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© 2012 Sanjeev Sabhlok's revolutionary blog
Most Indians are thoroughly confused about basic economics and political theory. However, it gets very hard when even Bhagwad Jal – a very articulate and popular Indian blogger – is also thoroughly confused. It is crucial that I persuade thought leaders like him first if I'm to have any chance of reaching out to the "common man"?
Bhagwad has commented on my blog, thus:
I suggest we stop talking in terms of labels – socialism, capitalism, liberal, fascist etc etc. All these "isms" and "ists" are a poor tool of logic because each person's views will deviate from the "ideals" in significant ways.
My response
There are CRUCIAL differences between two worldviews – socialist and capitalist. These worldviews lead to their own deductions about how people will behave under certain circumstances.
One (socialist) leads to collectivist solutions, the other (capitalist) to individualist solutions. These are RADICALLY different in every way.
It would be folly in the EXTREME to not be able to recognise these fundamental differences.
But, of course, such folly is common in India. Utter CONFUSION prevails in India.
Hence I’m struggling to get traction – despite offering solutions that are GUARANTEED to be 100 times better in every way than alternative solutions. People like you are muddled up. So maybe the first step is for you to educate yourself.
Clearly despite my repeated requests you’ve not done me the courtesy of reading BFN. Such are the “elites” of India. Don’t know but refuse to learn.
I know that most people have very short attention spans and can't read books, particularly non-fiction. So here's an attempt to provide just a brief dose from the draft manuscript DOF. I hope Bhagwad will bring himself to read at least this short extract. (It is not very well written – later versions will read much more smoothly, but the content is there).
EXTRACT
If the state of nature is actually a battlefield for survival, often punctuated by murder, rape, war and theft, how can mankind bring up the children? Clearly we did manage to find a solution to this problem. We survived.
Some of the strategies employed are described in the ancient Hindu scriptures. The state was formed, no matter how primitive. And governance was put in place. Thus, Srimad Bhagavatam (also known as the Bhagavad Purana) says that the tools of governance must include saama (‘diplomacy’ or pacifying); daana (charity, or possibly an incentive); bheda (a policy of divide and rule); and danda (punishment).[1] Later, Machiavelli was to suggest that human behaviour should be manipulated through money, fear and choreographed shows of grandeur. Perhaps because of this recommendation, Stalin and Hitler were particularly adept at grand displays. Modern theories (principal-agent and public choice similarly suggest a range of incentives (carrot) to elicit cooperation, and punishments (the stick) to discourage aggressive behaviour.[2] Many of these ideas are used in the institutions of governance of free societies even today.
Not all philosophers believe in Theory A. Therefore two sharply contrasting views about political society have come into being, with dramatically different prescriptions about social organisation. The individual-centric view (capitalism) defends freedom and extends it as far as possible – within the bounds of accountability. The society-centric view (collectivist, socialist) takes a rosy view of human nature but ends up riding rough-shod over the individual, and either glorifying the state (as Hegel did) or entirely rejecting the state (anarchy). Since I discuss libertarian anarchy (or the excessively minimal state) in chapter 3 as part of a discussion about Robert Nozick’s views, I will focus on collectivism here.
Collectivism
Collectivism is a political perspective that idealises the common man while – in the case of socialism – the wealthy are portrayed as anti-social exploiters. More fundamentally, collectivism treats the individual as a cog in society’s wheel: raw material to be moulded to suit the ‘purposes’ and direction of the society, or the ‘wheel’. Thus, while Karl Marx and Frederick Engels thought hat man was innately good, they but were, paradoxically, unwilling to trust this goodness to lead to good outcomes without state direction. The state must actively mould its citizens they said, in order to ensure that their private interests coincide with so-called ‘social’ interests. Thus:
There is no need for any great penetration to see from the teaching of materialism on the original goodness and equal intellectual endowment of men, the omnipotence of experience, habit and education, and the influence of environment on man, the great significance of industry, the justification of enjoyment, etc., how necessarily materialism is connected with communism and socialism. If man draws all his knowledge, sensation, etc., from the world of the senses and the experience gained in it, then what has to be done is to arrange the empirical world in such a way that man experiences and becomes accustomed to what is truly human in it and that he becomes aware of himself as man. If correctly understood interest is the principle of all morality, man’s private interest must be made to coincide with the interest of humanity.[3]
Unfortunately, societies that depend on forced collaboration have serious pitfalls. Such perspectives lump people into sub-groups and classes, leading to inter-group rivalry and class war.
Let me, at this stage clarify the meanings of socialism and communism, a matter that comes up ever so often in the public discourse. John Stuart Mill defined these terms, thus:
Socialism: ‘The word Socialism, which originated among the English Communists, and was assumed by them as a name to designate their own doctrine, is now [1849], on the Continent, employed in a larger sense; not necessarily implying Communism, or the entire abolition of private property, but applied to any system which requires that the land and the instruments of production should be the property, not of individuals, but of communities or associations, or of the government.’[4]
Communism: ‘the Communistic doctrine, which forms the extreme limit of Socialism; according to which not only the instruments of the land and capital, are the joint property of the community, but the produce is divided and the labour apportioned, as far as possible, equally.’
Careful reflection shows us, however, that these terms are actually synonymous, merely two shades of black. Both prioritise the collective over the individual interest. Both advocate, even glorify, state theft of property (redistribution) for social ends. Communism has led to severe state-led violence, such as in Stalin’s USSR. Socialism, on the other hand, has largely led governments to kill of people indirectly through corruption, bureaucratic production of goods, and general incompetence (as in the case of India). The end result is the same: people die. There is therefore, in my view, not much point in making a painstaking distinction between these two terms , and I therefore use them interchangeably.
Collectivist ideas such as these can only be implemented through statism, or through the the glorification of the state. This perspective is best attributed to Hegel, although he had many precursors (but not Hobbes, whose argument was individual-centric, not society centric). He asked that individuals be reduced by the state into abstract elements of a social pattern. He celebrated ‘the authority and power and the greatness of the State … against the whims or individual inclinations of this or that citizen or subject’.[5] In doing so he added even one more dangerous element – the dictator – to the mix. Indeed ‘For him, such questions as whether the great man, the earth-shaker, is good or virtuous or just are absolutely meaningless, and indeed petty, for the values implied by these words are themselves created and superseded by those very transformations of which the great man is the Herculean agent.’[6] Such amoral Hegelian approaches were extremely influential in driving communism and fascism.
Hegelian perspectives are popular and emerge repeatedly in every generation. The lesson for the liberal is this: preaching freedom is worthless and unless a way is found for the liberal to wrest control of the state from the statists. What use is our love of liberty if socialists or fascists are allowed to rule the world? Advocates of liberty must not underestimate the ever-present risks of Hegelian ideas. Collectivism can easily take religious forms. Crusades and jihads are a reminder. Religions build oppressive and unethical hierarchies like the caste system, and elevate certain individuals over entire groups. Collectivism remains a serious threat in many forms and shapes.
Individualism, or liberalism
The alternative perspective, classical liberalism (or capitalism), derives essentially from a competitive perspective regarding the state of nature. It argues that there is little to be gained and much to be lost by idealising humans. It seeks to defend and protect us against aggressive competitiveness It places the individual at the centre, the society at the periphery. It believes that under a well-designed governance arrangement, people will work cooperatively even as they are essentially competitive.
It also does not glorify the superman unlike Friedrich Nietzsche (‘I teach you superman. Man is a something that shall be surpassed’[7]). The liberal never fawns on so-called ‘great men’, knowing very well that everyone is flawed. The liberal has no heroes. There is none, he believes, whom we can rely upon or ‘follow’ uncritically. The theory of individualism or liberalism is therefore a philosophy that defends the everyday man, not ‘great’ men. We want everyone to be great, well-behaved and accountable. It is better to be a nation of shopkeepers than a nation of Nazi lunatics, each claiming priority over others, or a nation of socialists where people are herded like sheep.
Observe what people do, not what they say. I’ve not seen too much intrinsic goodness in people. Instead, I have seen goodness that is strategic, being motivated by the carrot or the stick. Capitalism therefore builds checks and balances to create conditions where people can better trust each other. And while not denying the need for a nation state, it sees the state as a creature of our convenience; not the end for which we exist. The government is our servant, not master. Freedom is about moving away from all signs of collectivism towards individualism and voluntary participation in the collective (Figure UU).
[1] 7.5.19, [http://srimadbhagavatam.com/7/5/19/en]
[2] Jensen, M.C., and W.H. Meckling, ‘Theory of the firm: managerial behavior, agency costs and ownership structure’, Journal of Financial Economics, 3: 1976, pp. 305−360.
[3] Marx, Karl and Frederick Engels (1845), The Holy Family or Critique of Critical Criticism. Against Bruno Bauer and Company. 1956 English translation is by Richard Dixon and Clement Dutts. [http://www.marxists.org/archive/marx/works/1845/holy-family/index.htm]
[4] Mill, J.S., Principles of Political Economy, Chapters on Communism and Property, respectively.
[5] Ibid, p.94.
[6] Berlin, Isaiah, Freedom and its Betrayal: Six Enemies of Human Liberty, London: Pimlico, Random House, 2003, p.93.
[7] From, Thus Spake Zarathustra, 1883, cited in Durant, Will, The Story of Western Philosophy, London: Ernest Benn Ltd., 1948 [1947] p.360.
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Sanjeev, I never said that Capitalism ans socialism were the same thing. I've read enough of history and Ayn Rand to know the abstract differences quite well.
My point is that it's a useless idea in the REAL WORLD since unless something is 100% one type of the other, there's no use applying a label and we don't have such countries in the real world.
There's also a crucial difference between unicorns and winged horses. I understand that differences between them very well indeed.
But since unicorns and winged horses don't exist in the real world, there's little point in debating the differences!
Similarly, capitalism and socialism are meaningless concepts since no system is one or the other. And specially since you tend to label people and make judgments about them based on those labels, it's even more dangerous and it's important that someone like me confronts you about passing these absurd and sweeping generalizations.
Dear Bhagwad
Let’s just say that you haven’t yet understood that. Do take the time to read BFN. When you are done you’ll realise that ideas have SERIOUS implications.
Indeed, EVERYTHING that one says or does comes out of one’s underlying worldview. Your view is that “everything goes”. I’m afraid that’s incorrect. There IS a right and there is a wrong.
Socialism is EXTREMELY DANGEROUS – an extreme slippery slope into perdition. You can’t really say “I’m just a little bit socialist”. It doesn’t work.
Yes, what we need in India now is ideologues at the other end of economic spectrum. Developed countries have prospered because of socialized medicine, respect for private property and limited deregulation. The problems faced by these countries are also because of those aspects. Classical liberalism and libertarian ideology have failed. Unfortunately, saying capitalism is the solution is similar mistake as we believed earlier that socialism is the solution. Fiscal conservatism, rational tax structure, limited deregulation, social security and socialized medicine are the cure to our economic problems.
Aaravind
Your statements are seriously inaccurate! I invite you to read BFN and consider the distinction between S and N Korea – tens of such BLATANT examples exist. Assuming you are open minded and interested in the truth.
And if (as you right note) socialism has failed, then that makes clear you need capitalism (there are ONLY TWO ways of organising a social/economic system),
Sanjeev, if you look around you'll find that everyone is indeed a little bit of both. I challenge you to find me even one country that is 100% socialist or 100% capitalist.
There are shades. The reality is that in democracies even the socialists get some votes. The policy is always distorted by socialists (who break the basic laws of economcs) till it gets untenable (e.g. Greece, US/etc.). Socialists want a free lunch. You can only do so up to a point.
The closest indicator of capitalism is the Freedom index (http://www.heritage.org/index/). Better indices can be prepared – but the point is there is ONLY ONE indicator needed: the level of freedom.
India is a desperately unfree country.
Sanjeev,
Appreciate your response. I do not want to compare the obvious (S Korea Vs N Korea). I am not saying capitalism is not virtuous. I want to look at the theory of classical liberalism and apply it to advanced and developed societies like USA, UK, Canada etc. If these societies do not adopt free markets and do not have liberty in true sense, what are REALISTIC chances of India getting and prospering with the theory.
I have been in USA for 12 years. Despite all the cries of limited government and individual liberties, USA still has big entitlement programs, govt in every step of individual life from EPA mandates on car emissions to foreign nation-building missions to prolonged unemployment insurance for unemployed. Individual liberties have NEVER existed in true sense as govt. can monitor and eavesdrop into phone conversations, check your bank account etc without your permission. Patriot act after 9/11 has intruded into every aspect of human life in the name of national security.
National, public-funded healthcare, universities are continued support by increased taxation, that punishes individuals who create more wealth. Where is economic freedom in ANY sense when you pay state, local, federal taxes, property taxes, communication and sales taxes? Merely saying a theory 'Classical liberalism' works is like socialists and communists saying their systems solve problems. The fact and reality is we need a middle ground where govt. provides and protects people, taxes us enough to take care of weak and elderly and provide security.
I would add an important role for the govt is to enable and incentivize people to maximize their wealth with prudent economic policies that ensures limited govt interference, maximum productivity and sustained economic well-being.
Dear Aravind
It is absurd to suggest that advanced societies did not “apply” the model of liberty. Yes, indeed, there are a number of socialists (primarily Keynesians) in the West, but the underlying model in the West is based on sound principles of economics and liberty. That’s how they have gotten wealthy.
I work inside the engine room of policy making in a wealthy state in Australia and can assure you that we do apply the principles of economics to a very large extent. Yes, it is not perfect, but perhaps 80% there. That’s good enough to make a nation very prosperous (the Keynesians will always damage it, after all this is a democracy).
Let’s be clear that WHATEVER little wealth India has generated in the past 20 years is on account of the principles of classical liberalism being applied MODESTLY.
If these principles are applied more sensibly and more broadly, India will become a super-wealthy nation in no time. Do read BFN.