The swadeshi serpent bites its tail; and a response

The swadeshi serpent bites its tail; and a response by Sauvik Chakraverti

21 December 1996 Indian Express

History does not reveal the lurid picture of colonial exploitation that Indian economic historiographers have painted in our minds. Well into this century, when laissez-faire ruled British thinking, it was quite clear that foreign capital was a good thing, and that foreign capitalists were profit-seeking individuals with interests quite distinct from that of the imperial state. Further, that the laissezfaire imperial state providing high quality administration should perhaps be the 'model' to be emulated today, given the dismal record of socialist interventionism.

India had its trains and telecom decades before Japan (Perry presented the Shogun with a miniature railway), and Indian cities had modern, efficient and economical electric mass transportation system - so it is quite clear that infrastructural development was proceeding rapidly with the inflow of foreign funds, much of it private.

When we examine the mind of the foreign capitalist, there does not seem to be any indication that he is an agent of the imperialist state: he is a private man, interested in private gain. The mistake made by exponents of swadeshi (or those who see a sinister neo-imperialism at work in the global market) is that they do not see individuals: they see states. Where liberals look upon the state with unconcealed scepticism, they see states in business, and they want their state to protect their businesses - at our expense of course.

The real problem with swadeshi - as with any other false ideology - begins when you place yourself at the receiving end: when the serpent bites its tail. If it was true that the best way to ensure national prosperity and general well-being is to consume only locally-produced goods, India wouldn't have had a caste of trader, or entire communities of them. Trade would be uneconomical, unintelligent, and not worth the trouble. If you look at our traders carefully, you do not see them as political agents they are economic actors.

They work in a self-regulating civic society, buying and selling for a margin. You see them everywhere: from the North-East to the deep South, you will find shopkeepers who all hail from some part of western India. They contribute to the local economy. What do they do when swadeshi strikes deep, and sub-national political movements espouse ideologies that look towards Indians from other parts of the country as foreigners? Keeping Indian markets for Indians may be fine for some big industrialists, but what happens when people want Maharashtra for Maharashtrians, Assam for the Assamese and so on.

Not having thought out its economic ideology clearly, the Government of India is making a fool of itself 'protecting national interests'- as at the WTO meet in Singapore. Where children study the swadeshi movement in government-approved textbooks as a logically correct way of securing national prosperity, how can our bureaucrats think differently? The ideology filters through and is adopted at sub-national level by sub-nationalists. Fast-food outlets owned by Americans are demolished by those who do not bother to notice that ITC was free to set up Indian food restaurants in the US: the Government of India's exchange regulations were the only hindrance!

Swadeshi is not truth. Chandni Chowk, where the world came to do business in a prosperous India, is. Swadeshi is merely the ideology of Congress nationalism. It should not be the ideology of the Government of India. It should also not be taught to children in the manner in which it is done today. They will soon be young voters, and so should be politically aware. Economic historiography should not be nationalist propaganda that borders on hysteria. Congress Raj - socialist and nationalist - must be compared with British Raj - imperial and liberal.

It will be seen that we had a far greater share of world trade then than we do now. That money was coming into the infrastructure. The government was standing by, running things, and not getting in the way. That money was convertible, and we were freer, economically. Big cities were built. Municipalities worked. Is Seshan calling for a second freedom movement?

Gandhi's mistake, Gunnar's too; and a response

Gandhi's mistake, Gunnar's too; and a response by Sauvik Chakraverti

The Indian Express 10 December 1996

Going through Gandhi, one sees how his mind was working on the confusing question of technology - boon or bane? In Young India, November 13, 1924, he attacked machinery: "Helps a few to ride on the backs of millions". He warned that 'the machine should not tend to make atrophied the limbs of man'. And he made an 'intelligent exception' of the Singer Sewing Machine because it had 'love at its back': Mr Singer saw his wife labouring over her sewing and invented a device that would save her trouble! Gandhi approved.

And he was honest about his confusion a long time later: In Community Service News, September-October 1946, he said: "As a moderately intelligent man, I know man cannot live without industry. Therefore, I cannot be opposed to industrialisation. But I have a great concern about introducing machine industry. The machine produces too much too fast, and brings with it a sort of economic system which I cannot grasp."

Why is it so difficult to grasp what machinery does? Only because we look at immediate - and not long-term consequences. Industry - Gandhi agrees - is a basic human impulse: we all strive to do whatever we do such that we save effort. Machines do the same. If they were bad, we would all be unemployed, our limbs atrophied, and we would yearn to be back in the Stone Ages, when we could have been much more active. But the obvious fact is that machines have raised production, wages, the standard of living and the sum total of human life on Planet Earth.

To examine the question, we look, like Henry Hazlitt did, at what happens when a new machine enters the factory of an overcoat manufacturer. Since it raises productivity, it displaces, say, 25 per cent of his workforce. This is more than what has been employed in manufacturing the machine itself. But look at the long-term consequences.

In a few years the machine `pays for itself. It has saved more than it was worth. These excess savings come to the man who bought it, who can either reinvest in his business, invest elsewhere or spend it thereby adding to employment. Further, the machine would probably have reduced costs in manufacture, giving the leader in introducing it an edge over his rivals.

Today, technophobic arguments are still heard all over the world. The anti-word is 'automation'. It is bad, and it reduces employment. The automobile industry is one in which automation is greatly opposed. Here is an industry
which has mechanised itself greatly, and the statistics are telling. In the US: 1910 - 140,000 workers; 1920 - 250,000; 1930 - 380,000; 1973 - 941,000.

Evidence indicates that the khadi philosophy is seriously wrong. It cannot be a way of either increasing employment or national wealth. It can, at best, create a constituency. What it will not offer this constituency is a means by which their produce gets treated as art - as hand-work should be considered - instead of a subsidised, protected something that needs the state to shelter it from the machine. It does not call for the artistic pride of the weaver. It asks for his submission to state patronage under the aegis of Gandhians whose only claim to fame is that they worship their God without original - or even critical - thinking.

What is surprising is that a Nobel Laureate in Economics (1974) is committed to the same error. Gunnar Myrdal, shortly before he won the prize, wrote that machines which increased output should not be introduced into underdeveloped countries because they 'decrease the demand for labour. Can this be for real? At a time when Malaysia has decided it will be 'developed' by 2020 (Mahathir drives a car numbered 2020!), how can we languish between socialism, and the unintelligent economics of a Nobel Laureate who has been hugely felicitated by the Indian state.

We live in times when even the existence of an intellectual-moral elite is doubtful - forget its capacity to guide the destiny of millions. Good economics and sound political science can offer some respite. This will never happen unless we are willing to sift through the heap of ideology we lug around and discard whatever is false.