Professor Amartya Sen in recent lecture ‘Snakes and Ladders’ compared the performances of Europe, China and India. He pointed out that the economic policy of ‘austerity’ pushed the developed world ‘into the mouth of a fairly hefty snake’. On the other hand though India’s experiment about democracy is relatively successful, there is an abysmal inequality prevails; so much so that it’s social development indicators are not only below China, but also below Bangladesh. To save developed and developing world including India from ‘hefty snakes’, state should ensure education and health security and it should act as the ‘social mediator’. Having broad consensus with Sen, I would like to put forward some important disagreements as below.
Austerity is a Symptom; Neo-liberalism is the Disease
First of all Sen did not mentioned about the ideology based on which the developed world had adopted the path of austerity. According to Sen after the Second World War a ‘huge effective welfare state system’ did emerge and ‘those were the glory days of Europe’. In our view there are at least two reasons for the emergence of ‘welfare state system’ – (i) the great economic depression of 1929-33 and (ii) success of the Soviet socialist economy. As a thrust of both these factors, the capitalist world entered into a phase of welfare state system in the hands of Keynes. However, welfare state was never more than a bitter pill for the corporate. According to Kalecki as an economy is approaching full-employment by means of state led deficit financing, the corporate control of economy and society will be loosen. This is why during the ‘golden age’ of welfare state system, the pro-market and state withdrawal theory namely ‘Monetarism’ led by Milton Friedman emerged, which were slowly and silently encroaching the academic and policy making space. Later on it evolved into neo-liberalism that ultimately discarded the welfare state. The neo-liberal policy of austerity imposed on USA and UK during the respective regimes of Ronald Reagan and Margaret Thatcher in 1980s. The developing nations also tied with the same policy through structural adjustment lending of IMF and World Bank. Though this policy of austerity curtailed expenditure on health and education of the masses, it opened up a door of huge subsidy and allowances for corporate. Sen detects austerity as the disease, while it is merely a symptom. The real disease is nothing but neo-liberalism that Sen did not diagnose.
India: Austerity and High Growth Bubble.
Secondly, I do not subscribe with Sen that India ‘have not chosen the austerity route’. Since the neo-liberal reform started in India in 1991, the then Prime Minister Narasimha Rao and the Finance Minister Dr. Manmohan Singh appealed Indian people to tolerate austerity for ‘nation’s interest’. As a part of the austerity the subsidies in food and fertilizer were curtailed. There was a reduction in institutional rural credit for the poor and there was a resurrection of moneylenders. The expenditure of rural development to GDP declined from 3.8% to 1.9% during the first decade of neo-liberal reform.
Thirdly there is a shadow of Neo-liberalism in Sen’s analysis ‘economic growth of Gross National Product contributes to development not merely through raising the incomes of people, but very powerfully through generating public revenue’. Though Sen accepted that the beneficiaries of this growth are ‘a fairly small minority’ and ‘in contrast …for other Indians – many more in fact – who have various deprivations’. Sen did not give any empirical estimate about the percentages of beneficiaries and deprived. Arjun Sengupta Committee in recent past gave an estimate that 77% of the Indians have income less than Rs.20 per capita per day. Amartya Sen remained mum about the fact that India’s high growth rate is largely service led. Agricultural growth rate fell below the population growth rate in India since 1991 that never happened after independence. In many post reform years this rate moved below zero. More than a quarter of million indebted farmers committed suicide after not receiving appropriate price for their product particularly for commercial crops. On the other hand industrial sector is also undergoing a secular stagnation since 1995. Therefore the high growth rate of the Indian economy is nothing but a ‘synthetic’ bubble woven by corporate subsidy and pay commission salary hike for a few rich and upper middle classes. Sen miserably skipped the point that this so-called high growth rate is entirely jobless. For last one decade or more employment grew less than 1% per annum while economy as whole expanded around 7-8%. In other words a small class benefited from the neo-liberal high growth rate that makes the majority people deprived. Deprivation of many and benefit of a small are two sides of a same coin. Therefore bypassing the central question of interclass redistribution of wealth and means of production how the ‘capabilities’ can be attained is not at all clear. Also it is not at all understandable why and how the neo-liberal state would make ‘more vigorous social mediation’ for the deprived.
Indian Democracy - How far is it Successful?
Fourthly, Amartya Sen claimed that the ‘democracy in India’ has been ‘largely successful practice’, since ‘(T)he interest in political and social participation seems to stretch even to the poorest parts of the Indian population’. In reality whoever formed the central government since 1991, be it Congress, BJP or United Front; they acted as some architect and agent of neo-liberalism. It’s interesting to note that most of them came to power banking on anti-liberalization slogan. Even Congress Election Manifesto of 1991 did not utter a single word in favour of forthcoming neo-liberal reforms. After the independence Indians witnessed the greatest political instability in one decade since 1991 where there were a highest number of changes in Government and Prime-Ministers. It is assumed that Indian people gave their verdict against neo-liberalism and toppled the government but they could not get rid of neo-liberalism. However, it is also a fact that the political instability declined in 2000s. UPA-I government had to shelve its neo-liberal package under the Left pressure. At the same time they were compelled to introduce some state interventionist policies like MREGA, Mid Day Meal, waiving of agricultural credit etc. As a response to utterly inadequate and very limited interventionist policies people elected UPA for the second time in 2009. As a matter of fact while the government introduced MREGA, they stopped all other employment generation programme.
Though neo-liberalism had structurally excluded the majority of people, perhaps Sen believes that if the excluded people can be extended state assistance within the existing structure one will find human face of neo-liberalism. But according to the present author neo-liberalism cannot have any human face.
Ref. Amartya Sen (2011), Snakes and Ladders, Website http://blogs.ft.com/beyond-brics/2011/12/24/amartya-sen-playing-snakes-and-ladders/#axzz1kclkp3jL (Last visited 31.01.2012)