City City Bang Bang, Columns

How marketable is the market?

The rally that the Congress held in Delhi last week marked an interesting break from the past in that it overtly backed its recent run of economic reforms. Typically, both the BJP and the Congress have otherwise shied away from using reforms as political tool; even the India Shining campaign was never about the idea of reform but merely about its apparent outcome. This curious coyness about reform is all the more interesting because the mainstream view on its necessity seems otherwise to face no serious challenges. It is now routine to classify the Indian ‘story’ in two phases- the licence-permit Raj of the first forty odd years post independence, and the post-reform era that has seen significantly faster growth and the consequent rise in the levels of affluence experienced by a significant section of society. That is not to say that there are no critics of liberalisation, but implicitly the two national parties have no serious differences when it comes to economic policy that they enact, whatever postures they might adopt from time to time.

From the evidence at hand, it would seem that the market, is not particularly marketable. The default position of most political parties borders on a deep mistrust of reform, and even those that fly under the flag of right-wing policies are no different. A curious paradox is on display- at one level, most dominant political alignments seem to implicitly agree on the broad market-facing economic direction that the country has been taking for a while now, at another level, they are extremely reluctant to take definitive positions on the subject- if anything all the noises that they emit hark back to what is seen as a crowd-pleasing version of the old reflexive socialistic tendencies. Reforms when they do happen, seem to be a product of having no other options, and no time to waffle on any longer. Long term policy constipation gives way on these occasions to a flurry of reform evacuations, and the cork is then back, jammed as tightly as ever. The Congress rally might have backed the initiatives announced but no longer term roadmap for continued reform was outlined. It would seem that the new found public affection that the party has expressed for reform is largely an act of desperation- having been pushed to the wall by an endless succession of scandals, it is seeking to regain some semblance of control over the discussion about its poor performance on all fronts.

The reluctance to market the market needs greater examination. Why have such few attempts been made to market the benefits of economic reform? It is true that the manner in which the market mechanism works is not self-evident- the link between opening out the market to multinationals, for instance and delivered prosperity on the ground is far from clear at first glance and is open to challenge. Politicians have preferred their own mechanism- political transfer payments like that selectively create and nurture constituencies, using power to chisel out a mutuality of interests. Reform in its purest sense, needs too much transparency and involves shedding transactable power. It needs institutions to work as intended across the span of delivery systems. It calls for the building of a new political grammar, one where a new cause and effect relationship must be established, this time between overall development and economic growth with an individual feeling of goodwill. The general must convert into the specific and policy must become experience. This calls for a longer term orientation and great belief in one’s ability to bend the system to a new way of working. There are some who have attempted this with some success at the state level, but the degree of difficulty here is daunting enough for this not be emulated on a larger scale.

More intriguing than the silence of political parties is the reluctance of business to market the market. Its dominant reaction has been to play the existing system to its advantage, and the torrential tumbling out of skeletons from the corporate cupboard is evidence of the opportunistic stance taken by significant sections of the business.

Much like political transfer payments, the advantages that accrue out of massaging the system instead of changing it, are that the gain is ownable by individuals at the cost of others. Rigging the system ensures not only victory for the self but guaranteed defeat of the others. Even when the attempt has been more systemic, business has tended to limit its interest in the organised sector, and within that the corporate sector. Narrow interests have been represented narrowly. This world exists of a few industry leaders, a few media outlets and the state; a vast amount of verbiage gets generated within the confines of this small universe; everyone else is a mere spectator to this conversation and large parts of India are excluded entirely from it.

Reform has thus been sneaked in, one wink at a time. In a small enclave of the like voiced, it stands for staggeringly self-evident wisdom, and any regime is measured largely from this standpoint. But because reform is enacted so stealthily, and cheered so noisily by the very visible, it neither gets meaningfully debated nor genuinely accepted. The great tragedy of reform in India is that it has few believers but many users. As a result reform in India is an occasional starburst of policies, but without the kind of systemic support that it needs. There are reasons to embrace the market and reasons to curb its influence, but without an open and transparent conversation on the subject, no one’s purpose will be served- neither of its proponents nor of its critics.

Post a Comment

Your email is never shared. Required fields are marked *