July 4, 2022 ☼ The Intersection ☼ public policy ☼ liberal nationalism
India's growth and prosperity requires tolerance, pluralism and fraternity.
This is an unedited version of my The Intersection column that appears every other Monday in Mint.
Even as India is emerging out of the pandemic, we hurtling into a maelstrom of unrest. To arrest the accelerating plunge into lawlessness, violence and unmanageable disorder, it is important for everyone, yes everyone, to prioritise tolerance, moderation and above all, social harmony.
Social harmony is the bedrock of national security in the information age.
The call for social harmony is not a liberal progressive platitude aimed at masking real divisions and grievances. I believe social harmony is a good thing in itself but you don’t have to agree with me on this. Beyond principle, the case for social harmony today is dictated by hard-nosed realism and an interest in our prosperity and well-being.
Parliament is an instrument to build social consensus. Merely going through the motions without a genuine commitment to debate allows public protests to claim legitimacy.
Why do you think the BJP government had to roll back farm law amendments? Why is the GST complex and hard to fix? Why is it that the country is witnessing a violent backlash against Agnipath? These reforms are in India’s long-term interest and while people can differ on the broad details, there can be little doubt that they are necessary. Depending on your politics you might blame opposition parties. Or you might argue that the government’s approach and communication is at fault: Reforms of this scale need a lot of consensus-building and political outreach, that “the more you sweat in parliament, the less you bleed on the streets”.
Yet these explanations merely scratch the surface. The underlying problem is the weakening of generalised social trust. If people prefer the sub-optimal equilibrium of their present condition to the wonderful benefits of the promised future, it is because they don’t trust each other.
In 2013, I warned that India faces rising costs of distrust. It has dipped since then. See question V24 in the World Values Survey.
After rising from 33% in the 1990s to nearly 40% in the early 2000s, the number of Indians who trust others fell to 20% in the late 2000s. Only 16.7% of Indians said that they would trust other people, according to the World Values Survey 2010-14, the latest period for which data is available. I won’t be surprised if it has dropped further since then.
Why is this relevant? Generalised distrust makes reforms extremely hard to do because those who fear being worse off do not believe in the government’s promises. At a micro level, distrust adds friction, costs and deadweight losses to the trillions of social transactions. For instance, even where the government has streamlined its procedures, doing business has not become any easier among firms within the business ecosystem.
Algan and Cahuc’s 2014 paper summarises empirical studies correlating social trust with a variety of economic and social indicators.
Mounting evidence analysed over the past two decades shows that generalised trust positively correlates with per capita income, productivity, R&D expenditure and life satisfaction. Lower trust is associated with more regulation, higher corruption, weak legal systems and greater inequality. Societies that have low levels of trust are poor, badly governed and unhappy. The worst part is that generalised distrust perpetuates itself. Children learn to distrust both from their parents and from the environment. The survey data suggests that we have been in this vicious cycle for some time.
See Rothermund’s An Economic History of India for a detailed account of India’s failure to industrialise in colonial times.
In fact, the prevalence of endogamous caste-communities is a reason why India failed to industrialise in the 19th century. As Dietmar Rothermund argues, land prices appreciated 4% from 1860 to 1913, while other prices rose only by 1.3%. Surpluses were invested in land and gold, and unlike Meiji Japan, colonial India failed to create efficient financial intermediation at scale. You can blame the British for not being interested in India’s industrialisation, but what do you say to the fact that as recently as 2017, 84% of the credit supply to MSMEs was from informal sources, mostly informal loans from friends and family? A lot of small communities finance a lot of small industries that cannot grow. Despite our large population, we are unable to aggregate the surpluses and allocate capital that is required to scale.
Tagore’s 1911 letter is worth reading. Ambedkar talks at length about fraternity and social democracy in his grammar of anarchy speech.
Tagore, Ambedkar and Gandhi had many differences. But each in his own way arrived at the same conclusion. In a letter to an American interlocutor, the poet wrote “The problem of India therefore does not seem to be that of re-establishing its lost ideals, but rather of reforming its overgrown body…our problem is not spiritual but social—that of reviving, by organizing and adapting to its more complex environment, our fast disintegrating social system. It is our disorganized society which prevents our ideas and activities from being broad, the narrower self from being merged into or sacrificed for the sake of the greater…” A few decades later, Ambedkar questioned how people divided into several thousands of castes could claim to be a nation. Denouncing castes as anti-national, he argued that “without fraternity, liberty and equality will be no deeper than coats of paint.” Gandhi realised quite early that communal harmony was an essential condition for India’s freedom and progress.
Why compassion is necessary for India’s post-pandemic economic revival.
So what can we as citizens do about it? If compassion does not come easily, then let us practice tolerance. If we do not feel a sense of fraternity then let us at least live-and-let-live until we do. We should of course demand that politicians, public officials and mediapersons rebuild social harmony. Living rooms and board rooms have a certain power in democracies that is quickly felt in the corridors of power.
For instance, we cannot have effective cybersecurity without adequate social trust.
I found one of my old tweets from 2011 that says: “Today’s social capital inequality is tomorrow’s internal security inequality.” We have to face the fact that without a political order based on pluralism, India’s diversity will limit its social capital. Growing social distrust will frustrate our vision of a strong and prosperous India. We have to change course, now.
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