Political Economy of Growth and Reforms in India

REVIEW OF AMARTYA SEN'S RATIONALITY & FREEDOM (Belknap Press, 2003)

The New York Sun ,  26 Feb 2003

Sauvik Chakraverti

FREEDOM MATTERS MORE THAN EDUCATION HOW AMARTYA SEN IS AN ENEMY OF THE POOR

My generation of Indians was told that the previous generation of Indians fought for 'freedom'. However, Indians possess very little freedom today: the World Economic Freedom Index ranks India close to the bottom, nudging the 'economically repressed' nations. How can a people who supposedly fought for freedom - and wrested it - have so little freedom today? The only reason I can offer is that the older generation did not understand and appreciate the value and importance of freedom. In reality, they did not fight for freedom at all; they fought for power over the colonial state in order to unleash new horrors on the populace.

This conclusion is justified when one leafs through the latest offering from India's greatest living economist, the Nobel laureate Amartya Sen. In Rationality and Freedom , Sen asserts that there is a 'reciprocity' between these two concepts. But is this really true? The great French economist Frederic Bastiat, for example, remarked long ago that socialist democrats assume the 'wisdom of the voter' at election time; and then, once elected, the very same legislators legislate away the voter's freedom on the grounds that he is too stupid - or 'irrational' - to be able to handle freedom! Is Amartya Sen, a committed democrat and socialist, not doing the same thing? And in doing so is he not following the precise path trodden by Gunnar Myrdal, another Nobel laureate, who said that the poor of the Third World were 'irrational' and incapable of taking well-thought out economic decisions responding to the price signals of a free market and needed authoritative resource allocation decisions taken for them by an 'intellectual-moral elite': planners. The LSE economist, Lord Peter Bauer famously called this 'the denial of the economic principle': the construction of an economic system based on the assumption that the people were sub-human, something less than Homo Economicus ; while their rulers were assumed to be infallible. Socialist planning was thrust upon Indians using public irrationality as an excuse. This planning has been a huge failure - but it continues. Every prime minister of India chairs the planning commission, and this body has just come out with a tenth five year plan! The Constitution of India proclaims that India is a socialist country! All these assaults on freedom continue simply because India's greatest living economist is not a true friend of freedom. Instead, he is busy splitting hairs endlessly. So much so that this book is really dense, slow reading, full of jargon and mathematics. By putting forward his ideas in this manner, Sen is being inaccessible to the layman - the poor voter who needs to understand what benefits economic freedom can yield for him. Sen does not shine his light on this poor voter. Instead, his book is directed at colleagues and students. It is not designed to convince; it is designed to confuse.

Of course, human beings are not always rational. We regularly marry in haste and repent at leisure. We return from shopping sprees with loads of perfectly useless stuff. Many of us indulge in body-piercing and tattooing to such an extent today that this behaviour surely cannot be called 'rational'. So bloody what? The democrat must always assume the wisdom of the voter. He is there only to represent the voter - not rule him. At least in law, there is no 'reciprocity' between rationality and freedom. The true democrat must assume rationality always and leave the voter free, making laws that protect freedom - not take it away. Public choice theory talks of 'rational ignorance' on the part of the voter: but here we do not assume irrationality; we say that reason prompts the voter not to seek all the information required to cast an informed vote. The two are very different.

If we observe poor Indians going about making their economic achievements, we see that they are hugely gifted. In Indian markets, it is the poorest who scout around for the best buys and bargain most energetically - while the rich get easily conned! A joke is told about Indians in England - once known as 'a nation of shopkeepers': Why can't Indians play soccer? Because, whenever they get a corner, they put a shop on it! A bania (an Indian trader) is rumoured to be able to buy from a Scot and sell to a Jew and still emerge with a profit! Economists like Myrdal and Sen do not see these gifted people: they see flaws in the people and perfection in their rulers. Sen, for example, harps endlessly on the need for 'education' for the poor people. Of course, this education will come from the state - which is an ugly propagandist, a purveyor of dirty, rotten lies like the theory of the vicious circle of poverty which destroy bright, young minds who come seeking knowledge. Sen does not see that millions of Indians know how to sing, dance and play musical instruments, but they languish in poverty because the State has outlawed nightlife. Freedom matters much more than 'education'. Tribals in the jungles of India possess the 'knowledge' to distil mahua from a jungle flower of the same name - but they are not free to sell this wonderful alcoholic drink. Mahua could easily challenge tequila . But Sen sings a very different tune: recently, he has been in the news for recommending that private tuition be banned in India!

Sen, of course, is always on the side of the poor and the marginalised. He believes in the doctrine of redistributive justice; and his most famous work is on famines. However, soft hearts can do a lot of harm; hard heads are far better. A renowned hard head, Lord Bauer, in 1961, in his first book on India, commented that beggary on the streets of India and Pakistan is not a proof of poverty; rather, this widespread beggary exists only because the dominant communities in both these countries, Hindus and Muslims respectively, believe they earn spiritual merit by giving alms to the poor. In these very countries, there are no Parsee, Sikh or Jain beggars because these communities practice collective charity, discourage beggary as a blot on the entire community, and encourage self-help. Today, India has 60,000 tonnes of foodgrain rotting in state godowns. Famine is a thing of the past. And 'poverty' needs to be meaningfully understood.

Indeed, notions of 'redistributive justice' should be unceremoniously buried. These ideas have unleashed waves of what Bastiat called 'legal plunder': land redistribution, nationalisation, rent control. The purpose of Law is the protection of property; and the Law cannot be made a thief. The Law cannot be Robin Hood - and, no matter what, Robin Hood was a thief. Notions of 'redistributive justice' have made democracy an ugly game by which some groups gain at the expense of others.

In conclusion, Sen's economics is completely out of touch with reality. So out of touch, in fact, that it can be considered dangerous. Deepak Lal and I have both written of the 'predatory states' that are keeping the Third World enmeshed in permanent poverty. In India, the prime minister has recently acknowledged that street vendors in Delhi alone cough up more than 500 million rupees every month to municipal and police functionaries who are running an elaborate extortion racket. They are the smallest players in the urban market economy - and the predatory state steals their surpluses. A majority of the world's people, all of them desperately poor, need freedom from their predatory states. For their sake, we need economists who genuinely value freedom. Amartya Sen is not one of them.

(SAUVIK CHAKRAVERTI is Editorial Director, Centre for Civil Society, New Delhi. He is the joint winner of the first Frederic Bastiat award for journalism.)