Predatory State - The Black Hole of Social Science
Times of India, Sept 22 1999
The term predatory state has been around for quite some time. Deepak Lal probably used it first, intending to classify regimes between two poles: the Platonic Guardians and the Predatory State. George Ayittey has for many years been writing of the vampire states of Africa. But these analyses ran into a stumbling block: the great political economist Mancur Olson ruled out the possibility of predatory states existing. Since Olson is not one to look at states with rose-tinted glasses, his objection to the term is worth recounting in detail.
Olson's analysis begins by looking at how the state emerges out of anarchy. Under anarchy, what happens is 'uncoordinated competitive theft' by groups of 'roving bandits.' This destroys the incentive to invest and produce. It makes sense for one of these roving bandits to destroy the competition, set himself up as dictator, and 'rationalise theft in the form of taxes.' The state as 'stationary bandit.'
In Olson's words: In a world of roving banditry there is little or no incentive for anyone to produce or accumulate anything that may be stolen and, thus, little for bandits to steal. Bandit rationality, accordingly, induces the bandit leader to provide a peaceful order and other public goods for its inhabitants, thereby obtaining more in tax theft than he could have obtained from migratory plunder. Thus we have the first blessing of the invisible hand: the rational, self-interested leader of a band of roving bandits is led, as though by an invisible hand, to settle down, wear a crown, and replace anarchy with government.
Olson denies that his autocrat, Mr. Stationary Bandit, can be called predatory: (The Stationary Bandit).is not like the wolf that preys on the elk, but more like the rancher who makes sure that his cattle are protected and given water. The metaphor of predation obscures the great superiority of stationary banditry over anarchy and the advances in civilization that have resulted from it. No metaphor or model of even the autocratic state can, therefore, be correct unless it simultaneously takes account of the stationary bandit's incentive to provide public goods at the same time that he extracts the largest possible net surplus for himself.
'Public goods' are those which cannot be priced and sold, or from whose consumption people cannot be excluded like law and order, roads, parks and, in the old textbooks, lighthouses. These are areas where private money will not come in simply because private businessmen cannot charge people for consuming them. Hence it is vital that public investments are made in them. According to Olson, even a stationary bandit would find it 'rational' to invest in public goods.
Olson's analysis makes sense to students of Indian history. The career of the Afghan predator, Sher Shah Suri, can undoubtedly be analysed in Olson's terms. He built the Grand Trunk Road (with serais all along it) and provided law and order simply because by doing so he could maximize his revenue: he could tax the trade that would naturally transpire. Although he was a predator, the state he set up was that of a stationary bandit; it was not a predatory state. The Mughal Empire, which followed Sher Shah Suri was also similar in character. Stationary bandits, all.
The socialist democratic Indian state is very different from its predecessors. Judging by the situation on the ground, what we face is an irrational under supply of public goods, especially roads and law and order. The undersupply of roads has created what urban geographers call primacy: the primary city bloating up while satellite towns do not develop. This is the primary cause of urban overcrowding and astronomically high urban land prices. Good roads would have colonised more space. Roads, after all, are the only way of augmenting the supply of land. Connect Village X to Town Y with a road, and that much land is immediately available for the townspeople.
The law and order front is equally appalling. Traffic in India is chaotic. VIPs hog police security while vast stretches of the country face lawlessness: here, there is the uncoordinated competitive theft of roving banditry. Would any stationary bandit countenance a Dara Singh? Saket, an upmarket locality in South Delhi now famous for double murders boasts a cine complex, three markets and three separate residential areas: it still does not have a police station. No stationary bandit would have neglected law and order thus.
When we examine the spending priorities of the socialist democratic Indian state, which plans its investments, we see that they prefer to invest in private goods: they make cars but not roads. They invest in hotels, in steel, in civil aviation. They also spend money on rural development, poverty alleviation and employment generation. Indeed, they spend so much money on these things that they cannot control the fiscal deficit. Yet, they cannot set up a roads fund. How do we estimate the character of our rulers?
This is a predatory state. This is a kleptocracy. This is the black hole of social science. It does not believe in maximizing revenue by investing public money well and taxing free traders. It believes, instead, in diverting public resources away from public goods to the pet projects of bureaucrats and politicians: the spoils system.
What are we to do? We must radically alter the spending priorities of the state. Planning must be done away with. All public enterprises must be sold. The entire public treasure must be taken away from private goods and re-invested in public goods. The roads of India must get top priority. Policing must be drastically reformed and made to deliver. Courts must be invested is so that justice is swift.
This socialist democratic state is unfit to perform any other task, least of all educating our young. Ignorant people cannot become educators. We must, instead, teach our children that the state is their enemy, so that they rise against its kleptocratic policies. It is time we terminated Indian socialism with extreme prejudice and ushered in a Second Republic based on free trade, property rights, sound money, public goods and sound reason.
Note: Kleptocracy means "rule by thieves".
New Delhi, Saturday, September 22, 1999
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