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Democracy and sustainable growth

Refuting the position that developing countries, in their early stages, could accelerate economic growth only under conditions of political dictatorship, Mr. Bill Clinton has praised India for demonstrating to the world that democracy an d rapid economic development are compatible with each other. P. R. Brahmananda on the co-existence of democracy and sustainable growth.

IN HIS historic lecture to Parliament on March 22, the US President, Mr. William Jefferson Clinton, congratulated India for demonstrating to the world that democracy and rapid economic development are compatible with each other. He was refuting the posit ion that developing countries, in their early stages, could accelerate economic growth only under conditions of political dictatorship.

China is the standing example of a modern country which developed at a high rate, in economic terms, under conditions of communist dictatorship. There are other examples from East Asia and South Asia and, probably, also from the case studies of Latin Ame rica. These examples have led to a theory among some American economists that, empirically, economic freedom and political dictatorship are perhaps the ideal mix for bringing about rapid economic development.

These thinkers do not demonstrate how the same countries can shed their political dictatorships and transit without violence to a politically democratic system. There seems to be a view that democracy is like a coat, which can be worn and removed at the will of the people. This issue apart, it has not been validly demonstrated that a democratic country following the right priorities cannot obtain the same rate of economic development as a politically internally-free country.

In fact, a view had gained ground in the world that the American established opinion, even among its officials and Presidents, was generally not very respectful to countries seeking to achieve high economic development under conditions of democratic poli ty. Mr. Clinton's observations in his lecture have served to dispel the above view. In his informal talks with the villagers in Naila, in Rajasthan, Mr. Clinton went further and credited India with the gift to the world of demonstrating the possibility o f high economic and social development under a democratic polity.

He also added the observation that the Indians should not lose their faith in democracy, even if at times social change was not as rapid as people desired. We may note that President Clinton, in his country, is associated with the championship of social justice, especially to the blacks and the under-privileged. That the process of achievement in this respect is slower than what he desired is what must have made him make the above observation.

Within the US circles, and in the American context, Mr. Clinton could be placed somewhat on the Left, in economic matters. It is, therefore, sad to those who cherish liberalism that the Left parties were not present at the Clinton lecture. It may be rema rked that even those who differed with the then Soviet system did not choose to be absent in Parliament when the Soviet Presidents delivered addresses there. Being present at a lecture does not necessarily imply that one has to agree with whatever the le cturer states.

It is now a matter of common knowledge that had we adopted the wage-goods strategy in place of the Mahalanobis' heavy industry strategy, India would have grown at a higher rate and would have also tackled by now the major problems of poverty, illiteracy and morbidity. In fact, had the national priorities been derived from the grassroots village-level panchayats, the priorities would have been the opposite of the Mahalanobis priorities.

India's formal democracy was primarily guided from the top. It was a sort of a government meant to be for the people, but not strictly by the people. The social welfare function came from the then leaders and their group of advisors. The rulers and their advisors sometimes gauge correctly the needs and requirements of the people. But that would be a coincidence and not a necessary result.

Even now the system is yet far from responding to the felt requirements of the people in the villages. The high growth rates now obtaining are the result of a shift away from the Mahalanobis model. But these rates could still be higher if a model incorpo rating the basic requirements of the people, and of the future, is adopted.

Anyway, even taking the long period, India's average growth rate is higher than 4 per cent per annum, somewhat higher than the mean growth rate of the world. More important, politicians and economists are talking about the possibility of moving up India' s growth rate to 8-9 per cent without disturbing the democratic functioning of the economy. In fact, the conjuncture of both political democracy and economic liberalisation has demonstrated that the growth rate can be moved up significantly.

Mr. Clinton's categorical statement about the happy co-existence of democracy and high sustainable growth clearly shows a shift from the earlier American standpoint showing a preference for the Chinese path, against the liberal Indian path. Even as great a philosopher as John Rawls contended that a minimum level of economic development is a precondition for a politically liberal system.

If we take the approach of revealed preference theory, the Indian electorate has not been enthusiastic about the Left parties, which would, perhaps, have liked India to follow the Chinese model, or the earlier fashionable Soviet path. India also rejected earlier Indira Gandhi's emergency administration. It is true that a democratic system is exposed to a number of discontinuities and disorders. But it is not always that the poorest sections are better off in a democratic process than under a dictatorshi p process.

Nevertheless, given the choice of free elections, even the poor prefer a democratic system with free scope for expression of opinion, despite the probability of a lower economic status, to a dictatorship system in which they might be better off. Clearly, the poor attach a greater value to their own freedoms than the Leftists and other elite think.

But Mr. Clinton's position is somewhat stronger than the above. He treats India as a model of a country that is proving that both freedom and improved economic lot of the poor under rapid development can go together. It has been pointed out that even if it is clearly shown that the poor would fare better under political dictatorship, given free choice, they would prefer a democratic system in the political domain. There is some problem in holding the view that democracy is a preferred form because it ca n show higher levels of economic performance not unequal to those shown under non-free conditions in the political sphere.

Sometimes, even Prof. Amartya Sen's case for democracy seems to be on the above ground. It must be mentioned that the Indian people would still favour democracy, even if economic performance cannot be of a very high level. In fact, freedom is treated in India as a value, and not subject to the trade-off approach so fashionable in modern economic discussions. Anyway, freedom is indivisible, and to split it will destroy the concept. It is a general equilibrium notion. To analyse freedom in terms of partia l equilibrium is not proper. Perestroika and glasnost have contradictions within them.

In a larger sense, a socio-political economic system, produces commodities and values by means of commodities and values. Thus, values are both inputs and outputs. And in a growing economy, each year, more and more surpluses in commodities and values are produced. The most important value is freedom as prevalent in a democracy. This dimension of freedom, as well as the democratic possibilities, keep expanding. When surpluses expand, the values dimension expands, as does social justice, which also become s an input and an output.

Mr. Clinton's visit should only strengthen our pride and conviction in the workability of the democracy-development combination, and should lead to further expansion of production and values.