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Interviews | Jean Dreze -- development economist -- interviewed by Jipson John and Jitheesh PM (Frontline.in)
Jean Dreze -- development economist -- interviewed by Jipson John and Jitheesh PM (Frontline.in)

Jean Dreze -- development economist -- interviewed by Jipson John and Jitheesh PM (Frontline.in)

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published Published on Oct 30, 2018   modified Modified on Oct 30, 2018
-Frontline.in

Jean Dreze is a well-known Indian economist working in the field of "development economics". Born in Belgium, he studied mathematical economics at the University of Essex and completed his PhD from the Indian Statistical Institute (New Delhi) in 1982.

He has taught at the London School of Economics and the Delhi School of Economics and is currently visiting professor at Ranchi University as well as honorary professor at the Delhi School of Economics. His research interests include rural development, social inequality, child nutrition, health care, food security, and elementary education, with special reference to India.

Jean Dreze played a pioneering role in public debates on the National Rural Employment Guarantee Act (NREGA), which guarantees employment on local public works as a right up to 100 days a year. He was also a prominent advocate of the National Food Security Act in India. Championing the cause of the most oppressed sections of Indian society, he has been vocal in demanding the implementation of various social welfare measures by the state.

Along with the Nobel laureate Amartya Sen, he has co-authored a number of books. Their books include An Uncertain Glory: India and Its Contradictions, Hunger and Public Action, India: Development and Participation, and India: Economic Development and Social Opportunity. His latest book is Sense and Solidarity: Jholawala Economics for Everyone.

The combination of extensive fieldwork and qualitative analysis of everyday life and poverty, along with quantitative work, makes his work distinctive in the field of economics. Jean Dreze has highlighted the importance of public action in development, especially by studying the experience of States such as Kerala. The Public Report on Basic Education in India (PROBE Report) by Jean Dreze, Anuradha De and others is one of the most genuine accounts of the state of basic education in India.

In an exclusive and detailed interview, Jean Dreze spoke on a wide range of issues, including demonetisation, the importance of social welfare measures, the NREGA, the withdrawal of the state from welfare measures, rising inequality, the Kerala development model, the Gujarat model, the alternative to capitalism, the crisis of contemporary capitalism, China?s economic experience, ideas of solidarity and mutual cooperation, and the Maoist movements.

* Nearly two years have passed since demonetisation. Have you felt any rationality on the part of the Modi government in taking such a decision, demonetising 86 per cent of the country?s currency? As an economist, how do you look at its effect on the Indian economy?

Demonetisation is the sort of thing that happens when the winds of obscurantism sweep through the corridors of power. The obscurantism is clear, so to speak, in the Prime Minister?s speech of November 8, 2016, when he announced demonetisation. The economic arguments in that speech had no head or tail. Nowhere did the Prime Minister explain how demonetisation would help achieve the stated objective of ?breaking the grip of corruption and black money?. Whatever little economics the speech contained was mainly gibberish?for instance the claim that ?the magnitude of cash in circulation is directly linked to the level of corruption?, or that ?inflation becomes worse through the deployment of cash earned in corrupt ways?.

The fallacy involved in thinking of black money as a kind of pool of tainted cash, some of it ?stashed under the beds of government officers?, according to Narendra Modi, has been aptly debunked by many economists across the political spectrum. Briefly, black money in the sense of illicit income is not a stock but a flow. If black money were stashed under beds or in suitcases, it would indeed become a stock. Perhaps political parties do this from time to time, in anticipation of elections, but black money is more likely to be used to throw marriage parties, build fancy houses, invest in the stock market and buy the odd Mercedes.

In the process, black money gets laundered, so it is futile to look for the mythical trove of tainted cash. At any point of time, of course, some unlaundered black money may be lying around, but it need not be a large amount.

In short, the idea of demonetisation as a ?surgical strike on black money?, as Modi?s right-hand man and Revenue Secretary Hasmukh Adhia put it on that fateful day, makes no sense at all. If anything, demonetisation turned into a state-sponsored money-laundering operation, as tainted cash smoothly found its way into bank accounts. When this came to light, the government promised that it would use big-data analytics and other techniques to flush out the black money from the accounts, but that is just another pipe dream. Indeed, nothing has come of it so far.

The worst aspect of demonetisation was how little attention was paid to its consequences for ordinary citizens. Instead, the government resorted to massive propaganda to persuade people that this bitter pill was good for them. This disconnect is an alarming feature of economic and social policy under the Modi government. Sweeping decisions are often taken behind the ramparts of the Prime Minister?s Office, the Finance Ministry and NITI Aayog, without any serious effort to find out how they affect people?s lives.

Other examples include the indiscriminate budget cuts in 2015-16, the imposition of Aadhaar-based biometric authentication on the public distribution system, the breakneck rollout of the Goods and Services Tax, and the authoritarian style of the Swachh Bharat Mission.

* Economists like you stand for increased state funding to provide universal education, health care, social security, and so on. The directive principles of state policy in the Constitution direct such welfare measures. But people from the state apparatus take the position that the state has no capacity to fund such welfare measures and make the case for increasing privatisation of essential services. Why do you not believe in this argument for privatisation?

This is no argument at all. The state?s financial capacity is increasing rapidly, if only due to economic growth. Government revenue today is about five times as high, in real terms, as it was 25 years ago. Looking to the future, it will continue to grow, especially if the tax-GDP ratio also increases, as it should. This will make it possible to do much more than what is being done today. To illustrate, consider health. Today, public expenditure on health as a proportion of GDP is lower in India than almost anywhere else in the world?barely 1 per cent.

If this is gradually raised to, say, 3 per cent, more or less the same level as in sub-Saharan Africa, and if India?s GDP continues to grow at 7 per cent a year in real terms, public expenditure on health 10 years from now will be six times what it is today. If this money is well used, all States will be able to provide better health services than what the trail-blazers such as Kerala and Tamil Nadu are providing today. That would be a big contribution to people?s well-being.

Of course, at any point of time, there may severe limits to the scope for increased social spending, especially when fiscal deficit is a concern. But over time, there are plenty of possibilities. Indeed, social expenditure is quite low in India compared with other countries at a similar level of per capita GDP. And as the economy grows, the share of social spending in GDP is also likely to rise. That, at any rate, is the experience of most countries with a modicum of democracy.

Importance of the NREGA

* People like you played an important role in the introduction of the National Rural Employment Guarantee Act during the first United Progressive Alliance (UPA) government. What was the economic thinking behind the demand for the legislation? How do you evaluate its impact upon the rural economy? Some neoliberal ideologists point out that spending on such an unproductive thing as an employment guarantee scheme is a sheer waste of money. What is your ground-level experience?

The economic thinking behind the employment guarantee act is partly that employment-based social security is self-targeting, and partly that this approach makes it possible to combine income support with the creation of productive assets. Self-targeting means that we leave it to people to decide for themselves whether they wish to work under the NREGA, under the assumption that most of those who do it are likely to be poor people. This avoids the need for a cumbersome and unreliable process of top-down targeting such as the preparation of a list of ?below poverty line? (BPL) households.

The self-targeting feature of the NREGA has worked reasonably well, judging from available data. One qualification is that it works better within States rather than across States. Across States, there is a weak correlation between the NREGA employment and poverty levels, partly because the better-off States tend to pay higher wages and also have better administrative capabilities.

Regarding the creation of productive assets, the record is not very clear, all the more so as there are huge variations between States and worksites.

The best NREGA works have high rates of return, judging for instance from a recent study of NREGA wells in Jharkhand. Encouraging findings also emerged from a survey of more than 4,000 NREGA works in Maharashtra by Sudha Narayanan and her colleagues at the Indira Gandhi Institute of Development Research: 87 per cent of the assets created were functional, 75 per cent contributed directly or indirectly to better agriculture and an overwhelming majority of local residents considered them to be useful.

Informal reports from Kerala, which has a strong tradition of decentralised planning, are even more positive. However, we also know that many NREGA works have turned out to be virtually useless, especially in poorly governed States like Bihar and Jharkhand. There are various reasons for this, including corruption, inadequate technical support and the growing centralisation of the planning process. There is some homework to do on this.

If the positive achievements of the forward States can be replicated across the country, the NREGA could make a major contribution to sustainable agriculture, rural development, environmental protection, social infrastructure, and more.

There is a third aspect of the economic thinking behind the NREGA that has not worked so well. The idea was not just that the programme would be self-targeting but also that work would be available on demand. This would ensure that the NREGA would also be a form of social insurance, apart from providing income support and resulting in asset creation.

Work on demand can also be seen as an expression of the right to work. In practice, however, work on demand remains an elusive goal in many States. In some States, government officials still refuse to acknowledge work applications in writing, and workers themselves are yet to understand the idea of work on demand. This principle, of course, also makes exacting demands on the local administration. Until it is realised, the NREGA will continue to resemble a government scheme more than a legal right.

These are some aspects of the economic thinking behind the NREGA. The programme, of course, also has other important goals, such as the empowerment of women, the promotion of self-governance, and skill formation. It was also expected to act as a springboard for the creation of workers? organisations in rural areas, but this has been very limited so far.

Overall, the economic thinking and larger vision behind the NREGA still strike me as fundamentally sound. I can say this without feeling self-conscious because the thinking was not mine, contrary to some media reports. It was a collective thinking that emerged from long experience, going at least as far back as the popular struggles of the early 1970s in rural Maharashtra. Translating that thinking into practice is likely to remain a struggle for some time, but I see no reason to give it up. In fact, the idea of employment guarantee is now receiving serious attention in other countries, including the United States. Hopefully, it will soon be regarded around the world as an idea whose time has come.

* You have written that the NREGS is facing a serious crisis because of the lack of adequate funding by the Union government. The Food Security Act also does not have the required momentum. How does withdrawal of the state from welfare measures in an unprecedented manner affect the vast majority of the poor in the country, especially in the countryside?

If we take a long-term view, welfare measures in India are expanding rather than shrinking, as you would expect in a rapidly growing economy with a semblance of democracy. But in the last few years, this upward trend has stalled. The goals of social policy under the Modi government can be summarised in two words: save money.

The symptoms of this outlook are many: stagnation of NREGA wages, failure to provide for maternity benefits as prescribed under the National Food Security Act, and so on. This year, the Finance Ministry even rejected a very modest proposal put forward by a galaxy of eminent economists to raise the Central contribution to social security pensions from its abysmal level of Rs.200 a month to Rs.500 a month.

And of course, there were deep cuts in social spending in the Modi government?s first Budget in 2015-16, well beyond what one could possibly justify on the grounds that State governments were due to receive a higher share of the indivisible pool of taxes.

Financial allocations for midday meals and the Integrated Child Development Services (ICDS), for instance, were slashed by a staggering 36 and 50 per cent respectively, although this was partly reversed later under public pressure. When I asked a senior adviser in the Finance Ministry, a year later, how and why this happened, it turned out that he was not aware of the problem. He said the cuts had been made in a hurry, without much deliberation. That speaks volumes.

There have been no major social policy initiatives in the last five years, with the partial exception of the Swachh Bharat Mission if you overlook its authoritarian aspects. Kiran Bedi was rightly lampooned recently for issuing an order calling for the distribution of free rice in Puducherry to be restricted to ?open defecation free? areas, but high-handed tactics of this sort are being used across the country. In Ranchi, according to media reports, people who defecate in the open are at risk of their lungis being confiscated until they sign a pledge not to do it again. To be fair, the mission is also doing some good, even if its achievements are exaggerated by the government.

For the rest, there is little to show. The NREGA came under attack as soon as the new government came to power, with ominous proposals to restrict the programme to the poorest districts or even phase it out altogether. This gave way, later on, to grudging acceptance of the fact that the NREGA is here to stay, with a similar attitude towards other social security programmes such as the public distribution system, midday meals and old-age pensions.

Some of the government?s most influential economic advisers make no secret of the fact that they would prefer most social programmes to be replaced with targeted cash transfers. On school education, status quo is the motto once again, and as far as health is concerned, the Central government got away with grand promises year after year. The latest instance is Ayushmaan Bharat, projected as a giant leap towards universal health care but on a shoestring budget. Overall, social policy under the Modi government is a damp squib.

Rising inequality

* A recent study points out that around 58 per cent of India?s wealth is held by the top 1 per cent. The story of widening inequality comes from other parts of the world, too, including the developed countries. This rise in inequality is essentially linked with the capitalist path of development. How do you locate this phenomenal growth in inequality? What are its fallouts?

I think there is more to rising inequality, or rather rising economic inequality, than just capitalism. What we seem to be seeing today is a growing convergence of different forms of power, to the extent that the entire system is increasingly geared to the interests of the privileged. One aspect of this convergence is the state-corporate nexus. Public policies are heavily influenced by corporate interests, despite occasional concessions to the underprivileged, largely for the sake of electoral gains.

India?s tax system, for instance, is extraordinarily soft on the rich and especially the super-rich. And as Angus Deaton pointed out recently with reference to the U.S., the privilege-friendly nature of the state is even clearer when you look not just at the tax system but also at rent-seeking opportunities. In the case of India, a good example is the plunder of public sector banks. That?s not capitalism, and certainly not the market, but a kind of state-sponsored corporate crime. And now other centres of power are reinforcing the state-corporate nexus, for instance the mainstream media, and also growing sections of academia.

The revolving door between these centres of power is getting wider every day, with the same sort of people flying to Davos with the Prime Minister, owning TV channels, setting up private universities and funding political parties. As Bertrand Russell lucidly explained long ago, different forms of power have a natural tendency to seek and reinforce each other.

The fallouts of rising inequality have to be seen in this light. Some economists, for instance Suresh Tendulkar, have argued that rising inequality does not matter much if it is part of a process that also reduces poverty. If a poor person?s life improves, why should it bother him or her whether Mukesh Ambani earns 50 million dollars a year or 100 million? The assumption behind this argument seems to be that there is a trade-off between inequality reduction and poverty reduction, which is far from obvious.

But leaving that aside, there are good reasons to object to Ambani?s wealth. It can be seen as an aspect of the growing concentration of power, which is a fundamental infringement of democratic ideals. The wealth and power of the super-rich have a growing influence not only on economic matters but also on public policy, electoral outcomes, social norms, media priorities, technology, the law, and ultimately, how we live. It is in this wider perspective that extreme wealth is highly objectionable, even if it is not as pressing a problem in India as the appalling living conditions of the poor.

Having said this, economic inequality in India is just one aspect of a much larger problem of social inequality that also includes disparities based on caste, gender, family, education and language. This is true to a varying extent elsewhere as well, but few countries, if any, have such an oppressive social system, even if some sections of Indian society, such as Adivasi communities, are relatively egalitarian. Economic inequality in India is grotesque enough, but the larger picture is much worse and it is important not to lose sight of it as we marvel at the wealth of the super-rich.

* Along with Amartya Sen, you have authored several books from a development economics perspective. Your writings significantly contributed to popularising what later became famous as the Kerala model of development. What makes Kerala?s model of development special?

We have always avoided the term Kerala model, and even argued against it, because no Indian State is a model. Instead of looking for models, we should learn from the positive achievements of different States, without ignoring their failures. In the case of Kerala, the failures would include high rates of unemployment, alcoholism and suicide. But Kerala has certainly done very well in many areas, especially when it comes to human development. Kerala is still far ahead of other Indian States in terms of basic social indicators such as nutrition levels, child mortality, life expectancy, literacy rates, and the proportion of the population below the poverty line. The gap is narrowing over time, as other States such as Himachal Pradesh and Tamil Nadu are catching up, but it is still substantial, and it was astonishingly large a few decades ago.

At that time, all Indian States, including Kerala, were still very poor, but Kerala stood out in terms of social indicators, with, for instance, a life expectancy of 72 years in the early 1980s compared with 55 years in India as a whole.

Kerala?s experience shows the value of focussing on human capabilities, especially health and education, at an early stage of development. Early investment in elementary education, in particular, has wide-ranging personal and social benefits, as we know not only from Kerala?s experience but also from that of other States that followed a similar route later, and indeed from the history of development around the world.

Elementary education contributes not only to economic growth but also to child health, fertility decline, social equity, women?s empowerment and the quality of democracy, among many other goals. It is also, in itself, an aspect of human well-being. Kerala has greatly benefited from early efforts to expand literacy and education, going back to the 19th century, and evident in Kerala?s high literacy rates compared with the rest of India and indeed much of the world.

Beyond this, Kerala?s experience also brings out the general importance of public action in development. Leaving things to the market is not a very effective route to development, in the broad sense of an expansion of human freedoms. The market, suitably regulated, tends to lead to rapid growth in specific fields, such as the production of certain kinds of commodities. But market failures abound for all sorts of facilities and activities that enhance the quality of life, from health and education to cultural life and the protection of the environment.

And social equity, of course, also requires public action since the market has little to contribute to it. Kerala, like the rest of India, has a heavy historical legacy of extreme economic and social inequalities, including very oppressive caste relations. It is through public mobilisation and popular struggles, along caste as well as class lines, that some of these inequalities at least have been curbed in Kerala. As M.A. Oommen aptly put it, Kerala is ?a movement society par excellence?.

And then there are aspects of Kerala?s experience that are yet to be clearly understood?for instance the role of gender equity and women?s agency. The female-male ratio in Kerala has been high for a long time, and this tends to be seen as a sign of relatively equitable gender relations: for instance, there is no strong preference for boys. Since there is a clear correlation, in India and elsewhere, between gender equity and human development, it is a plausible hypothesis that the gender factor has played an important role in Kerala.

However, gender equity is not a unidimensional thing, and the female-male ratio is just one aspect of it. In other respects, say, the participation of women in the labour force or in the State Assembly for that matter, Kerala does not look so good. Women in Kerala have certainly made sterling contributions to the State?s development, for instance in the fields of education and health care, but the larger role of gender relations in Kerala?s experience is yet to be elucidated.

These are some aspects of Kerala?s experience that all Indian States can learn from. Some of them have already done it in substantial measure, and hopefully, others will do so too.

* The Gujarat model has been hailed as an economic miracle to be emulated by other States. Industry-friendly and foreign capital-friendly atmosphere is what is highlighted when talking about Gujarat. But on social indicators the State is way behind a number of other States. Is there a Gujarat model which has something to offer?

I don?t know what the Gujarat model stands for, and I don?t know if anyone knows. It sounds to me like a slogan that became popular in some circles shortly before the 2014 elections. As I understand it, according to Jagdish Bhagwati and Arvind Panagariya, the Gujarat model is about private enterprise and growth. On the other hand, Narendra Modi, who is supposed to be the chief practitioner of the Gujarat model and discusses it on his website, seems to have a very different idea of this model, more focussed on participatory governance and that sort of thing. Then there are other definitions, like a ?heady mix of administration, spirituality, management and obsession with control?, as one reporter put it in his account of the economic philosophy of Narendra Modi?s right-hand man, Hasmukh Adhia, one of the architects of demonetisation. And in at least one interview, Prof. Bhagwati clarified that the Gujarat model was ?not just about growth? but also about social spending and even ?living a simple lifestyle?. That sounds good, but it does not take us closer to a consensus about the meaning of the term.

As many economists have pointed out, the claim that Gujarat is a model is not exactly borne out by its social statistics. More than a model, Gujarat is ?middle?, in the sense that it tends to appear around the middle of the scale when you rank India?s major States in terms of composite social indicators such as the human development index or the multidimensional poverty index. The last time I looked at this, in 2014, Gujarat had an uncanny tendency to occupy the ninth rank among 20 major States. In a forthcoming update, based on estimates of multidimensional poverty in 2015-16, Gujarat slips to the 12th position among 21 major States (including Telangana). The proportion of households living in multidimensional poverty is estimated at 24 per cent in Gujarat, not much below the national average, compared with just 1 per cent in Kerala and 7 per cent in Tamil Nadu.

None of this is to deny that Gujarat has some significant achievements to its credit, including rapid economic growth over a long period of time. But there is no obvious reason to call it a model. Rather, we should learn from Gujarat?s achievements as much as from those of other States, and also recognise the State?s failures. At the end of the day, Gujarat presents an interesting puzzle: why does it have indifferent social indicators in spite of relatively high per capita income and, we are told, efficient governance? This question is all the more important as the Gujarat model, whatever it is, is sought to be extended to the rest of India.

* It is evident that the majority was sidelined economically under capitalism. It proved to be a curse in terms of the economic betterment of the people all around the world. What is the alternative before humankind? Is socialism the alternative economic and political arrangement?

Curse may not be the right word, but capitalism certainly has a lot to answer for, and not just in terms of people?s economic betterment as you put it. If it were only that, it would be relatively easy to correct, for instance, through public provisions for health, education and social security, as has indeed happened in substantial measure in many countries.

There are other objectionable aspects in capitalism, such as the grotesque concentration of wealth, exploitative work relationships, the corruption of democracy, environmental plunder on an apocalyptic scale, the gradual conversion of the world economy into a gigantic casino, and possibly the cultivation of a pathological human personality dedicated to profit and self-interest.

There is an odd notion, pervasive in economics, that profit-seeking generally serves the public interest. For instance, it is argued that market competition forces producers to respond to demand, improve quality and reduce costs. There is some truth in this when it comes to very simple commodities, such as those associated with Adam Smith?s famous story of the village butcher, baker and brewer.

For more complex commodities, such as those involving externalities or asymmetric information, competition tends to be problematic and needs to be tempered, at the very least, with extensive regulation, if not public provision. If you look beyond commodities and think about most of the activities and capabilities that make life really worthwhile, competition and profit-making are largely useless if not toxic ways of pursuing them.

To take one obvious example, nothing is more important than health for the quality of life, but market competition is a very poor way of organising health care and promoting good health. Quite often, business is even injurious to health, whether it is by hard-selling tobacco, peddling junk food or exploiting vulnerable patients. That is why Cuba is able to match the U.S.? health indicators at a fraction of the cost.

Similarly, market competition is a poor way of going about urban development, environmental protection, peacemaking, public transport, education, culture, entertainment, sports, the media, and democracy, to mention just a few other foundations of the quality of life.

All this tends to be obscured by the dynamism of the commodity economy. Even as our lives are flooded with ever-smarter phones, cars, laptops and other gadgets, we miss out on other elements of the quality of life that require public action more than market competition. The fact that India spends as little as 1 per cent of GDP on public health services is a telling symptom of this pervasive imbalance. So is the fact that India continues to have one of the most oppressive social systems in the world even as it aspires to be an economic superpower.

It is also important to remember that capitalism is not the same as market competition. The two are often conflated, but that is largely a propaganda device. Modern capitalism relies on state power as much as on the market.

But capitalism fosters the growth of giant corporations that are constantly trying to prevent, not promote, competition. I doubt that, say, Reliance would have done so well had it not subverted market competition and latched on to state power with abandon.

Having said this, it is easier to see the depredations of capitalism than to build an alternative. Marx himself did not have much to say about the nuts and bolts of a socialist economic system, and what he did say was not always convincing. It is certainly not just a matter of public ownership of the means of production, let alone a dictatorship of the proletariat. I prefer to think of socialism as a continuing project rather than as a ready-made blueprint to be deployed as soon as capitalism collapses. There have already been significant socialist initiatives around the world, not only in communist countries but elsewhere as well: land reforms, universal health care, trade unions, the welfare state, worker cooperatives, and employment guarantee, among others.

Universal health care, for one, would have fitted very well among the demands of the Communist Manifesto. The proposal for a universal basic income, or at least some versions of it, can also be regarded as a socialist idea, inappropriate as it may be for India at this particular time. The private non-profit sector, which has already made enormous contributions in fields such as health and education, is also expanding to new domains, displacing profit-oriented business and enabling many people to contribute their skills, passion and creativity to the common good.

Further, institutions of socialist inspiration will hopefully emerge and help to develop alternatives to capitalism. Among these enabling institutions I would count the spread of enlightened values and social norms, such as solidarity and public-spiritedness. These are essential to achieve more egalitarian economic and social relations without infringing on individual liberty.

In short, I don?t think of socialism as ?the alternative? to capitalism, as you put it. This dichotomy is a little contrived, since real-world economies have capitalist as well as socialist elements. Instead, I think of socialism as a set of ideas and ideals that have already contributed a great deal to human progress and may help us to develop a variety of alternatives to capitalism. And by the way, capitalism is not the only curse we have to deal with. There are many others, such as the caste system, patriarchy, communalism, authoritarianism and violence. There is plenty we can do about them without having to wait for the end of capitalism.

Progressive taxation

* The French economist Thomas Piketty and others empirically document the rise in inequality all over the world. They suggest progressive taxation as the measure to curb this increase in inequality. Do you realistically think that it is possible to adopt such a measure within capitalism? Would capitalism allow such state intervention?

Capitalism is not a dictatorship of the capitalists. Popular movements have an influence too, even if they have to contend with the awesome power of the privileged classes. That is how progressive taxation and the welfare state came about in many countries. And these redistributive measures make a significant difference.

In France, for example, the ratio of average incomes in the top and bottom deciles of the income distribution is around 24 to 1 before taxes and social benefits, but only 6 to 1 after these transfers, according to one recent study. In many countries, including India, the top marginal income tax rates used to be really high, like 90 per cent or more. They have come down in recent decades, and the super-rich have won many other concessions as well, but the tide may turn again. In short, there is no reason to dismiss progressive taxation as a means of curbing economic inequality.

Progressive taxation is especially important in India, where the super-rich are pampered no end. India has no inheritance tax, no wealth tax, low marginal tax rates at the top, plenty of tax exemptions, and all kinds of regressive subsidies. The case for an inheritance tax is particularly strong as hereditary economic privilege in India is compounded by other inherited privileges such as caste and social networks.
 
Progressive taxation could help to contain these obscene inequalities. The problem, of course, is that extreme wealth easily translates into political influence, helping it to resist taxation.

Aside from being taxed, wealth should be publicly disclosed, in my view, at least above a certain threshold. For one thing, that would be of great help to fight corruption. For another, it would help to contain the power and influence of the super-rich.

There is a wrong notion, in India and elsewhere, that wealth is a private matter. ?My money is mine, I deserve it and it is nobody else?s business? seems to be the motto. In fact, rich people are in possession of a public resource that just happens to have come their way?a portion of society?s collective output for which they cannot claim personal credit in any objective sense.

The wealth they possess is an arbitrary outcome of the economic system, which bears no relation to the ethics of the case. Sometimes it is an outcome of fraud or exploitation. Further, money is a source of power, which can always be misused. Seen in this light, I think that society has a right to know who earns or possesses how much money, at least above a certain threshold.

Progressive taxation, of course, is not the only way to reduce inequality. And, as I said, in India economic inequality is best seen as part of a larger concern about social equity. Universal quality education, for instance, strikes me as even more important than progressive taxation as a means of making a dent in the nexus of inequalities that blight the lives of the underprivileged in India. Unfortunately, the connection between the right to education and social justice is rarely made, except among Dalit activists and intellectuals.

* The world economy is yet to recover from the economic crisis of 2008. Economists like Prabhat Patnaik observe that capitalism has reached a dead end now, with no other option to recover. Do you think so? Also, in a recently published book ?How will Capitalism End??, the German economic sociologist Wolfgang Streeck predicts the end of capitalism. He also says capitalism has reached its final crisis and no alternative is emerging. Do you share such a view? What would be the implications of it? If otherwise, how will capitalism exist?

From a common sense point of view, I think that it is futile to predict what will happen next, as if there were some necessity about it. Human history is full of wild contingencies?for all we know, nuclear war might break out tomorrow and that will be the end of it. Capitalism could probably collapse in some fashion, for instance through a worldwide financial crisis followed by mass uprisings.

It could also adapt, as it has already done in the past, for instance, by accommodating the welfare state. It could mutate into something we are barely able to imagine right now, like some sort of automated economy where computers and robots anticipate our needs and take charge of most of what is called economic activity today. Hopefully, capitalism can also be replaced with something better, with democratic control over the major means of production, egalitarian relations at the workplace, extensive social benefits, an end to the tyranny of the super-rich, and that sort of thing. But that requires working for it, not just predicting the end of capitalism.

There is another worrying possibility, which is that capitalism will continue to limp along but in a dysfunctional sort of state, with huge unemployment, periodic financial crises, extreme economic inequality, and other side effects like xenophobia. As it is, something like this has happened in Europe for quite a while, with double-digit unemployment rates persisting for decades in some areas or age groups. And it might have happened for decades from the 1930s onwards, had the Second World War not put an end to the Great Depression.

Today, Europe has a much better social security system than in the 1930s, so the human consequences are less devastating, but they are tragic enough. Hopefully, there are ways of avoiding this scenario, but since the main victims of it are unemployed people, who have little political power, it could take a long time for better economic institutions to emerge.

* Though the world economy has been in the midst of a recession for nearly a decade since 2008, China has largely managed to maintain its impressive economic growth and improvement. It has emerged as an economic powerhouse and also succeeded largely in improving the lot of the wretched. What can we learn from the Chinese economic experience?

The most significant aspect of China?s development experience is not that the economy has grown so fast for so long, or that it weathered the 2008 crisis, but that growth had a participatory character, with rapid increases in living standards not just for the privileged but for the vast majority.

One indication of this is the rapid growth of real wages, in contrast with India where real wages are growing at a very sluggish rate despite rapid GDP growth. India, unlike China, has an enormous reserve army of low-productivity labour?millions of people with poor health, little education and virtually no capital. The street cobbler or bicycle mechanic of today, in India, is doing the same things with the same tools as 40 or 50 years ago. China, in contrast, developed human capabilities early on, with rapid advances in health and education in the period that preceded economic liberalisation and also radical land reforms that gave most people access to land.

When economic liberalisation began, in the early 1980s, people were well placed to take advantage of new opportunities. Also, in contrast with India, rapid economic growth in China started in the agricultural sector, with dramatic effects on rural poverty.

As with Kerala, of course, it is important not to treat China as a model. The participatory character of China?s economy does not extend to the political system. Authoritarianism in China has exacted a heavy price in the past, whether it is at the time of the 1958-61 famine, or of the Cultural Revolution, or of the one-child policy, and it could happen again. State power and control continue to grow, for instance, with the new systems of ?social credit? which would have impressed George Orwell. The end of authoritarian rule, if and when it happens, is unlikely to be a tea party. Just as India has much to learn from China, China could take a leaf or two from India?s book.

* Ideas of solidarity and mutual cooperation play an important part in your economic and social philosophy. A hundred years ago the Russian thinker Peter Kropotkin made famous a similar kind of thought through his work, ?Mutual Aid: A Factor of Evolution?. What is its relevance today? How would this idea materialise in practical economics?

The basic ideas of Kropotkin?s wonderful book, Mutual Aid, are as relevant today as they were at that time. In fact, some of them are being revived by evolutionary biologists, game theorists and others, mostly without acknowledgement, since Kropotkin fell into oblivion in the meantime. That?s not an accident; it is part of a larger pattern where ideas that suit the privileged and powerful tend to flourish even as ideas that threaten their interests are sidelined. In this case, it is interesting to compare the fate of Kropotkin?s ideas with those of Darwin. Both are very important, and Kropotkin?s book was, in fact, a kind of constructive rejoinder or rather, a sequel to Darwin.

Kropotkin pointed out, among other things, that mutual cooperation has survival value for a species. For example, migratory birds fly in formation, and had they not learnt to do that, perhaps they would not have survived. This is a simple but far-reaching observation. The privileged classes, however, had more to gain from Darwin?s ideas, or rather from a distorted interpretation of Darwin?s discovery that the basis of biological evolution is the survival of the fittest. That was widely read to mean that ruthless competition is a kind of law of nature, when it implies nothing of the sort.

Kropotkin?s ideas, by contrast, were a little threatening for the ruling classes, and so was Kropotkin himself, as a revolutionary anarchist. So, it?s not surprising that Kropotkin was quietly forgotten even as Darwin became a household name, rightly so of course.

One can give many other examples where the progress of ideas was tilted in favour of privileged interests. There is a similar contrast, for instance, between Gandhi and Ambedkar. Both were important thinkers, but Gandhi?s ideas, in contrast with Ambedkar?s, were not particularly threatening for the upper castes and privileged classes. In fact, Gandhi defended the caste system, or rather varnashrama dharma, to the end of his life, while Ambedkar attacked it relentlessly. So, Ambedkar was quietly forgotten for decades, except among Dalits of course, even as Gandhi was venerated.

In recent years, Ambedkar?s memory has been revived, but even today his ideas tend to be remembered selectively, especially but not only by the Sangh Parivar.

Coming back to your question, the reason why Kropotkin?s ideas are as relevant as ever today is that cooperation, or rather voluntary cooperation, is a very important form  of economic and social interaction. Unlike coercion, it respects individual freedom, and unlike competition, it does not threaten to create inequality. So, cooperation is a pretty good way of organising lots of things, including various kinds of economic activity. If you look at the average small-scale enterprise, there is no obvious reason why it should not be managed on the basis of mutual cooperation rather than top-down relationships like the wage labour system. The main reason why there is a boss, quite often, is not that he or she is needed to coordinate the work, or to bear the risk of the enterprise, but that the boss has the power to call the shots. If we value freedom and equality, cooperation seems like a much better approach.

The scope for cooperation, however, depends on our ability to cultivate a spirit of solidarity beyond narrow circles such as the family or caste. That may seem like wishful thinking, but it is even more naive to think that humanity can survive much longer unless we develop more enlightened and socially rational value systems.

* You are well aware of the condition of the poor Adivasi people in the tribal belts of the country. The Maoists and other extreme Left movements gained significant support among the people of these belts. It seems Adivasis are now the major support base of these groups. What lay in this support? Do you think that the Maoists could bring any relief to the oppressed tribal?

I hesitate to comment, let alone pass judgment, on a movement we know so little about. All I can do is to share a few thoughts with reference to Jharkhand. To start with, it is important to distinguish between the two major sections of the Maoist movement in India. The Communist Party of India (Maoist) was created in 2004 through a merger of People?s War, based primarily in Andhra Pradesh, and the Maoist Communist Centre (MCC), largely based in Bihar and Jharkhand. These two groups are very different, and I guess the merger must have been a matter of survival or strategy.

I don?t know much about People?s War, but from what one reads, it sounds like a relatively disciplined and principled organisation. The MCC, on the other hand, was considered an extremist fringe of the Naxalite movement before the merger?very violent, opportunist, caste-ridden and bereft of any credible revolutionary programme. My impression is that it has very limited popular support today. Quite likely it had significant support at one time, when the Naxalites used to drive landlords away or kill the perpetrators of caste atrocities.

Today, however, they are just as likely to kill a poor Adivasi or Dalit who stands in their way, or members of rival communist parties for that matter. One of my own friends, Niyamat Ansari, who used to fight against corruption in Latehar district, was brutally killed by a Maoist squad.

It was an eye-opening experience, because the Maoists behaved at every step like the Indian state at its worst. They killed Niyamat in a very brutal manner, without any sort of due process. When we protested, something they are not used to and take very badly, they tried to tarnish Niyamat?s reputation by making ludicrous allegations against him. When these allegations were debunked, they promised an inquiry, which never happened of course.

Meanwhile, they harassed and threatened Niyamat?s relatives, asking them to retract their testimonies to protect the corrupt contractors who were facing trial in the meantime for inciting the murder. These are the sorts of methods normally used by the police or government. It is no wonder that the Maoists are known in the area as ?lal sarkar? (the red government), and I don?t think the term is meant as a compliment.

Coming back to your question, I don?t think that the Maoist movement has any future in Bihar or Jharkhand. I am sure that many honest and courageous people joined it in the past, and selflessly gave their lives for the liberation of the oppressed. But there are only so many Che Guevaras. Many others join the movement with very different motives, whether it is to settle scores, make money or get hold of weapons. Power corrupts at the best of times, but all the more so in a violent underground movement that sustains itself through fear. Further degeneration of the Maoist movement in Bihar and Jharkhand is only a matter of time.

* It is rare to see people who combine academic research and activism for the cause she/he stands for. It seems this is one of the deficiencies of our time. In your new book, "Sense and Solidarity", you champion the cause of combining research and action. What kind of qualitative advantage does it offer?

There are many possible reasons for engaging in research?passion, money, fame, curiosity and career advancement, among others. One of them is to contribute to collective efforts to make the world a better place through democratic means. That is essentially what I mean, in the book, by research for action. It is a simple idea, and I think that many people find it appealing except that there is no obvious institutional base for this approach.

If you join an academic institution, you will be under pressure to write for professional journals that few people read, and also to keep a distance from jholawalas as they are called. If you join a non-governmental organisation, you will have to deal with all the frustrations of being accountable to funding agencies rather than to the people you wish to work with. If you join the government or the corporate sector, you will be expected to obey the boss or serve privileged interests.

Few people, unfortunately, have the freedom to pursue research without shackles, though this is changing a little as statistical data, reading material and other resources are becoming widely available on the Net instead of being confined to university libraries or research centres. And, of course, some institutions committed to research for action do exist.

Research for action requires the same sort of scientific rigour, broadly understood, as research in general, but in some respects it calls for doing things differently. For instance, if you wish to reach a wide audience, it is a good idea to keep things simple, as opposed to complicating matters as tends to be done in academia.

Similarly, speed tends to be more important for action-oriented research than for academic research. And then there is a range of ethical issues that have special relevance to action-oriented research, from intellectual honesty to principled funding. But most importantly perhaps, research for action calls for some serious reflection on where you stand in society and what sort of values you are committed to.

There is a deep illusion, in economics, that academia is a kind of neutral ground from which independent and objective ?policy recommendations? can be made. In fact, economic departments are increasingly well integrated with the state-corporate nexus. In any case, policy and action, unlike research, are political acts, so there is no escape from thinking about our commitments and values if we want to take a position on real-world issues.

* You are often called a development economist. For you, what does it mean to be an economist, a development economist?

My interest is not in development economics per se but in development, in the broad sense of an expansion of human freedoms. Given that interest, economics seemed like an important discipline to study. So are other social sciences, but they are more easily self-taught than economics. So I studied economics, starting the hard way with mathematical economics and then drifting towards public economics, development economics and now a more practical than academic interest in development.

At the end of the day, I have mixed feelings about economics or rather mainstream economics. On the one hand, it is a sophisticated discipline and there is much to learn from it if we study economics critically.

There are many brilliant scholars in the profession and many good people too. On the other, the study of economics comes with a certain amount of indoctrination, based not so much on what is being said as on what is being left unsaid.

For instance, it is possible to go through a whole PhD in economics without ever hearing about things like class, caste, exploitation, war, propaganda, corporate power and other topics that are essential to understand today?s economy and society.

Of course, there is a specialised economic literature on each of these topics, but they are not part of everyday economic thinking. It takes some time and effort to shed the blinkers that tend to come with a degree in economics.

Also, economists generally move in privileged circles, and that too often influences their world view. In that respect, the profession seems to be going astray at the moment, as economists go back and forth between university departments, government commissions, the Bretton Woods institutions, investment banks and sponsored think tanks. Conflicts of interest abound and some economic research institutes have become virtual extensions of the corporate sector.

Ideally, economists should engage not only with privileged institutions but also with citizens? organisations, popular movements and the public at large. Some do, but there is room for more.

Jipson John and Jitheesh P.M. are fellows at Tricontinental: Institute for Social Research and contribute to various national and international publications including The Indian Express, The Wire and Monthly Review. The writers can be reached at jipsonjohn10@gmail.com and jitheeshpm91@gmail.com.
 
 
Frontline.in, 12 October, 2018, please click here to access
 
Image Courtesy: Frontline.in

Frontline.in, 12 October, 2018, https://www.frontline.in/social-issues/social-justice/article25036595.ece?fbclid=IwAR14ff7YlMz-bZgpwxXRKSNfiG8mbC-Bk-MXJhwQZTDp2kzo3Q6D-KQeiEs


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