In a classic case of deflecting blame for their own shortcomings, politicians in India have identified the size of the population as the country’s biggest problem. This disingenuous position was stated in a unanimous resolution issued by the Indian parliament in 1997 on the 50th anniversary of independence.
It is hard to imagine a more cynical or despicable lie. If left free from the extensive interferences of various levels of government, the energy and creativity of the Indian people could soon allow them to be among the richest on earth.
Indians are not poor because there are too many of them; they are poor because there are too many regulations. India’s greatest problems arise from a political culture guided by socialist instincts, on the one hand, and an imbedded legal obligation, on the other hand.
While India’s political culture reflects the beliefs of its founding fathers, there is the additional matter of the modified preamble to its constitution that specifies: “India is a sovereign, secular, socialist republic.”
It was Indira Gandhi who had the words “socialist” and “secular” added in the late 1970s. At the same time, she also amended the Representation of Peoples Act to require that all recognized and registered parties must swear by this preamble. Since all parties must stand for socialism, there are no parties that espouse classical liberalism, yet there are numerous communist parties.
While one can appreciate the difficulty of abandoning ideas with such honored lineage, the fact that socialism has been widely discredited and abandoned in most places should prompt Indians to reconsider this commitment.
Despite evidence of its failure as an economic system, many socialists who carry on do so by trying to proclaim that their dogma reinforces certain civic virtues. A presumed merit of socialism is that it aims to nurture a greater sense of collective identity by suppressing the narrow self-interest of individuals. However, this aspect of socialism lies at the heart of its failure both as a political tool as well as the basis for economic policy.
Let’s start with the economic failures of socialism. Most of the grand experiments have been ignominiously abandoned or recast in tortured terms such as the “third way,” which defers to the importance of markets and individual incentives.
Unfortunately, it took a great deal of human suffering before socialists abandoned their mission of trying to create an economic system on the basis of collective goals. It seems that socialist ideologues are impervious to evidence that their system inspires even more human misery in the civic realm.
This is because socialism provides the political mechanism and legitimacy by which people identify themselves as members of groups. While it may suit the socialist agenda to create them-and-us scenarios relating to workers and capitalists, or peasants and urban dwellers, this logic is readily converted to other types of divisions. Asserting group rights over individual rights can lead to the sort of injustices associated with apartheid in South Africa or genocide in other parts of the world.
In the case of India’s socialist state, competition for power has increasingly become identified with religion or ethnicity. Political parties based on religion are inevitably exclusionary and conservative. These narrow concepts of identity work against social cooperation since such political forces cannot accommodate modern notions of universalist values.
Socialism also sets the stage for populist promises to take from one group to support another. And so it is that socialist ideology provided the beginnings of a political culture that has evolved into a sectarian populism that has wrought cycles of communal violence. Populism, with its solicitations of political patronage, whether based on nationalism or some other ploy, is also open to corruption.
Like its evil twin, populism, socialism creates false expectations among the poor that cannot be fulfilled and promotes other forms of divisiveness. A common assertion made by public officials is that poverty can be decreased or that social justice served by taking away from the rich or by passing laws to raise wages. However, this assertion misleads the poor into believing that their condition can and should be legislated away. In response to these signals, the poor demand to be given ever more as a right arising from their identity within a group.
By promoting the misleading idea that income and wealth redistribution can reduce poverty, socialism ignores the fact that poverty is man’s default condition and it persists because of low economic growth and insufficient capital formation. As in most emerging market economies, India has too many policies that hinder private investment.
One of the lessons of the global economy is that only private initiatives can create sustainable economic growth and employment. Long-term investments by entrepreneurs are stunted when capricious actions of governments arise from a populist agenda.
Instead of listening to socialist denunciations of globalization, poverty-stricken citizens around the world should realize that their economies suffer from failures of governance. Poor policy decisions are being made within an increasingly defective “institutional infrastructure” that frustrates investors seeking evidence of growth potential.
At issue is nothing less than the role of the state. Should the Indian state be used as a mechanism to protect the freedoms and rights of individuals living under a general law? Or should the state be a vehicle for groups to gain power and use it to further their own narrow ends? It should be clear that the latter approach will lead to the destruction of India’s society, while the former will allow it to survive.
Christopher Lingle is professor of economics at Universidad Francisco Marroquín in Guatemala and global strategist for eConoLytics.com.