Lessons not learnt

I see that our rajyapal, my friend Gopal Gandhi, told the graduating students of Jadavpur University, at its 52nd convocation on December 24, “Students who pass from this university should have a clarity of mind so that they speak lucidly and logically.” I have never been a student at Jadavpur University, but I have taught there, and I decided that Gopal Gandhi’s firm instruction must apply to me as well: we cannot ask the students to do something that their teachers cannot do. Certainly, there is need for seeking some clarity and reach in speaking about events and developments in West Bengal right now.

The first thing to note is that there are some very important distinctions to be made between the different issues involved in the current debates — distinctions that are sometimes missed. The first, and perhaps the most immediate, distinction is that between a general economic strategy and the general politics of governance (including matters of law and order) associated with that economic strategy. A second distinction relates not to the economics-politics division but arises within the political domain: that between the politics of administration (including maintaining law and order with justice) and the general importance of some political values, particularly that of democracy. The third distinction arises within the economic domain, in particular the difference between the nature of a general economic strategy, on the one hand, and the specific economic proposals, on the other, that are devised to carry out that strategy. I begin with the general industrial strategy that underlies the economic policy programme, but this will have to be supplemented, in the second essay (to be published tomorrow in this two-essay presentation), with considerations of the politics of governance, the importance of democracy, and the translation of the general strategy into concrete economic policies.

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I begin, then, with the policy strategy of rapidly industrializing West Bengal, involving various means but firmly including the use of private investment in industries and in modern services in this state. I would argue that this general strategy is basically correct. What is so good about rapid industrial development? The basic point is simple enough. In removing poverty, incomes would have to be raised (though there are a variety of other things also to be considered, since we do not live by income alone), and it is hard to do effective and secure income-raising without substantial industrial expansion. This works not just through direct income generation but also through its indirect consequences in energizing an economy and generating new skills (critics of industrial expansion often overlook the extent to which different parts of a working economy are interdependent). It is not surprising that no substantial country ever has crossed the barrier of poverty without very substantial industrialization. If the need for an industrial base and the corresponding skills applies to all countries in the world (as I believe it does), it has a particularly strong relevance to Bengal which was one of the more prosperous parts of the world based on strong industries in pre-colonial days, and was especially advanced in textile production. That industrial advantage was lost during colonial rule when the pre-mechanized industries went downhill without new and modern industries coming up, and to this has to be added the reputation that Calcutta developed in the second half of the 20th century as a hotbed of industrial action, scaring industrial investors away.

Strong rejection of this general approach comes from at least two distinct groups. There are, first of all, those who simply do not want capitalists in West Bengal, and do not, in particular, want to invite private capital to help industrialize the state. What is the point, the politically determined typically ask, of having a communist government if it is going to turn all soft on capitalism? The second group of opponents are on a very different track, even though in denouncing the government they can be strong allies. This group of critics would not want to take land away from agricultural use. There are some genuine “physiocrats” among this group, with agriculture-fetishism and a strong belief in the unparalleled — almost mystical — merits of agriculture. Their arguments were adequately rebutted about 200 years ago, and if life has ceased to be quite as “nasty, brutish and short” as Thomas Hobbes found it, the contribution of industrial development to that change would be hard to overlook.

However, the agriculture-favouring opponents have presented some other arguments that are indeed very weighty. Two in particular deserve very serious consideration. Some oppose the diversion of fertile and productive land into industrial use, which applies to some extent to Singur as well, since such land is clearly very useful for agriculture. Another important argument points to the possibility that taking land from agriculture would impoverish the agriculturalists who live on that land, no matter how large an income the new enterprises may actually produce for other people. I have seen various arguments making this point forcefully, including in one case invoking — I believe appropriately — my own concerns about entitlement failures of specific occupation groups and the effects that this might have on starvation of those groups (no matter what happens to the totality of incomes).

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How strong is the anti-capitalist high theory against private investment, with an implicit vision of a hugely prosperous State ownership economy? In particular, should not communists shun private investment? It is sad for high theory, but in most cases that would be a mistake, if the communists want rapid economic development for the removal of poverty (as they clearly do). It is not an accident that every communist country reliant on pervasive state ownership in the world has either moved to welcoming private investment quite substantially (as China has done), or has declined and been replaced by straightforward capitalist systems (as has happened in Russia and other countries in the former Soviet Union). The exception is Cuba, but its economic success is extremely limited. It remains a poor economy.

But is there, then, nothing to learn from Cuba? There is, in fact, a hugely positive lesson in the Cuban experience about how much can be achieved, despite economic poverty, through excellent public healthcare and school education. Despite its low income, Cuba has nearly the same life expectancy as the much richer population of the United States of America, primarily because of its medical system which is good and which does not leave a huge proportion of the population uninsured, as the US one does. There is, however, also a precise lesson here about how one need not become a capitalist camp follower simply because of accepting the pragmatic case for using private investment in industries. The role of the State in many fields, including in universal medical care and in universal schooling, remains extremely strong, and it is a lesson that has often been missed, even by countries that are formally communist.

Take China. Pre-reform China, before the privatization that began in 1979, had already achieved a high life expectancy (68 years at birth) and very high literacy rates through universal public healthcare and public education. To be sure, China also had a terribly inefficient communal agriculture, and this, combined with a general lack of democracy and a free media, was mainly responsible for the famines of 1958-61 which killed between 23 and 30 million people (the existence of this catastrophe is now denied only in the Indian subcontinent, not in China or anywhere else, and then again only by some whom I would call hard-core theorists — it is hard to call them Marxists since Marx had such strong respect for empirical information). But the general system of public healthcare with universal coverage and universal schooling had dramatic achievements in pre-reform China, and in 1979, China was 14 years ahead of India in life expectancy at birth.

The Chinese economy was, however, in a mess, and the reforms of 1979 put agriculture on a much surer footing through private farming under the new “responsibility system”. In industries too, the reforms achieved a great deal, when China went on to use private investment drawn from all over the world. But the reforms did not stop there. Such was the new belief in the magic of the market (China leaped from a comprehensive anti-market position to a comprehensive pro-market philosophy) that the Chinese also abolished overnight the entitlement to free healthcare for all. Everyone now had to rely on private purchase of health insurance, except in the relatively few cases where the employing organization did that for the employee. The bulk of the population got suddenly excluded from entitlement to public health service, and it is now thought that no more than 20 per cent of the population has assured healthcare. Since then, China’s progress in health and longevity has slowed down dramatically. Even India has been catching up with China, despite the messy state of India’s own healthcare: India’s shortfall from China in life expectancy at birth has been halved since 1979, from 14 years to 7 years. And a state like Kerala with universal medical coverage by the State (even though private medicine also thrives in Kerala on the secure foundation of public medical entitlement for all) is very substantially ahead of China in life expectancy. To take another measure, in 1979, China and Kerala both had an infant mortality rate of 37 per thousand, and this has now fallen only to 28 in China, whereas the rate is less than half that in Kerala (around 10 to 14, depending on which survey you use).

There is, thus, a lesson from Cuba that China missed (about the merits of universal public healthcare) and a lesson from China that Cuba missed (about the positive role of private investment in industries). And there are huge lessons from the experiences of the rest of the world. India in general, and West Bengal in particular, can learn from all. Neither a comprehensive anti-privatization philosophy, nor a comprehensive pro-privatization position, would offer what is needed.