Sharing an essay I had written in 2008 as part of my paper titled 'India, democracy and communism'
Income
and democracy
Renowned
sociologist and political scientist Seymour Martin Lipset[1] propounded
the ‘modernization theory’ that essentially says ‘that higher income
per capita causes a country to be democratic’.
Lipset
opined “The more well-to-do a nation, the greater the chances that it
will sustain democracy.” In other words, higher income causes a
country to be more democratic. Other existing studies too establish a strong
statistical correlation between income and democracy[2]. According to Robert
Barro, “Increases in various measures of the standard of living
forecast a gradual rise in democracy. In contrast, democracies that arise
without prior economic development … tend not to last.”[3]
Conventional
wisdom maintained that income per capita has a causal effect on democracy.
Studies[4] by Daron Acemoglu et al effectively showed that earlier studies
including the modernization theory did not consider factors that affect both
income and democracy. Later studies showed that controlling for such factors by
including country fixed effects removes the statistical association between
income per capita and various measures of democracy. While new efforts have
disproved the causal effect or suggested reverse causality – democracy causes
income – they have reiterated the strong positive correlation between income
and democracy.
Poverty,
inequality and democracy
Poverty
unfortunately has more definitions, causes and consequences than solutions.
There have been authoritative, analytical, thought-provoking and thoughtful
literature and work done in the area of poverty alleviation. For this paper, we
shall restrict our study to correlation between poverty and choice of political
system. Specifically, we shall investigate whether democracy is the right
choice for a poor country; whether communism provides a better environment for
reducing inequality.
Poverty
is a multi-dimensional phenomenon and has to be studied through several
indicators:
- Levels of income
- Inequality in income and consumption
- Social indicators
- Indicators of vulnerability to risks and of
socio/political access
For the
purpose of global aggregation and comparison, the World Bank uses reference
lines set at $1.25 and $2 per day (2005 Purchasing Power Parity terms).
According to a World Bank report[5], the number of poor Indians for various
poverty lines is as follows:
$1.00
|
$1.25
|
$2.00
|
$2.50
|
266.5 (24.3%)
|
455.8 (41.6%)
|
827.7 (75.6%)
|
938.0 (85.7%)
|
At this
stage, mention must be made of the Gini[6] coefficient[7]: the most
commonly used measure of inequality (of wealth distribution; of income
distribution). The Gini coefficient (sometimes Gini index) is used by the UNDP,
World Bank, Transparency International, Freedom House and other organizations
and bodies to measure and track several economic indicators.
The
coefficient varies between 0, which reflects complete equality and 1, which
indicates complete inequality (one person has all the income or consumption,
all others have none). The coefficient has a negative correlation with
per-capita GDP. Poor countries generally have higher Gini indices (spread
between 40 and 65), while richer countries have indices below 40. Figure 2.1
shows the 2017 Gini coefficients for all nations.
Figure
2.1: Gini Coefficients – UN World Human Development Report, 2007-2008
In
fact, recent studies have only reinforced the positive correlation between
economic development and democracy:
- “…These results raise the question of why there is a positive
cross-country correlation between income and democracy today. We provided
evidence that this is likely to be because the political and economic
development paths are interwoven.” – Income and Democracy – Acemoglu et al
- In ‘The Growth Effect of Democracy: Is It Heterogenous and How Can
It Be Estimated?’ Torsten Persson and Guido Tabellini have showed that
democracy has an effect on economic growth.
So, was
it a right decision to opt for democracy when it was not economically
unsustainable? And therefore will it last in the future? A few answers could
possibly be found in Mahatma Gandhi’s thoughts on socialism and economic
development.
Gandhian
economics and Marxism
It is
irrelevant and futile to speculate on what the consequences would be if India
had adopted and implemented Mahtama Gandhi’s economic ideas. However it would
not be futile now to study how revisiting some of Gandhi’s principles would
impact socio-economical development in India. A study and commentary on the
complete works of Gandhi will be pointless for the objective of this paper.
However a few selected (but by no means selective) aspects[8] of Gandhian
economics is presented here.
First,
the concept of ‘village economy’ was the distinguishing,
almost central to the Gandhian socio-economic philosophy. Gandhi’s choice of a
political system was inseparable from, and deeply based on, socio-economic
situation of the under-privileged. In this, Gandhian thoughts resemble Marxism.
Gandhi’s vision for village India seems to be a blend of direct democracy – of
which referendums are a major element – and socialist democracy. Gandhi
highlighted the significance of the village economy in Harijan:
‘…
I would say that if the village perishes India would perish too. It
will no more be India. Her mission in the world will get lost. The
revival of the village is possible only when it is no more
exploited. Industrialization on a mass scale will necessarily lead
to passive or active exploitation of the villagers, as the problems of
competition and marketing come in. Therefore, we have to concentrate
on the village being self-contained, manufacturing mainly for
use. Provided this character of the village industry is maintained,
there would be no objection to villages using even modern machines and tools
that they can make and can afford to use. Only they should not be
used as a means of exploitation of others’ – Harijan, 1936.
Second,
Mahatma Gandhi pioneered the ‘ashram’ settlement in South Africa and
established several of them in India. In spirit, intent and role the ashram has
been compared with the ‘commune’: a self-sustaining, self-dependent,
self-sufficient place where the inhabitants would produce and consume their
basic needs and subordinate themselves to the larger interest of the society.
All tasks were shared and executed equally by all inhabitants without any
discrimination.
Third,
Gandhi espoused the notion of ‘trusteeship’, which centred on denying
material pursuits and coveting of wealth, with practitioners acting as
‘trustees’ of other individuals and the community in their management of
economic resources and property. Contrary to many Indian socialists and
communists, Gandhi was averse to all notions of class warfare and concepts of
class-based revolution, which he saw as causes of social violence and
disharmony. Gandhi claimed to be a socialist himself and his concept of
trusteeship sought to destroy capitalism and not the capitalist thorough a
non-violent means. In Young India he declared:
‘By
the non-violent method we seek not to destroy the capitalist, we seek to
destroy capitalism. We invite the capitalist to regard himself as a
trustee for those on whom he depends for the making, the retention and the
increase of his capital. …Immediately the worker realizes his strength, he is
in a position to become a co-sharer of the capitalist instead of remaining his
slave. If he aims at becoming the sole owner, he will most likely be
killing the goose that lays the golden eggs.’ – Young India, 1931
Today,
Gandhian thought is more relevant than ever because of the havoc that
globalisation has wreaked across economies – not as much as in capitalist greed
driven economic recession, which by its cyclical nature would be temporary in
its life – but through marginalisation and socio-economic isolation of local
natives.
The
Gandhian ideal of rural democracy and economic self-reliance, going under the
name ‘Sarvodaya’, is fundamentally opposed to the contemporary dynamics
of globalisation that is based on neo-liberal ideology. Gandhi
described it as follows:
‘…
Every village will be a republic or panchayat having full
powers. It follows, therefore, that every village has to be self-sustained and
capable of managing its affairs even to the extent of defending itself against
the whole. This does not exclude dependence on and willing
help from neighbours or from the world… In this, there is no room for machines
that would displace human labor and concentrate power in a few hands. Labor has
its unique place in a cultural human family. Every machine that helps every
individual has a place’ – Kunal Roy Chowdhuri, 1993
Theft,
which finds mentions repeatedly in Gandhi’s writings, refers to greed and all
its manifestations like overproduction and consumerism. Both these are
characteristic of an accumulative capitalist society. Gandhi echoes the
thoughts of Marx and Engels when he says:
‘It
is theft for me to take any fruit that I do not need, or to take it in a larger
quantity than is necessary.’[9]
The
similarity in the philosophies of Marx and Gandhi is also evident in Gandhi’s
views on labour, which as a ‘working class is continuously oppressed by a small
ruling class’[10]
Gandhi’s
concept of trusteeship reflects his efforts at spiritualising economics and his
principles are rooted in human dignity. And it is here that we see differences
in Gandhian socialism and Marxist socialism:
- Although the care for the working class was equally genuine in
both, Gandhian socialism draws inspiration from Indian spirituality while
Marxism was born from the sweat and blood of the industrial capitalism.
- While the need for affirmative action was equally emphasised by
both, Gandhian socialism is based on trust in the good sense of the zamindar,
while Marx believed in force.
And it
is in these differences that we notice not only the similarity of objectives in
Gandhism and Marxism but also the applicability of their philosophies to India.
[1] Some
Social Requisites of Democracy: Economic Development and Political Legitimacy –
Seymour Martin Lipset – The American Political Science Review
[2]
a. Huntington, Samuel P.
– The Third Wave: Democratization in the Late Twentieth Century;
b. Rueschemeyer Dietrich,
Evelyne Huber Stephens, and John D. Stephens – Capitalist Development and
Democracy.
[3] Barro,
Robert J. 1999. “Determinants of Democracy.” Journal of Political Economy
[4] Income
and Democracy – Acemoglu D., Johnson S., Robinson James A., Yared P. – American
Economic Review, 2008
[5] “The Developing World Is Poorer Than We Thought, But No Less
Successful in the Fight against Poverty” – Martin Ravallion and Shaohua Chen –
Policy Research Working Paper, World Bank
[6] Corrado Gini (1884-1965) – Italian sociologist, demographer and
statistician
[7] Expressed as a percentage – Gini Index
[8] Various excerpts from ‘Economics of Third Sector Management in
India’ – H.A. Shankaranarayana – 2006
[9] M.
K. Gandhi, ‘The quest for simplicity: “My idea of Swaraj”’ in M. Rahmena
&V. Bawtree – The Post-Development Reader Zed, 1997
[10] M.
K. Gandhi, ‘What is Just?’ in The Collected Works of Mahatma Gandhi, Navajivan
Trust, Ahmedabad
