Not a Political Theory Yet!

Kalyan Guha

Rupee has clocked all-time low of Rs 60/-. Way back in 1993 one could purchase 1 dollar by paying only Rs 32. No relevance in intoning for good old days! But Manmohan Singh was finance minister (FM) at that time, sharpening his chisel on the 'Reform Anvil'. The country was facing deep forex crisis. It was estimated by the then Government treasury that forex was available for 3 months' import requirement. The sweeping reforms brought the country's economy on the rail, it was asserted so by the Govt. That was the period when the government decided to do away with the 'License Raj' ostensibly and release the economy from the yoke of the state regulations. In fact, that was the start of implementation of 'ideas of neo-liberalism'. Initially neo-liberalism started as a political concept way back in later part of 17th century with John Locke as an early theorist, propounding the freedom of individuals in pursuing their choices and decisions. Adam Smith was a classical proponent of those ideas on the plank of laissez faire.

By the quirk of turn of events, Manmohan Singh is on the saddle as the Prime Minister of the country almost for 10 years since 2004. His entire economic policy since then sang the paean of the magic of 'neo liberalism' and now through the loud mouth of an able singer—Montek S Aluwahalia, the US educated and the articulate Indian economist and equally more articulate FM, Mr P Chidambaram. The only causalty has been the silent PM. Has he understood the futility of neo-liberalism and has become silent? Montek's only plea is that the world economy is in crisis. So India cannot be in isolation. Downslide of rupee can be caused by many factors—the increasing fiscal deficit exceeding the Kelkar Committee recommendation at 4.2% of GDP, the consequent threat of inflation, continuing Current Account deficit and above all the crippling stranglehold of corruption at high places. The economy has been subject to random loot and pilferage. In recent times the neo-liberalists developed their way of thoughts on the support of Milton Friedman of Chicago Economic School and his followers, discarding Keynesian prescriptions of intervention of the State in crisis which saw a period of support from 1948 (post-World War-II reconstruction phase) to 1970. But it is a fact that neo-liberalism is yet to evolve itself as a strong theoretical platform like that of Marxism, Keynesianism or classical liberalism (John Stuart Mill et el). It is an extension, that too loosely, of market economic practices. Neo-liberalism has developed over the last twenty years or so as a body of practices, casually here and there, encouraging free market practices. David Harvey, making a survey of history of development of neo-liberal ideas, tried to define neo-liberalism in line with Nozick's definition as under:

"Neo-liberalism could also include a perspective on moral virtue: the good and virtuous person is one who is able to access the relevant markets and function as a competent actor in these markets....being solely responsible for the consequences of the choices and decisions they freely make : instances of inequality or glaring social injustices are morally acceptable, at least to the degree in which they could be seen as the result of freely made decisions."

The composite effect of all these uncertain free market exercises has the unfortunate effect on rupee power. Even after 65 years of independence, rupee hasn't been able to find a place in international currency basket as an international tradable currency unlike US dollar, AUS $, Japanese yen or Chinese currency, UK sterling or Singapore $ etc. On the other hand, Indians are fed like the parrots of the famous Tagore's tale of "Tota-kahini" (the Story of the Parrot) that Indian economy is emerging as world economic power!

A country becomes world power when its economic and military might grows side by side. Any of the two by its absence cannot help catapulting it into world political power to reckon with. Even if its military might not be that much evident, the strength of economic power can make a country visible to others like Singapore, Hong Kong, Nordic countries in Europe or countries in Far east like South Korea. Were these countries following neo-liberal policies? No,they were simply exporting more than import making their Current Account quite comfortable. Even now, despite ups and downs occasionally, Japan, South Korea, Singapore and Thailand have favorable BOP position i.e. earnings and receipts from outside more than the outflow of forex from within. It was the technology and its efficient utilisation. They talk of technology, but that has remained still far and far lagging behind except in some good patches of 'surface consumption' here and there in the area of communication and consumable items. Where is the comfort in 'surface' transport, rail, land or water with adequate safety and security measures? Where are the appropriate and timely medical services for the commoners in the areas away from cities? Where are the sources of quality food items and packaging in general? Where is the general morality in providing other public services anywhere? Is this neo-liberalism? Monmohan Singh could not probably guess the extent of corruption pervading the public life from top to bottom of the society. From the above definition of neo-liberalism, it has been accepted that the inequality and 'glaring social injustices' will be veritable consequences of the neo-liberal practices. Unfortunately neo-liberalism has been hijacked conveniently by free market economists before it could develop as a political theory. Are Indian authorities not imitating the neo-liberal practices elsewhere without ensuring appropriate governance?

Manmohan Singh has got a good stint in ruling, but Manmohanomics has apparently failed in the Indian politico-economic scenario despite his best efforts. The sooner he starts doubting the unfortunate effects of neo-liberalism, the better for the welfare of the people!

Frontier
Vol. 46, No. 5, Aug 11-17, 2013

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