Why India needs Raghuram Rajan's definition of development
In a recent television interview, the governor of the Reserve Bank of India (RBI) made a point of highlighting, in congratulatory mode, that our economic achievements, significant though incomplete, have been realised in a "flourishing democracy".
"The world’s largest democracy" is also a phrase often trotted out when the Indian establishment needs to impress others or reassure itself in the face of carping criticism about poverty, inequality, murderous intolerance of difference or obscurantism of any sort.
The problem is that nobody cares to define, in detail, what they understand by democracy.
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| PM Narendra Modi. (AP) |
The basic question in our context is whether universal adult suffrage and the electoral freedom to select national and provincial legislatures, is sufficient for us to sit back and congratulate ourselves as being not just different but superior to those that grew under authoritarian regimes.
In his economist avatar, Raghuram Rajan has1 argued that:
"… the underlying cause of underdevelopment is the initial distribution of factor endowments. Under certain circumstances, this leads to self–interested constituencies that, inequilibrium, perpetuate the status quo. In other words, poor education policy might well be theproximate cause of underdevelopment, but the deeper (and more long lasting cause) are the initial conditions (like the initial distribution of education) that determine political constituencies, their power, and their incentives. Though the initial conditions may well be a legacy of the colonial past, and may well create a perverse political equilibrium of stagnation, persistence does not require the presence of coercive political institutions. On the one hand, such an analysis offers hope that the destiny of societies is not preordained by the institutions they inherited through historical accident. On the other hand, it suggests we need to understand better how to alter factor endowments when societies may not have the internal will to do so."
A simple interpretation of this argument is that despite electoral democracy at some levels, powerful constituencies with vested interests in the status quo of inequality and underdevelopment can ensure that factor endowments are not changed by appropriate policy initiatives.
In effect, electoral democracy, though necessary, is not sufficient to ensure sustained development. The formal structures of democracy need to be buttressed by something more if it is to be truly "government by the people, of the people and – most importantly – for the people".
Of course, if we choose to compare ourselves with failed states run by murderous, thieving dictators, our democratic structures are wonderfully stable and admirable. However, if we look at the other end of the spectrum, things look rather different.
If the essence of a democratic society is the deeply embedded and widespread conviction that all human beings "are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the Pursuit of Happiness " then we need to go beyond electoral practices to assess if our democratic cup is indeed brimming over.
A bit of history is helpful here. The organic evolution of institutions from "extractive" to "inclusive" – from the divine right of kings to the rule of law, equality of all before the law, universal suffrage, private property and an individual’s right to freedom and dignity – was a long and painful process in the place from where we copied "democratic institutions"– Britain.
"British democracy was not given by the elite.It was largely taken by the masses who were empowered by the political processes that had been ongoing in England and Britain for the last several centuries."2
The imposition, from the outside, of systems and institutions on a society that espouses values diametrically opposed to those inherent in the institutions sought to be grafted, has been vociferously criticised on the grounds that failure is inevitable.
It has been contended that institutions that do not emerge from within a society organically have difficulty in finding strong roots in a hurry.
In the Indian context, we have a set of modern western democratic institutions based on the notion of the essential equality of all human beings implemented at Independence by a westernised elite in a society that conformed – and still does to a great extent – to the dictates of caste.
Caste and the notion of hierarchy and fundamental inequality of human beings contradicts the essence of democracy and their continued coexistence for over sixty years needs to be understood.
The sheer strength and flexibility of the caste imperative in the face of democratic institutions has created a synthesis that is troubling in the extreme. Democratic processes are coloured and controlled by caste compulsions – caste vote banks are one example – and personal behaviour adapts, abandoning what cannot be practically retained and retaining the essentials.
A good example are the constraints relating to roti and beti. Long distance travel and the compulsions of urban living make it impossible to follow the restrictions on roti comprehensively... but the rules governing marriage can and are rather rigidly observed.
Proof of the virulent strength of this particular caste compulsion can be found very close to the home of Indian democracy – the widely reported case of a woman who married outside her caste, returned to her parental home for some reason and was publicly lynched in daylight for her sin is a simple case in point, and not an isolated one at that.
It can be argued that occasional acts of insanity happen in many "developed democracies" – massacres of innocents by automatic weapons wielding individuals happen not infrequently in the USA, for example. But those are cases of individual "rogue" men, while we have instances of collective murderous insanity – the two have different pathologies.
After six decades of independence and democracy, we still have the nawab-thanedar-zamindar nexus as strong as ever – only the names and designations have changed.
The state does little to serve and protect; it remains extractive and exploitative and rules with a heavy hand with little regard for human dignity. It decides what we eat and read, who we love, and how we entertain ourselves.
Its functionaries are the closest thing to feudal lords in a modern context and the state has not ensured an efficiently functioning system for dispensing justice.
The state, in short, functions like a semi-feudal not a democratic state. Thus, both at the level of individual behavior and institutional functioning, we in general, don’t quite exhibit democratic, inclusive tendencies.
In the interview cited above, Raghuram Rajan was positive that we, in India, will chart out our own path of development and not tread any old and beaten track. The question, however, is what exactly will that path look like?
Note:
- The Persistence of Underdevelopment: Institutions, Human Capital, or Constituencies? Raghuram G Rajan (IMF and NBER), Luigi Zingales (Harvard University, NBER & CEPR).
- (Why Nations Fail–The origins of power, prosperity and poverty, By D Acemoglu and JA Robinson)