The Fallacy of the Democracy

At the very outset, I would like to ask this question; can we justifiably expect justice from the kind of democracy we have in India today which is heavily controlled by few powerful at a time when a sizeable portion of India’s population is still illiterates? How can we expect true democratic justice from those political leaders who supply TV, cloth, cycle, even rice for Rs 1/kg to their voters on the eve of election? How can we expect true democratic justice from such leaders who replace their posts of Chief Minister, Minister, MP etc when they get sentenced by Judiciary for crimes they committed while they were in power with their wives or wards? Of course, I am not posturing that Indian democracy is full of vices and evils with no elements of virtues. For instance, certain legislations passed by current government like RTI Act, Land Acquisition Act etc are remarkable piece of legislations as far as Indian democracy is concerned. It is worth mentioning here that the oldest democracy of the world, USA, took centuries since its independence in the year 1776 to pass a legislation called Freedom Information Act in the year 1961 similar to our RTI Act whereas we took just 60 years to achieve such a milestone in our democracy. However, there are certain grey areas that politics will be wary of dealing with for the betterment of the society. The best example is the field of education in general and higher education in particular. How can we expect the political system infested with aforesaid forces of evils to empower the minds and bodies of the ordinary citizens by creating an environment in which they can get educated to the highest extent possible? Aren’t such evil political forces smart enough to realize the simple fact that if people at large are educated leading to improvement in their political and civic consciousness which will ultimately wash away the vote banks of such political parties? Obviously, that is why they, instead of concentrating on such fundamental issues like education even at a time when majority of Indians today are young waiting to be trained and coaxed for a better socio-economic life through quality education, these politicians concentrate on distributing cycle, TV or rice for Rs 1/kg which is finally served to buffalos reared by such households to make use of plenty of rice available at throw-away price. What makes us suspicious is the complacency noticed on the part of the same govt which passed historic legislations as pointed out above to push through some important educational bills pending before parliament as a result of the strategic stalling of parliament by the opposition to change the face of Indian higher education. Of course, govt would attempt to pull their head out excusing the recalcitrant attitude of the opposition parties who believe, in Indian democracy irrespective of parties, that their only duty is to remain as road-blocks.  However, this excuse will have to be applied with a pinch of salt as the same govt did everything to ensure that Telenagana bill is passed amid total chaos and pandemonium in the parliament by opposition before the election as they are smart enough to realize that it will help to reap its political dividends during election. The question posed here is why this govt did not evince same interest and alacrity to get educational bills such as Innovation University bill which has been pending before parliament for years passed as it did in the case of Telenagan bill? The answer is obvious; first, educational bill lacks the charm to appeal to the sizeable illiterate Indian voters. Similarly, politicians are aware of the fact that it will boomerang though not at present, but in the future. How young India can afford such a knee-jerk policy at this historical juncture. Today’s young India, if adequately trained and educated, will be an asset of tomorrow or today’s shunted and blunted young India will be a liability of tomorrow.

The emergence of AAP in Delhi is the manifestation of the aforesaid boomerang that has struck at the very face of those who initiated the moves that enabled the people of Delhi to respond in a fitting manner. The AAP is a city based educated working middle class phenomenon. Who created them? Obviously, they were the creation of the very Manmohan Singh as a result of the economic prosperity that India witnessed, at least in its cities, after the liberalization and globalization of 1990s. These educated middle class also got politically conscious and sensitive creating an impulse to question the anarchy going on around them in the form of the rampant corruption which is also a  by-product of both gloablisation characterized by technological innovation (2G) and mutilated or truncated  Indian democracy  characterized by the dominance of  regional parties which often clips the wings of the main  national parties to achieve a pan-Indian perspective rather than misusing the available political wind-fall opportunities for either personal or regional benefits, as often did by these regional parties. Thus, the point I am making is that a phenomenon like AAP is essentially the creation of the recent institutional and structural reforms like liberalization and globalisation that India has witnessed as the very champions of these reforms failed to recognize the possible long term socio and political impact of these reforms as a result of their overly preoccupation with possible economic impact of such reforms with an eye on vote bank politics. This act also otherwise blunts the view of certain critics of the AAP saying India has had seen similar political outfits emerging time and again in the past and all of them also got eclipsed as the country moved forward and therefore, AAP’s destiny will, in no way, be different from its so called predecessors. This view is highly shallow in the sense that AAP, unlike its so called predecessors as I described above, is the corollary of the structural and institutional reforms that India was subjected to after 1990. Of course, I am afraid that I will be countered showing the example of the so called socialist revolution North India witnessed during 1970s under the leadership of Jayaprakash Narayan  However, it is quite unfair to draw parallel between AAP and Jayaprakash Narayan’s revolution because 1970s upsurge was not an outcome of any sort of structural or institutional changes in India except the fact that it was mainly an upsurge of people’s anger against the  draconian attitude of the then existed India’s political establishment. Thus, if someone argue that a phenomenon like AAP will be sustaining as indirectly indicated by the Time Magazine’s recent survey probably held among educated city based people that only Aravind Kejriwal is fit to become the prime minister of India compared to other major candidates, we cannot completely disregard their view.

Therefore, what I am advocating is not that India will remain to be a land of illiterates forever. Instead, given the nature of current politics, we will be lagging behind especially in the case of education. After having said all these, I also did not subscribe to the view that it is only the professional politicians who are our potential policy makers responsible for the pathetic state of the affair in Indian higher education. Instead, it is an outcome of a tacit unsavory collusion between the formal professional politicians outside the educational system and the informal amateur politicians inside the educational system. Therefore, our higher education, like anywhere else, can be saved only if we break this unholy alliance between formal and informal politicians in the scene of higher education in India implying that Indian higher education is eagerly waiting for the emergence of another Aravind Kejriwal as nowhere in the world change or transformation or revolution did not take place until and unless it imposed forcefully and peacefully on the status-quo. 

The Ghost of Marginal Cost has Vanished from the Dismal Desert of Economics

Today we are all living largely in a knowledge economy in which innovation and subsequent knowledge creates value compared to previous industrial economy in which value was dependent on the tangible production and output. This has turned matters up-side down. For example, according Professor, Geremy Rifkin, this transition to knowledge economy has made the mythical marginal cost (mc) concept on which the entire capitalism is built has become obsolete and irrelevant in the economic discourse. The basic idea of the mainstream economics is that the goods and services has to pass through various stages in the form of exchange of either inputs or output entailing additional cost at each level and therefore, price must be decided based on the additional or incremental or  marginal cost. Of course, it may appear to be appealing to the logic even though it is not possible to figure out how much is marginal cost in the practical situations and therefore, it is mythical. At the same time, in a knowledge economy, there is no such a cost like marginal cost at all. For example, consider my blog for which the service providers has to ear mark certain space which constitutes both total cost and fixed cost. Even if it is accessed by billions of the people around the world, it does not entail any additional cost to the service providers or to me. Thus, the spirit of mc has vanished from the dismal desert of economics.

Another most amusing development in the modern knowledge economy is the astonishing u-turn and thereby camouflages of the economic agents (read human being), which instead of destabilizing the very foundation – selfishness- on which the modern economics is built, it has essentially reinforced its credibility to remain as well as continue to be the foundation of economics. In the erstwhile industrial economy, the selfishness of the people vis-a-visa economics was satisfied by way of denying others what they possessed and thereby distinguish themselves from others based on the ownership. For example, land lords in the past denied others the right to own land and thereby they satisfied their selfishness by owning vast stretches of land in which they were proud of. Thus, in the past people appealed to and satisfied their selfishness by way of denial and deprivation. But, contrary to this, in the modern knowledge economy the same people are appealing to and satisfying their selfishness with sharing and distribution, just opposite of what they did in the past to achieve the same objective. What a miraculous turn of events.  Today, people share their blogs, their videos through Youtube, their wisdom through facebook and twitter. How this will satisfy his/her selfishness and thereby help economist to eke out a living for their otherwise hapless kids. The idea is this:  unlike the past industrial economy in which tangibles like gold  which were considered to be the assets  must be kept in the dark inner rooms of the castle to deny it to others, as Travancore King did in the past by storing huge amount of precious metals in the Temple as he can draw credit out of this as he is the custodian of the temple and thereby satisfy your selfishness by ruling the paradise of fool over the pride that I have this or that which others do not have so that I am distinguished from others and hence your ego which is your boss who controls you will be happy with you, the slave, today in the modern knowledge  economy, your boss (selfishness) will be satisfied only you share your asset like knowledge  with others because what made you proud of you in the past industrial economics is the impression that I am great or noble because I have land , BMW etc whereas who will mind  and acknowledge you today if you conceal your knowledge within your shelf at home without sharing it with people. Once you share your wisdom with others, if it is impressive, you will be acknowledged which will make you proud of yourself and thereby you will also make your boss happy. That is why people share their wisdom today not necessarily to be useful to others but to glorify themselves. Economics, I LOVE YOU SO MUCH. You are a wonderful and beautiful ghost.

By the way, being distinguished form others is one of the driving forces of the life. For example, why should the so called VIPs insist that they should not be frisked at the airports? Are they smugglers? No, the issue is that all others are being frisked so VIP should not be frisked so that he is distinguished from others. The logical root of the current identity politics can also interpreted with same reasoning as the modern champions of identity politics proclaim that they are of being, say, a dalit or being hailing from a particular regions and thereby they are trying to invoke the spirit of identity to appease their ego. Thus, ultimately what matters is not the quantity of good you have produced, or length of the land you own or colour of the sari you have purchased for your wife , instead what matters is your ego or your selfishness because you are simply and miserably so poor and so constrained to be happy simply by appealing to your selfishness as it is the dominant evil force controlling you and also because you ultimately love only yourself and you pretend to be in love with others not because you really love them but because you really love you. That is, when you inherently pretend to love others, they will also be doing the same thing and you will be pleased as you are under the false impression that they love you and finally, thereby, you, the idiot, satisfy your princess of selfishness. You are a fool because others are also indulging in the same tactics directed at you to satisfy their princess. Thus, life is a drama written by an idiot (in which the actor is also an idiot).

Undermining the True Spirit of Globalisation

As I discussed the importance of a continuous policy regime at the level of countries today in a previous post, the same reasoning is also applicable to global economy as a whole. In this era of close integration and dependence among countries, countries must extra care not to interrupt the existing progressive policy regimes so as to elbow both investors confidence as well as to strengthen the trust between governments. Each country, in particular, must avoid taking such policies which will erode the confidence of others against whom such policies are directed to safeguard the interest of the former. This sort of shadow-boxing along the policy lines by the member countries of the world especially by powerful forces will undermine the very sprit and purpose of the globalization.

The on-going standoff between US and Russia over the Ukrain issue has to be evaluated with this perspective. There two things here, first, any attempt to address a political crisis with an economic solution is not desirable as a political crisis must be resolved through political means. Second one is the resonance of economic embargo being surgically imposed on Russia across the globe. What message this episode spreads across the world?  Because already international community look at the on-going process of globalization with suspicion about its true intention as they firmly believe that it is old wine in a new bottle. The criticism raised against the current of form of globalization that it is designed and adopted for the comfort of rich also attracts credence. Two things appear to be on the side of the detractors of the globalization; first, globalization has touched only the strengths of the rich like capital and manufacturing whereas the strength of the poor, labor is still unexplored to the detriment of the poor countries. Second, the notion of old wine in a new bottle implying that globalization is the new avatar of the old imperialism also appears plausible in the context of US actions against Russia that a US led globalization to benefit out of its own strength like capital and restricting other to make use of their strengths is so designed to brow beaten and coerce others to fall in line to serve the interests of the US. In other words, US’s attempt to intervene in a political crisis with an economic solution strengthens the suspicion that globalization pursued today is not to make world better off, but to make certain section better off at the cost of others. Thus, this kind of lop-sided and miss-guided policy prescriptions will undermine the true spirit of the globalization and thereby lose an historical opportunity to the world to change its face for the better if it is pursued better.

Exclusive Inclusion of ‘Kudumbasree’ in Kerala

The microfinance phenomenon has now caught the imagination of both academicians and policy makers all over the world with its much touted success in the amelioration of poverty in Bangladesh under the leadership of Nobel Laureate Professor Muhammed Yunus. Thus India has also witnessed rapid expansion of the microfinance institutions in the various parts of the country including   the microfinance component of the “Kudumbasree” in Kerala with the purported aim of achieving inclusive growth. But, the fundamental question is whether kudumbasree-lead microfinance programme is really inclusive as being often clamored? In my view, it is exclusive rather than inclusive both conceptually and structurally. Firstly, conceptually inclusiveness demands secure recognition of the individuality for rights or privileges of members in the specific context of an entity like kudumbasree-lead microfinance as it will induce the person’s incentives to exert more effort in the right direction not indulging in the moral hazards like deceit or secure recognition of individual property rights in the specific context of property like land. For example, consider the land reform which is obviously inclusive as it secures the property rights of the each individual who got land.   If so, where is the recognition of individuality in the kudumbasree-lead microfinance? Of course, it recognizes the individuality of rights, but to a very limited extent compared to, ironically, the stipulation of the collective responsibility of individuals. In other words, the overwhelming collective responsibility of the individuals in the kudumbasree-lead microfinance to avoid moral hazard like non-payment of loan dwarfs the recognition of individuality for rights as symbolized by the meager benefit accrued to members through its services leading often to a situation in which the very system get stagnated under the burden of responsibility without being able to make progress on account of the meager benefits. Therefore, they get further excludes and alienated from the system to which they were originally meant to be included.  

Secondly, since the kudumbasree system is organized as a particular group of people being systematically carved out of the general public and hence treating them as a separate entity with no formal link with general public in regard to its functioning, it get excluded from the general public and therefore, it misses those spillover benefits which it could have derived had it functioned in a collaborative manner with the general public. How can you achieve inclusion of a group into another group by separating the existence and functioning of the former from the latter? Or does this separation means that this group already possesses required resources to be included into the mainstream, however, they are denied the leeway to make use of such resources at their disposal for their upliftment as they are closely associated to the mainstream and thus, they are separated from the mainstream to circumvent this difficulty to gain freedom to make use of their resources for their upliftment? I think this justification will not stand the logical test as it is amply evident that people who join in the kudumbasree are marginalized deprived sections of the society who lacks any sort of resources to a considerable extent. Thus, nobody can contest the simple fact that if you want to raise a certain group to a higher level on par with another group who are already at a higher level, then the best strategy is to leave the former group to be in close proximity with or amidst in the latter so that the former can gradually pick up momentum in accordance with the momentum that exists in the latter. This highlights the structural exclusivity of this initiative. The fundamental question here is that what this inclusion is all about or where are you trying to include these people? Of course, as I observed earlier, they are meant to be included into the general mainstream public. If so, the recognition of individuality of rights must be, at least, on par with the stipulation of the collective responsibility to avoid moral hazard so that people will be in a position to sustain their incentives to put extra effort for the development and expansion of the entity which will improve the growth and pace of inclusion.

Given this reality, one can doubt then why this initiative is being structured like this in its current form without addressing its structural imbalance defeating the very purpose of this initiative? The answer to this question lies in the brutal politics behind kudumbasree movement in Kerala. This movement is originally conceived to mobilize people especially women from the marginalized sections of the society by political establishments in the state as their hither-to employed means and ways of mobilizing people were waning rapidly. That is why the kudumasree-lead microfinance initiative so incoherently designed with the ulterior objective that people should never be economically empowered for which the recognition of the individuality of members when it comes to rights  were suppressed so that they will remain to be poor and excluded from the mainstream forever so that these political predators can stalk them indirectly forever and  at the same time, they should be made politically active as staunch comrades to sweat and even to die for the party for which the recognition of their collective responsibility, to avoid moral hazard in the form of desertion from the party,  must be over-emphasized so that they will  always  be alert and asleep to ensure that each group remain intact and remain united to achieve the objective of inclusion under the guise of the broad umbrella of politics. This readymade provisioning of a net work of a united group feeds the political aspirations of their bosses without much sweating. Thus, the kudumbasree movement is a part of a mega conspiracy hatched to rope in party workers when hither-to used traditional methods of mobilization was failed.  

Anthropological Hypothesis

There are mainly three views regarding why inequality exists in the world. One is the climate hypothesis of French Philospher, Montesueiu who argued people of tropical areas are lazy and therefore, they are less innovative and productive whereas people of other areas are hardworking and therefore innovative and productive. That is why UK and USA are rich while Sub-Saharan Africa is poor. Second one is the Cultural Hypothesis of German Sociologist, Marx Weber who argued it is culture in the form of the protestant ethics that made UK rich. Third one is the ignorance hypothesis formulated along the line of the definition of the economics by Lionel Robinson and according to this economies often face market failure and rich countries are rich as they are able to formulate better policies to tack the menace of market failure as a they are knowledgeable compared to poor countries who cannot formulate better policies to deal with market failure and therefore they are poor.

 In my view none of these views are satisfactory to explain the phenomenon of world inequality as demonstrated by Acemoglu and Robinson (2013) in Why Nations Fails…….and a satisfactory explanation to the world inequality lies in the anthropological attributes of human being as explained below.

Ignorance hypothesis says that rich countries have eliminated the problem of market failure with better policies. If so what enabled them to make better polices? Or why poor countries are unable to make better policies? To answer this we have to resort to their culture. Rich people are rich because of their rich culture, not in the sense defined by the Marx Weber along the line of religion; instead it is to be defined in the line of the anthropology. To go further in the sense that to know how Anthropology rendered world unequal, we have to unearth the mystery behind the human evolution. I do not believe that people of the world as whole are evolved from the same origin and in the same environment. It is this difference in the origin and environment that caused difference in the culture, appearance, norms, skills, talents, aptitude etc which made someone better and other worse. There can be a temptation to explain this link between Anthropology and Inequality with Montesquieu’s Climate Hypothesis citing the example that people of Tropical area like Africa are black whereas people of arctic areas like Canada are white. But, I think it is not appealing because if so, how the people of tropical areas like Middle East and Australia happened to be white?

Also, there is a problem with the perspective we look at the development today. We look at the development through the prism of the principles dictated by industrial revolution which as per this Anthropological Hypothesis could be the outcome of the natural instincts and aptitudes that the British people inherited from their ancestors and thereby they were naturally tuned to develop means and ways to make industrial revolution successful. How can we say that people of another region, say India, would be comfortable with such means and ways that found fascination with British? Not one thing here that in the ancestral tradition of the Indian society, “sanyasm” (sainthood) is an important stage of their life in which they renounce all their material endowments and move to jungles or Himalayan mount ranges to meditate. A the same time, in a society like British, what we have seen is just contrary to this with a penchant to make more endowments throughout life. Please do not try to interpret this with the Max Webers’ cultural hypothesis as culture is the outcome rather than villain.

Therefore, in my view, to find a sensible explanation to the world inequality, we have to recognize the anthropological diversity of human being which forged their varying capabilities and cultures. However, in the modern era, only the capabilities and culture of the British inherited from their ancestors got patronage though industrial revolution and therefore, modern developmental discourse got biased in favor of a particular group and capabilities to the complete decimation of the capabilities and talents that people of other regions had inherited from their ancestors. That is why world is unequal.

It is in this context, a truly democratic globalization assumes significance recognizing the diversity of the human aptitudes and capabilities paving way to comparative advantages across the world. Thus, if we capitalize this diversity thorough international trade in a truly democratic manner giving due consideration to all, we can eliminate the world inequality. 

The Economic Implications of the Purported New Political Dawn in India

As India has had been on the election trail in the recent past, what we are repeatedly told is that Indian politics is at the door steps of a new dawn. We are told that a new savior is on the way to change the face of Indian democracy substituting the said to be failed existing model with another model said to be successful somewhere else. We have also heard so much about the pros and corns of this transformation in the offing. But here the issue is not whether someone is fit enough for bringing about such a change or not or whether a particular model is successful or not, rather the issue is what are the potential economic implications of this new political dawn in Indian democracy? First, it means that we have wasted our past sixty years after independence as we failed to develop a political consensus regarding our development strategies. In that sense, this new dawn is akin to scratching our head with burning stick. For, the political exercises like election and selection of executive are means which should not confused with ends- people’s wellbeing. We undertake this sort of exercises not simply for the sake of these exercises or for the sake of the personal glorification of those who are clinging to such political exercises for decades. Instead, we, the people of India, take part in such democratic exercises spending huge amount of resources with the ultimate aim of building a prosperous and powerful India in all respects. For achieving that ultimate goal democracy has to play a pivotal role.

 Second, the new dawn implies beginning of a new policy regime of all sorts especially economic policies implying political and economic discontinuity instead of political and economic continuity and thereby stability. How India’s democracy can afford to cry out for a new political beginning of this kind disregarding the virtues of the past?  Can we expect to build a prosperous India in a discontinuous India? Never! Because, prosperity is a dynamic process which requires not discreet or static policy regimes but continuous and uninterrupted policy regimes. How can we achieve something dynamic  in a static environment? Let us not forget the historical reality that it was continuity along with stability that made countries like United States one of the richest countries of the world. Acemoglu and Robinson (2013) in their book  Why Nations Fail has pointed out this referring to the forces behind US development as a rich country that political institutions ensured stability and continuity. For one thing, they made sure that there was no risk of a dictator taking power and changing the rules of the game ………… How can we induce private investment in a country characterized by the discontinuous political and economic regimes even after sixty years of its independence? Shouldn’t we feel ashamed over the fact that we miserably failed even to develop a consensus regarding our development strategies even after sixty years of democratic experience? Hence, a pinch of caution would be desirable to be applied to those arguments that all out transformation of the system that we have now is in the best interest of the country.    

Win-Win Politics of Secularism and Communalism in India

The professional politics in India today can be  characterized by a win-win politics carved out in the name of secularism and communalsim for the convenience of our professional politicians  as it presents a win -win situation for both secularists and communalists because in a democracy like ours, the best and easiest way to make political capital is to cause polarization in the society in the name of  either caste, or religion or region etc. as relatively poor people in all sense can be easily carried away with such tactics where as it is very sweating to capture the imagination of the people in the name of progress especially in a challenging social economic setting that exists in India. That is why our professional politics has somehow managed to divide the society into tow by way of defining politics in terms of communalism and secularism. If so, then the rule of the game is simple: suppose election is on the way, then you just manage something like Muzaffar Nagar episode, polarize the society on the one hand and at the same time, consolidate your vote bank through the same polarization, on the other hand. Thus, this process of consolidation on the both sides presents a win-win situation to both the champions of secularism and communalism. What is interesting is the fact that immediately after independence certain section has realized that they can make inroads to politics of power in India only through the exercise of polarization and thereby, they themselves has implicitly agreed to act as the forces of polarization which was wholeheartedly accepted the so called forces of secularism as it is beneficial for them. Thus, to a large extent Indian democracy today is essentially driven by this kind of implicit win-win strategy pursued by our profession politicians.