Capitalism& the Poor World: A Response to Jagdish Bbhagwati, Abhijit Banerjee and others

EMINENT ECONOMIST from Colombia University, Dr Jagdish Bhagwati writes: Typically, the rich in Ahmedabad spent moneys on people's education, on health, and (believe it or not) even on agricultural extension and dry farming experiments.

I am not sure whether Dr Bhagwati visits his home town oftener these days. But I find things are slightly different at the grassroots from the rosy picture he paints.
I don't deny the rich Gujaratis did spend money on philanthropic efforts. They did and they even supported the Indian national movement even when their business interests went against their nationalist sentiments.

But these days how do the rich Gujarati's spend their money?

It is a fact that the anti-minority pogroms that made Gujarat notorious in recent past were funded and supported by these same sections who have plenty of money to spare and they nourished the politics of hooliganism with their riches. Now all over the world the Gujarati diaspora speak of a new Gujarat and this Gujarat is something terribly different from the one the old Rajkot-wallah, Mohandas Karamchand Gandhi, lived in and died for. It is a place where the other, the poor Muslim who lives in the slums of Ahmedabad and Baroda, has no place.

This is the experience all over the country. As a journalist, I find that the rich NRIs are the major supporters and financiers of a highly virulent kind of nationalism -- a nationalism that is more likely to divide this country again -- that promotes bigotry, hatred and jingoism. They are the people who, from their safe havens in the west, want India to make N-bomb and possibly send its neighbors to the stone age. Read their blogs and comments in newspapers and you are flooded with such sentiments, expressed quite openly and unabashedly.

So perhaps we need to rethink what money can do to a person and a nation. Uncontrolled riches can play havoc too.

Posted by:n p chekkutty | July 21, 2008

Dr Abhijit Banerjee gives a few examples from India, and most of them about the way the country failed to make any mark in beneficial social interventions.
But I had occasion to see the agency of the government actually at work, in a beneficial way. He speaks about the recent budget provision of Rs. 75,000 for the assistance of farmers in distress (to which many economists were not enthusiastic,) following the large number of farmer suicides in various parts of the country, from Vidharbha in Maharashtra to Wayanad in Kerala.

I visited a few villages in Wayanad hit by farmer suicides in the recent past and found that two major steps taken by the state and federal governments, the debt relief commission set up by the Kerala Government and the debt write-off program announced by the Federal Government, did help ease the situation on the ground. During 2002-2007 there were regular reports of farmer suicides from all parts of rural India, but in the past few months they are rare, though not fully subsided.
Wayanad gave me an example of how it works. The debt relief commission, which had received over four lakh petitions in the first three months, had held a few sittings there and I saw many people, most of them with small amounts of loans from various sources, had approached it for help and they were able to provide them in most cases.
The Kerala state's Economic Review 2007, released by the Planning Board headed by Dr Prabhat Patnaik, an eminent economist, reported that by the end of 2007 the state was able to put an end to the widespread farmer suicides in the region.

As a journalist working in this region, I know that this is not 100 per cent true, but to a large extent this claim is factual. The suicides have markedly come down and the government efforts did play a major role in this gain.

In fact, Kerala can be considered a model for the public intervention ensuring a better and even equitable social order: Its human development indexes are almost comparable to the first world, and recent studies seem to say that even the economic growth, which was extremely poor in the past, is now picking up as shown by the experience of recent years.

Posted by:n p chekkutty | July 22, 2008

In response to Eric Werker:

Elsewhere Prof Abhijit Banerjee has expressed reservation about the concept of a weak state, what does exactly it mean. Any lack of a proper understanding or a definition of what is a weak state could be problematic, since there are talks about pressuring, funding and even making use of 'economic smart bombs' to keep them in line.

Being a person from the South which the new 'socially responsible corporates' are determined to reform and revive, I am extremely worried and concerned of what goes on here. I do not say there is any kind of conspiracy here to subdue the poor South making use of new concepts, new ideas and the monopoly over economic and intellectual resources and technological advances the West still enjoys, as many others in the South do believe, but let me point out that the muddled understanding about the people who are not known to those policy-makers can really do much harm.

I am not going into the details about what were our experiences with the World Bank and IMF in the past but in the countries of South, say in my own country India, there has been a great debate on it for a long time. Looking back, it is clear that there was a not-so-subtle element of putting pressure, arms twisting in most of their policy dictates/formulations with regard to many countries in our part of the world.
So let us try to understand what is a weak state? Is the United States a 'strong state' perhaps? Is it the yardstick for the whole world to emulate? Then I think many would not think of anything but 'shock and awe', something too mean for any civilized nation to speak about. So let us drop the use of terms that eerily remind about military tactics, often applied in the past, and in many cases eve now in operation and for some others, still in the pipeline.

Or are we talking about the United States a model strong state in economic terms? I don't deny that the US still has an advantage in science, technology,trade, etc, but is it in the same dominant position as it used to be, say just a few years ago? What is going to be its position in another ten years, after this Iraq war accounts are due to be settled and possibly another from Iran too comes in for payments? It does not look rosy at all and as Fareed Zachariah seems to argue, the US is not declining but that the others are also rising. Well, it's a matter of speculation and I feel when others are rising fast and the US is unable to rise to balance or even out, then what we will see is the decline of the empire.

Here I would agree with the author that may be this new sudden urge to help out without properly looking at the world we are going to reform could do more harm than good. It is not only the dictators or commission agents who i am talking about. They are only an ephemeral phenomenon as people in those countries can take care of them in due course of time. What worries me is that any misguided and impatient approach could harm the nascent, slowly evolving democratic institutions in many parts of these countries that are trying to cope with difficulties, learn to walk, to solve their problems in their own unique ways.

Perhaps what they require from the West is simply a proper hearing, a respectful understanding and may be some little help here and there in making themselves useful; both to themselves and to the world.

Posted by:n p chekkutty | July 24, 2008