maintaining roads’. It is seen that ‘performance-based contracts’ with private firms are the best and cheapest way to maintain roads. There is an interesting story of how a US town paid $120 per pothole repair by traditional manual methods. When the performance-based contract was executed, the contractor found it prudent to employ a pothole-repairing machine that could be driven over the pothole, and which conducted an immediate repair for just $22. There is a photo of this machine. It is also mentioned that not repairing highways in time escalates costs hundredfold. One of the contracts cited contains the clause that, over every 10 kilometre, not more than three potholes of 15mm diameter should be seen: and where seen, they should be repaired in 48 hours. These are ideas India needs.

Gabriel Roth’s own essay, which opens the volume, ‘Why Involve the Private Sector in the Provision of Public Roads’ sets the tone for a learning experience on ‘the future of roads’ that can benefit many Indians dealing directly with this vitally important subject or indirectly interested in it, from infrastructure fund managers down to journalists covering roads.

Engineers can also benefit, and there is an exposition of radio-enabled ‘open road tolling’, by which tolls can be electronically collected on all roads, without requiring vehicles to stop.

As a libertarian myself, that too one with a passion for roads, I can only assert that I have myself benefited greatly from a study of Gabriel Roth’s Street Smart. I am happy this will be reflected in my writings on roads for many years to come. 

http://www.newindpress.com/sunday/sundayitems.asp?id=SEB20080322085510&eTitle=Books+%26+Literature&rLink=0

Liberalism vs The Rest

Liberalism vs The Rest by Sauvik Chakraverti, 
Saturday March 22 2008 18:23 IST

Surely the first question any aspiring ‘representative of the people’ must ask himself is: What is the role of the State in a free (or democratic) society? To Raj and the Thackeray parivar, to Narendra Modi and the Sangh Parivar, to Buddhadev Bhattacharya and the communist parivar, just as it always was for the Nehru parivar, it seems perfectly apparent to me that their idea of State is ‘an institution that protects us from injustices, except those it commits itself’ (Ibn Khaldun, Muqaddima, circa 1350).

Coercion is their motto not because they are anti-democratic, but precisely because they are democratic. The process we call democracy in India is riddled with coercion. Anyone who runs a political party holds vast powers over all members; a political party is a power hierarchy based on ‘hegemonic relationships’. When politicians vote within democratic assemblies, each member must respect the orders of his ‘party whip’. The very term reeks of coercion. Then there is the Party High Command (or Politburo). Theirs is the ‘vote motive’. Or is it ‘rent motive’? Compared to these motives, the ‘profit motive’ is innocent: shubh laabh.

Raj Thackeray is ‘political’ in that he seeks to represent a majority. He is the leader of a ‘recognised’ political party and has powers over ‘party cadres’. This is true of all political parties. It is because of this that Roberto Michels propounded his Iron Law of Oligarchy in 1915: “Hierarchical political parties can never yield a classless, socialist society,” he wrote. “Where the instrument is hierarchical, how can classlessness result?”; adding, most accurately, “socialism will fail at the moment of its adherents’ triumph.”

The politics of Thackerayism, Moditva, Buddhadevism, Lalooism, and Nehruvianism are all ‘legitimate’: these recognized political parties swear by ‘socialism’, as defined in the Constitution of India and their party constitutions. But the reality of hegemonic power relations within each party hierarchy should wake us up to the fact that the way we are headed is not the classlessness of socialism, but something diabolical. It is aimed at taking control of the dysfunctional State, which provides access to further coercion, through legislation, through taxation, and through manipulation of the police and the administration. Never will we attain Socialist Equality if we continue with this socialist democracy. Oligarchies will rule. Chaos will follow.

In vivid contrast, Liberalism begins with voluntary co-operation in markets. Voluntary exchanges in the market order must be free, we believe. We therefore oppose legislation on ‘victimless crimes’ like gambling, prostitution, and ganja peddling. To us, coercion is an actionable tort, and a grave matter. We dream of a coercion-free natural order. That is why our ideal State is a provider of Justice. Nothing else.

This is Liberty under Law. It yields Freedom and Property, not Equality. To liberals, socialist ideas of Equality are a dangerous deception. The highest political values of liberalism are Freedom and Justice. Yet, we are barred from political participation while Raj Thackeray is legit. “Fair is foul and foul is fair,” as Macbeth’s witch put it. To grasp the amount of coercion that Raj Thackeray has unleashed on a poor minority, recall that 50,000 north Indians have fled Maharashtra since he began flexing his Maratha muscles.

Unveiled threats are also coercive. As they were not countered by immediate and stern State action, they were deemed imminent by all concerned, who fled.

What would happen if liberals took over? Whom would we throw out? This is relevant given that politicians place before the voter their own idea of a ‘class enemy’. To Raj Thackeray, north Indians are the enemy. To Modi, it is non-Hindoos. Who are the enemies of Liberalism?

The enemies of liberalism are all those who coerce the rule-following citizenry. Today, apart from some recognised political parties, the biggest profiteers from arbitrary coercion are the police and the taxation bureaus. A liberal government’s first task will be to bring these coercive bureaus to heel. The police must protect petty traders. Taxation must be linked to services provided. Today, taxation is arbitrary and excessive like those on civil aviation, which transfer business to the unsafe railways. Tolls on ‘notional highways’ are double-taxation, as we pay dedicated road taxes on automotive fuels. As we pay the taxes, proper highways must be built as 'freeways'. The excise department must be stripped of licensing powers, so the business of alcohol retailing can be free. The customs department must either be abolished, or a small ‘revenue tariff’ should be levied on select, bulk imports. A minimalist State requiring minimal taxation: that is the liberal ideal.

Where masses are poor, taxation must be lighter still. If liberals come into positions of authority, the police, the excise, the customs, the income tax will feel the heat. And that’s a promise.

To conclude: There is hope for liberalism as we do not require coercion for the fulfillment of our political ideals. As other political creeds require coercion, they are doomed to failure as there is an limit beyond which none will submit to authority. For this crucial reason, liberalism is destined to prevail over all competing political visions. It is only a matter of time. 

http://www.newindpress.com/sunday/sundayitems.asp?id=SEC20080322085650&eTitle=Columns&rLink=0

Holmes rolls in Goa

Guest Columns by Sauvik Chakraverti,

The Newindpress on Sunday, 2007-2008

Holmes rolls in Goa

Sherlock Holmes and his assistant Dr Watson holidayed in Goa recently, enjoying a few days of r&r. After a leisurely walk along Palolem beach, Holmes remarked: “Watson, it seems perfectly apparent to me that tonnes of ganja gets smoked in Goa every day. This calls for a deeper, private investigation.”

Dr Watson, as is his wont, was slow to get the point. “How can you arrive at such an outrageous conclusion after just one short walk, Holmes?” he demanded to know. “Why, you have not even unsheathed your famous magnifying glass!”

“Elementary, my dear Watson,” said Holmes. “Perceive the loads of rolling papers that are sold in all the little shops here, in five kilo jars. You don’t need a magnifying glass to spot this singular, vital clue. So much paper means so many spliffs, which means so much ganja — simple arithmetic. Tell you what, Watson, let us score some ourselves and smoke it. You know, when in Rome etc. And anyway I haven’t brought my cocaine along, anticipating trouble with this foreign police.”

Deprecating Holmes’ sense of adventure, Watson nevertheless agreed. The duo headed for the closest cigarette shop. Holmes bought a pack of king size Rizlas. The little shop had over 500 packs in stock. Holmes, in a conspiratorial tone, asked the shopkeeper where he could get some ‘stuff’ to smoke in his Rizlas. The shopkeeper pointed to a young Goan lad in a Bob Marley T-shirt, leaning casually against a coconut tree. Very soon the deal was done, and Holmes obtained a goodly quantity of fine ganja. The two hastened to smoke it.

“Time me, Watson,” commanded Holmes as he began the tedious preparations that go into rolling a spliff: cleaning the grass of twigs and seeds, preparing a nice ‘mixture’, making a roach, and then finally doing the spliff.

“Twelve minutes precisely, Holmes,” said Watson, as Holmes lit the spliff and inhaled deeply of the sweet smoke. “Let me now count how long it takes to smoke it.” This turned out to be three minutes. The duo, now suitably stoned, strolled into a beach shack and ordered some beer to tackle the inevitable ‘cottonmouth.’ The shack had some chairs on the sand facing the setting sun. The colours were breathtaking, the soft reggae music emanating from the shack was elevating, and the cold beer was heaven itself. Of course, Holmes’ mind was still ticking away on the ganja question.

“Watson, the plight of ganja smokers distresses me. Twelve minutes to roll what takes three minutes to smoke. What a criminal waste of Time! All roll, roll, roll and no rock at all! We must therefore arrive at an assessment of not only the total sales of rolling papers and the total quantity of ganja smoked, but also the total amount of time spent hand-rolling. Let us down our beers and proceed to the first step: evaluating the only visible clue we have — rolling papers. How many packs of rolling papers are sold here every day? That is the question.”

Very soon, the two were back in the shack, Watson bearing his notepad. More beers were ordered and Watson pulled out a calculator. The statistics on rolling began to roll.

Twenty little shops selling 100 packs of rolling papers every day added up to 2000 packs sold per beach, per day. Assuming Goa has 20 beaches like Palolem, that means 40,000 packs of rolling papers sold every day in Goa. Now, a pack contains 50 leaves, which means 2 million spliffs are rolled in Goa every day. Hand-rolling them takes 24 million minutes or 4,00,000 man-hours. At two grams of ganja per spliff that adds up to four tonnes of the stuff consumed daily in Goa. Holmes and Watson were both flabbergasted at the implications of what their very ‘private investigation’ had uncovered. They paid for their beers and continued on their stroll. Holmes was lost in thought, almost oblivious of his enchanting surroundings.

“Watson,” said Holmes, “let us visit the website of Rizla and try and find how many rolling papers they sell annually worldwide. This could give us an exact understanding of this ‘crime’ that the whole wide world revels in.” The two trooped in to a cyber café on the beach, but the data could not be obtained. Rizla maintains all such information as trade secrets. But they did find a long history of the company, which has French origins but is now owned by Imperial Tobacco and headquartered in the UK. It must indeed be a very big business to attract Imperial Tobacco to it. And Rizla was just a market leader. As Holmes and Watson discovered, there were many other brands available, with keen competition between papers made of hemp and Rizla, whose papers are made of rice. However, they could not obtain any hard data on the international rolling paper industry. Disappointed, but not beaten, our heroes re-emerged on Palolem beach. The sun had set, the moon was out, and all the shacks had their pretty coloured lights on. They walked into one of them and ordered more beer. Holmes began to roll another spliff. The evening proceeded slowly, more beers were drunk, more spliffs were smoked, and a fine seafood dinner followed. Holmes then summed up his thoughts: “Watson, my good man, if Goa represents even five percent of the world market for rolling papers, this means 40 million spliffs are smoked worldwide every day. The total time spent hand-rolling them is eight million man-hours every day. Total ganja smoked worldwide every day is 80 tonnes. This is an astonishing discovery. If ganja was legal, big spliffs would be made by machines, as cigarettes are today, and eight million man-hours of hard labour saved.”

“Why don’t you write a column for The Times on this when you return to Baker Street, Holmes,” suggested Watson kindly, knowing that his friend was exceptionally perturbed at his findings. “You would shake up the authorities.” “I most certainly shall,” Holmes replied. I am too stoned to roll, but very keen on a last smoke.” Watson did the needful, as a dutiful ‘joint secretary’ would. Holmes patiently waited the full 12 minutes; he then lit the joint, inhaled, exhaled, and raised the toast: “Here’s to machine-made spliffs someday soon, so the whole world can chain smoke them.”

“Amen,” said Dr Watson 

http://www.newindpress.com/sunday/colHeadlines.asp?By=Sauvik+Chakraverti

Do we need socialism?

Guest Columns by Sauvik Chakraverti,

The Newindpress on Sunday, 2007-2008

Do we need socialism?

A constantly moving target is difficult to shoot. But shoot it we must. I refer to the word ‘socialism’, which was inserted into the preamble of the Constitution; and the subsequent infiltration of this term into the Representation of the People Act, by which all political parties are made to swear by socialism in order to be eligible to participate in the electoral fray. At stake is the idea of a truly liberal party based on individualism and private property — the very antithesis of socialism.

But what is socialism? Is it the ‘commanding heights of the economy’ that Nehru ascended? Is it the empire of PSUs that no party wants to privatise? Is it the contempt for private enterprise and private property? Apparently, it is none of these things anymore. The Supreme Court has found yet another definition of socialism — a definition that has serious implications for our future. If this new definition goes unchallenged, socialism will be perpetuated; simultaneously, liberalism will be barred.

On January 9, 2008, while dismissing a petition challenging the legislation that makes it mandatory for every ‘recognised’ political party to swear by socialism, the Chief Justice of K G Balakrishnan, asked counsel Fali S Nariman: “Why do you define socialism in the narrower sense as the Communists do? Why don’t you go by the broader definition… which mandates the state to ensure social welfare measures for all the citizens… as a facet of democracy?”

There is an ever-present danger with Supreme Court: that it will act in ways that preserve the government, of which they are a part. Indira Gandhi called her judges ‘a committed judiciary’, and it seems they are indeed still committed to her political ideals. An entirely new judicial definition of the dreaded word has been established: one that ‘mandates the state to ensure social welfare measures for all the citizens, as a facet of democracy.’ Justice Balakrishnan wants ‘welfare for all the citizens’ — but that must be over-enthusiasm for his cause. What he probably means is welfare for the really deserving poor.

Classical liberals of 18th and 19th century Europe and America would be horrified by the idea of a ‘welfare state as a facet of democracy.’ To them, the great idea was Liberty for all — especially the poor. It was held that people are diversely gifted and only in a liberal, free market order could each find his ‘just deserts.’ And since that is a competitive struggle for all, along with Liberty came Self-Help. Samuel Smiles’ eponymous volume was a classic of its times, selling 20,000 copies in its first year alone. Self-Help was kept next to the Bible in every Victorian home, an aspect of Victorian morality all too easily forgotten today, thanks to welfare statism in the west, and its culture of dependency. (Incidentally, Liberty Institute has republished the book in India.)

Liberty and Self-Help were the two pillars of classical liberalism, especially among the poor. That is why the first ‘mass movement’ in British history was the one for free trade in the 1830s, led by Richard Cobden and his Manchester Free Trade League, in which the working classes eagerly participated. Socialism was not even on the horizon then.

The ‘welfare state’ is a product of the 20th century, that too, after the second World War. It has indeed become a ‘facet of democracy’ in several western nations, but not a good facet. The welfare state is the darling of ‘tax-borrow-print-and-spend politics’ that is funded by Keynesian fiat money, that sustains a vast ‘spending bureaucracy’ and subsidises an underclass that is increasingly work-resistant. Yet, even in these countries, there are parties and political leaders that oppose welfare statism — like the Tories did under Margaret Thatcher. In a truly liberal order, it is unthinkable that every party must swear by the welfare state. But the situation in India is far worse, and there are good reasons to believe that the Chief Justice’s conception of a good society, if ever allowed to come into fruition, will spell disaster for the nation and its people.

Writing in the 1950s, the great dissenting development economist, Peter, Lord Bauer, said that widespread beggary on the streets of India and Pakistan is not a sign of poverty; rather, it exists because the dominant communities in both these countries, Hindus and Muslims respectively, believe they earn spiritual merit when they offer alms to beggars. In the very same countries there are large communities like the Parsees, Sikhs and Jains who practice charity differently among themselves — and produce no beggars. A ‘welfare state’ of the kind contemplated by the learned CJI would cause beggary in India to multiply thousand-fold.

What is the best way to help the deserving poor? When I ask this question during seminars, I offer students three choices: First, take direct action and give alms to every beggar you come across. Second, pay taxes to the government and ask the government to help the poor. And third, donate to a good charity organisation like Mother Teresa’s and ask them to use that money to help the poor. Even kids of Class 5 decide that the third option is the only doable one. To liberals, charity must be private.

In India, what keeps people poor are stupid policies — and all these policies are the product of ‘socialism’, however defined. The new definition will lead to the perpetuation of our ‘spending bureaucracy’, without any benefit to the poor. For real progress, India needs the classical emphasis on Liberty and Self-Help —and well-directed private charity.

If an example of an Asian country is required that prospered immediately upon embracing these principles, it is Japan after 1868: the Meiji era. Samuel Smiles’ Self-Help was translated into Japanese then, and widely read. It convinced the ordinary Jap that with Liberty all he needed to add was sincere, individual effort. And every Jap worked hard; their work-ethic is the stuff of legend. The populous little nation flourished and became an inspiration for all of Asia. The Japs have never embraced socialism. It is still Liberty and Self-Help in the Land of the Rising Sun.

If India is to regain her lost glory, socialism must be dumped and her people encouraged to help themselves. Indians are known to be hard working. The new definition of socialism offered by the CJI is patronising and impractical; and it will not lead to the ‘welfare’ of the poor. A liberal party opposed to socialism must be allowed to attract the mind of the smart Indian voter.