Need for a New Outlook

IT is time to begin thinking seriously about the economic problem. Of all the failures with which the new regime can be charged none is more disturbing–or, admittedly, so far as the Central Government is concerned, more excusable–than its failure to pull the country out of its economic stagnation, or to afford any promise of doing so in the future. India is in fact involved in two simultaneous crises, the political and the economic. The political tasks of the assumption of power and establishment of the new order have quite properly taken first place. But though this consideration must make critics for the time being more charitable, it does not diminish the acuteness of the economic crisis, nor will it moderate the disaster which seems likely to be its outcome.

It is necessary to think of a relatively short period, in terms of decades. Advocating a policy designed to reduce the rate of increase of population, one has often been met with the scientific answer that when our technical knowledge is fully applied the country will be able to maintain its present, or a much larger population, at a high standard, and that when this position is reached the birthrate will fall automatically. One can reply in one word–”When.” We are failing at present even to move significantly in the direction of an application of modern technology. Our technological level has risen, but our production has barely kept pace with our rising population. In agriculture we have been losing ground for the past twenty years.

It is probably true that if existing technological knowledge were applied, our people, like others, could live at a satisfactory material standard on two or three hours’ work per head per day. It is probably true that there is an adequate technological answer even to the soil-and-population scaremongers like William Vogt. But though we may know in principle what to do, and there is probably no insuperable economic difficulty in the way of doing it, the administrative, political, psychological and educational difficulties are enormous, and there is no real prospect of overcoming them for generations yet.

Nor is it convincing to say that these difficulties would be greatly reduced if we went over to socialism or communism. The socialist is apt to think it is so, because he imagines himself, endowed with technological omniscience, operating the levers of an omnipotent and frictionless administrative machine. In practice things are not so easy. In fact the evidence hitherto does not suggest that collectivism has any great advantage over capitalism in regard to speed of technological progress; though, as we have not yet had much experience of collectivism, there is still room for hope. However it is clear a priori that the socialist exaggerates. Bureaucracies can develop vested interests as powerful and as obstructive any capitalist group. Experts disagree, as also do non-experts, and interests of all kinds organise their pressure-groups, under socialism as under capitalism. If the collectivist dictator attempts any cutting of Gordian knots, he can never be sure that his choice is right, and he will inevitably suffer from the restricted thought and initiative, the paralysis of fear developing into active sabotage, that hamper an over-centralised administration.

In India, then, we know how to grow all the food we want, and how to produce all the industrial goods we want. Probably a few years’ high-powered research would show us how to stabilise the population. It is the human difficulties which prevent application of this knowledge. Thinking in terms of decades, we cannot call in to our aid any spectacular technological improvements. We have to think in terms of a very modest rate of improvement from the existing technical level.

But meanwhile the economic position is rapidly worsening. There is no need to go into the familiar detail, of enormous food imports–at the cost of our precious foreign balances–the abject failure of the attempts to grow more food, the obstinate stagnation of industrial production, the failure of private capital to undertake new productive enterprise. Lately a new factor or aspect of the economic crisis has come to light, thanks to the Eastern Economist. For the past two years new investment has fallen below the figure of the depreciation of existing capital; so that we are actually disinvesting, failing even to maintain our capital resources, not to speak of increasing them.

These are but the more immediately striking facts. If the favourable Possibilities held out by technological improvements are left aside, as in prudence they must be, the longer-period prospects of the national economy are equally gloomy. The land is very fully occupied, by a population which is growing rapidly, and will presumably grow more rapidly still if our health services improve–though this effect is likely to be offset by famine. Emigration on a significant scale is out of the question for technical reasons, even if political obstacles did not prevent it. The expansion of the cultivated area is necessary, and is being undertaken, but it cannot proceed nearly fast enough to accommodate five million more people every year; if it did, the available waste land would very soon be fully occupied. Moreover this expansion demands heavy and rapidly increasing capital investment.

The difficulties confronting industrial expansion are almost equally grave. The Bombay Plan contemplated investment in industry at the rate of 5,000 crores (at pre-war prices) in 15 years. This was to increase production three times, and with a somewhat slower growth in agriculture (investment 1,200 crores) was to double the real income per head of the population. This aim, the doubling of real income in 15 years, is not extravagant. Anything much slower should be regarded as dangerous. We cannot be satisfied with much less than an annual investment of 1,000 crores at current prices. As things are this is crying for the moon.

Economic progress at present goes wards. The standard of living is falling. It is higher than is justified by current production, for in addition to our failure to invest in industry, we are spending our foreign balances on current food consumption. Nevertheless the standard of living is falling, and must continue to fall if we continue to use up our capital instead of increasing it. When we come to economic sanity and begin to save again, the standard of living must fall sharply.

But the ultimate result of a continued fall in the standard of living must be discontent, revolt, and the dictatorship either of the present or of a new set of rulers. In the existing conditions in Asia generally, there can be little doubt that the communists would be the ultimate victors. This does not mean that the communists have a solution to the economic problem. Probably they would do no better than others even in economic policy, while the rest of their policy amounts to nothing short of the destruction of civilisation. But their technique of dictatorship is so perfect that they can retain power however abject their failure.

Thus our economic future can be regarded as a race to overtake and reverse the present rapid slide downhill. The pace of that slide is set primarily by the increase of population. It is hastened still further by the improvement of the health services, by our current over-expenditure, and by the baseless expectation of better times ahead aroused among the people by communist, socialist, and indeed by Congress propaganda. Can we overtake it in time? Can we lower the birthrate, increase the cultivated area, induce the farmers to work harder, provide them simple technical aids, and persuade them to use them, and save or borrow enough capital to raise industrial production, solving meanwhile all the administrative, educational and other problems involved–can we do this in time to forestall revolution?

We cannot hope for many years before the catastrophe overtakes us; in that short time the task is obviously enormous. Ignoring the organisational, educational, technical and other aspects of the job; consider it purely from the point of view of capital investment. The country cannot be considered safe, as we have said, until it is investing, in industry alone, something of the order of 1,000 crores per year. At present our net investment in industry is nil, or rather negative.

How can the country obtain so much capital? Clearly we cannot expect to get it all from abroad. Whatever we can get from abroad we should get: the supposed dangers of foreign investment are at the worst far less than the dangers of not investing, or not investing enough. But however farsighted and generous the Americans may be, they cannot be relied upon for continued investment on that scale.

The alternative is to raise the money, that is to save it, within the country. This involves lowering the standard of living at least of substantial sections of the population, without lowering production correspondingly. At least a considerable part of the population has to submit to a substantial cut out of its present real income. There is no evading this. Any kind of regime, pursuing any economic policy, would be faced by the same necessity.

If this is considered as a matter of policy, it is clear that the burden must be made to fall on those who can bear it. It would be inhuman to try to lower the standards of the poor majority, of town or country. Moreover that policy would defeat its own purpose, since it would drive them into the communist camp. The middle and upper classes must suffer the cut.

But these classes are already complaining of the high taxation. Indeed it is high, and probably little purpose would be served by stiffening up the income-tax schedules, since the result would be more evasion. A different financial approach might yield some result. The Finance Department might try postponed expenditure: compulsory loans instead of confiscatory taxes, and not just at the top but right down the middle income brackets.

However, nothing adequate to our needs is likely to be obtained by the methods of finance. People’s thinking and feeling about the problem must change. The outlook of our middle and upper classes is strikingly out of accord with the realities of their position. It is natural enough, but that fact will not save them. It is natural that on the attainment of independence the dominant administrative, business and professional classes should conceive of themselves on the model of the recently dominant classes of other Countries. But that is not their real position.

Much criticism has been directed at our showy embassies and the expensive life of the governing class in Delhi. This is quite justified, but the important moral is seldom drawn. It has been regarded as mere bad taste; but in fact it is class suicide, and national suicide. This ostentation sets an example which the dominant class all over the country has been only too eager to follow. Everywhere people of these classes are raising their expenditure–for trips abroad, travel by air, entertainment, bigger houses, flashier cars, fashionable clothes. Where a man puts his money into business, it is less likely to be a productive enterprise than a “luxury” cinema.

There has been a certain amount of change in the opposite direction, perhaps by way of reaction, but for the most part a mechanical carrying out of the Gandhian injunctions. The provincial governments are enforcing prohibition, and will soon ban horse-racing. These are almost wholly beside the point, though it is arguable that racing is a factor of importance in encouraging the mentality of display and extravagance. The effort to cut down luxury imports is praiseworthy, though its success is not very noticeable. Altogether there has been little effect on the public mind. There is no realisation that the new ruling class cannot, as a matter of elementary political prudence, afford to live as other dominant classes of free countries in recent generations have lived.

Our ruling class is in fact entering upon its heritage just at the time when similar classes all over the world are losing theirs. The capitalist age is ending; the socialist age is beginning. Not that this will be an era of equality, without ruling and privileged classes. There is forming a new ruling and privileged class, the administrators, technicians and managers. There is no long future before a ruling class whose position depends largely on private wealth. Our dominant classes must realise that in the long-period sense their day is done. They have a choice now, between following the extravagant, ostentatious style of life of other capitalist classes, which will lead to an early communist revolution; and on the other hand a prudent and patriotic sobriety, which may greatly prolong their dominance, and may enable the country to pass gradually to a different type of economy without the appalling suffering and destruction of cultural values which communism involves.

It is a great pity that the name of Mahatma Gandhi has been so much used, and for so many dubious purposes, that it has almost ceased to have any meaning. For what he had in view for the richer classes under Swaraj is very similar to what is advocated here. He used the term trusteeship: he meant that there should be no confiscation, but that the rich should voluntarily limit their personal expenditure, and devote the bulk of their wealth to public purposes. He foresaw that the alternative would be confiscation, and he was right.

If all or most of the upper and middle classes would contribute, nothing so drastic as the Gandhian trusteeship would be needed. What is required is a change of attitude, a renunciation of the habit of conspicuous and competitive expenditure, which is after all a recent import into India from the West, at least among the capitalist class, and is indeed a relatively new thing for capitalists even there. Until the late Victorian age the typical capitalist in the West worked hard and lived soberly and thriftily. In the same way in India, until a generation ago, the tradition among the capitalists was that of the merchants in mediaeval India who, as Moreland relates, “studied to appear indigent” to protect themselves from pillage, and devoted their surplus to works of piety.

That tradition, handed on by Mahatma Gandhi, ought to be revived but with the difference that surplus wealth must be spent on modern means of production, or lent to the Government for the same purpose. The country needs, for a long transition period, a combination of the mediaeval or Gandhian life-style of low living and high thinking with the scientific outlook and technology of the modern age.

The combination is a somewhat contradictory one. It will doubtless be thought quite fantastic to demand of the new ruling class that they should cease to celebrate their triumph, and should voluntarily simplify their lives in order to give up a substantial fraction of their incomes for public purposes. But the alternative is plain: economic decline, revolt, and dictatorship, in all probability a communist dictatorship. If we of the middle and upper classes do not give up a fraction of our wealth voluntarily, we shall lose the whole of it by coercion, and–to make it quite clear–a great many of us will lose our necks as well.