The fall of the Soviet Union and the collapse of communist economies in the late 20th century reinforced belief in capitalism. The phenomenal rise of the Chinese economy removed all doubt about its role in fuelling economic prosperity. India's own success with liberalisation has convinced its governments, major political parties, bureaucracy, big businesses, and many in civil society to abandon socialistic ideals in the single-minded pursuit of libertarian goals.
Despite the increase in the country's Gross Domestic Product (GDP), its ranking in the Human Development Index (HDI), its indices for maternal and infant mortality and its rates of under-nutrition of its people tell a completely different story. The burgeoning incomes of the wealthy increase the indices of growth; yet, these averages hide much poverty, suffering, loss of livelihoods and life. Capitalistic ideology, which has been driving recent growth, has its blind spots.
Basis of belief: All beliefs, including economic theories, stem from the ability of the human brain to recognise patterns and meaning in perceived information. People fashion particular beliefs from subjective, personal and emotional cues aided by social and historical contexts. Beliefs are constructed and then rationalised with supporting data; discarding of contrary evidence is common. Some researchers argue that beliefs determine reality and not the other way around. Yet, the most rational among us sincerely believe that we systematically sift information, identify facts and logically construct our arguments to form our beliefs.
For example, the wealthy, steeped in conservative ideology, often argue for tax breaks for the rich and reduced government spending for the poor to fuel growth. Their financial backgrounds and success in the free market colour their vision; they dismiss the lot of the poor, their lack of capital and the uneven playing field as inconsequential. On the other hand, liberals would support a priori social justice and equity arguing for higher taxes and increased government spending to improve the lives of the poor. The many arguments employed to support each of these positions are post hoc and based on particular beliefs.
Arguing from facts: Facts are used to attack opposing political rhetoric and economic theory. However, even strong arguments based on many undisputed facts are open to refutation, if they do not include all relevant information. The challenge is to include all relevant facts; ignoring some essential information can result in a false sense of confidence in our political and economic arguments. Good arguments require that we understand as many relevant facts as possible about the reality. Rational arguments based on authentic reality will be more convincing than perfectly logical opinions based on part perceptions.
Fiscal conservatives focus on average GDP figures, which increase by a disproportionate rise in the fortunes of the rich, often at the expense of the poor. On the other hand, liberals argue that trickle-down economics do not work resulting in even greater inequity, mandating governmental regulation and intervention for social justice. Ideological beliefs determine the type of selective blindness and consequent focus.
Ideological conflicts: Philosophers including Descartes have argued that we should start from obvious premises, self-evident to any rational person. However, a failure to agree on basic assumptions leads to a breakdown of rational arguments and the consequent refutation of many supposedly substantive claims. Such premises are based on mental pictures and world views, which, in our pluralistic world, are controversial. Family background and influence, schooling and education, training and work environments, friends, newspapers, television, internet blogs and diverse sources of knowledge determine our world views. Different people hold rival world views, which play a greater role than facts in reaching conclusions about politics, morals and religion.
Policymaking requires both theoretical knowledge and practical judgment for implementation. However, in pluralistic societies with different world views, mental pictures often eclipse facts. Nevertheless, identification and application of world views in policymaking requires the appreciation of exceptions to a particular world view. Such recognition and incorporation of these in planning is crucial for rational argument.
Fiscal conservatives believe in free markets, minimal regulation and small governments that maximise profit and increase capital, which they consider crucial for achieving social and economic good. Liberals, on the other hand, focus on issues related to social justice and equity. They claim that individual aspiration and greed, in addition to capital used to maximise profits, can threaten the well-being of society and demand governmental regulation. Nevertheless, conservatives admit that some regulation is necessary while liberals acknowledge that too much control makes for bad economics. Both world views are legitimate and have valid exceptions, calling for diligence in policymaking and application.
Basis of policy: Which world view should India's policy makers subscribe to? Which facts should be highlighted to determine application? Should the fiscal stimulus to encourage economic growth give even greater tax breaks to the wealthy? Should mineral-rich forests, home to adivasis, be acquired by governments and transferred to multinationals and corporates for development? Is the world view of the adivasi, who has been displaced by the clearing of forestland for mining, valid? Have the constitutional rights of farmers, whose lands are acquired by government for private housing, violated? Are the unemployed and those in extreme poverty entitled to social protection? Are the hungry and the malnourished entitled to food security? Should the poor always be required to sacrifice their lands and livelihoods for large dams to provide water and electricity to the rich?
Bias among decision makers: India's current decision makers, both politicians and bureaucrats, are products of the free market. It is no secret that members of legislative assemblies and of Parliament spend crores of rupees to win elections. The unregulated Indian free market, with its crony capitalism of cuts, commissions, contracts and corruption, has aided and abetted their ascent to power. Similarly, many of our bureaucrats are schooled in elite capitalistic institutions. Capitalism now runs in their veins. They are not able to see, much less feel, the world of the dispossessed and disenfranchised poor.
Capitalistic thoughts are now well-entrenched habits, which accept the inequity produced by free markets as a given. The belief in the success of trickle-down economics is delusional. Reminders about the prevalent extreme poverty, significant unemployment, massive under-nutrition and chronic hunger are mere annoyances and irritations.
There is a split in the India question. Should India's economic policies focus on Shining India to stimulate growth or on the poor of Bharat to provide social, employment, food and health security? Should these policies heal the divide and reunite the country or should they focus solely on the growth story? Should India take its gaze off the GDP numbers and examine the impact of its policies on the HDI?
The people saw through the Bharatiya Janata Party's (BJP) India Shining Campaign. The United Progressive Alliance (UPA)-I's promise of an egalitarian society through its many progressive schemes — National Rural Employment Guarantee, National Rural Health Mission, Sarva Shiksha Abhiyan — paid handsome electoral dividends. However, UPA-II has moved to the right and is now defending the indefensible. It is coddling the rich at the expense of the poor. The lack of significant differences among major political parties, the Congress and the BJP, on financial and economic policies reflects the insensitivity of the ruling class to the needs of the majority.
Moving forward
The vision for a civilised society, enshrined in our Constitution, needs to fulfil the collective aspiration of the majority of its peoples. The focus on reducing poverty is a just cause. National policies and programmes should cater to the needs of the majority rather than add millions to the coffers of the wealthy. The magnitude of subsidies for the corporate sector and the scale of corruption in business dealings also suggest that the amount of monies actually available for social justice programmes exceed all expectation and only require political and administrative will for implementation.
The two very different ideologies will have to engage the big picture, focus on economic growth and on justice. The current emphasis that all ideas, including political and economic policies, be monetised needs to be replaced by an emphasis on justice and equity. Their intrinsic worth, currently measured by their impact on GDP, should be substituted by assessing their impact on humanity. Indian policymakers, driven by ideology, should also be able to see the exceptions to their conservative philosophy in order to be able to provide rational and just policies for the whole country. The magnitude of the poverty underscores the unethical position of the right-of-centre governments. There is a need for an overlapping consensus in which different groups, with different arguments, accept the centre ground. Surely, social justice and equity for millions of Indians is a worthy cause.
( Professor K.S. Jacob is on the faculty of the Christian Medical College, Vellore .)
