The widening implications of the scandal surrounding Libor, or London interbank offered rate, further underscore what has been clear over the last few years: while government regulation can stifle creativity and create rent-seeking incentives, self-regulation by the private sector is not the road to nirvana either. Nonetheless, given the state of the State in India and the sheer range of activities in a modern economy and society, self-regulation will be critical in a wide range of activities. But then how does one ensure that self-regulation is effective — where the benefits to members of the group are not at the cost of society?
The regulation of the professions in India is instructive in this regard. While higher education is the principal entry mechanism to the professions, the social power of the professions has historically stemmed from their ability to self-regulate. It has long been recognised (going back to Emile Durkheim’s classic work, Professional Ethics and Civic Morals) that the state simply cannot perform the regulatory function for professions. Nonetheless, while professional associations should not be part of the state, they cannot be completely detached from it either — since the latter provides them with the legitimacy (often through national laws) to act as the monopoly regulator of that profession. This “public morality” of the professions is, of course, the source of its legitimacy and social power. But that requires the professions to practise – and enforce – strong self-regulation.
Durkheim had argued that self-regulation and professional ethics were important “because they govern functions not performed by everyone, that not everyone is able to have a sense of what these functions are, of what they ought to be, or of what special relations should exist between the individuals concerned with applying them”. Accordingly, he hypothesised that “professional ethics will be the more developed, and the more advanced in their operation, the greater the stability and the better the organisation of the professional groups themselves.”
In India, as elsewhere, there are professional associations of accountants, architects, doctors, engineers, lawyers and so on. Self-governance by the professions in India is both statutory and advisory. The legal and accounting professions have statutory professional bodies, while engineering, business and journalism have independent voluntary bodies. Medicine and architecture have both. These bodies are meant to establish and regulate standards of professional conduct and education. Yet their performance in recent years leaves much to be desired.
Although regulatory bodies governing the professions are typically vested with the power to initiate disciplinary action, their punitive powers are too weak to prevent professional misconduct and, in any case, even these are seldom exercised. In the legal profession, fees for misconduct are trivial and actual expulsion or suspensions are too remote a possibility to prevent misconduct. In journalism, the Press Council of India’s (PCI’s) powers of censure are restricted to warning, admonishing and censuring the newspaper and the journalist. There are virtually no consequences even when newspapers openly engage in paid news, although one could attribute this exception to constitutional guarantees of press freedom. Although the PCI’s own website declares that it “wields a lot of moral authority although it has no legally enforceable punitive powers”, there is little to support this grandiose claim. The Medical Council of India (MCI), in its 2002 Code of Ethics Regulations, calls for suspension or removal (after hearings) of the physician’s name from the state medical register. Yet despite widespread violations of medical ethics – such as using ultrasound or amniocentesis for sex determination – actions are few and far between.
One reason for weakening standards of governance of the professions is that many of them also have the power to accredit new institutions. With the rapid growth of private higher education, the interest of professional regulators moved from maintaining and improving professional standards to making money from accreditation of new institutions (exemplified by corruption scandals concerning the MCI). The financial lucre in controlling these bodies, in turn, led to an adverse selection effect in the quality of people heading them. Yet, in all cases, members of the professions concerned – doctors, engineers, the professoriate – chose, by and large, to remain silent.
If higher education is the gateway to the professions, it is also the “original sin” that has undermined the professions. Managements of corrupt educational institutions recover the money paid out to officials from students, thus raising financial entry barriers and making professional education less inclusive. And a professional who pays a premium for his credentials but has received a poor-quality education will not only cut corners to recover that investment, but will also have little regard for professional norms and ethics — since his education did little to impart any professional values to him.
The professional bodies in India that have maintained some standards do not accredit any institution. This removes the personal financial incentives to be office-bearers of these institutions, since there is no opportunity to accredit an institute offering a degree in that profession and make money in the process. Instead, these organisations draw up standards and conduct qualifying exams. However, unless these bodies have at least some outsiders representing broader societal interests, they rarely impose strong penalties for professional transgressions.
While the middle classes in India are rightly exercised about the sheer venality of the state, the core social institution of the middle class – the professions – has been as much a party to this national scourge. The effectiveness with which the professions govern themselves will have significant effects on citizens’ lives. These institutions are centrally connected to governance and state capacity; no regulatory reform will work if these institutions are ineffective. For instance, no legal reform is possible without restructuring the political economy of the legal profession; the political economy of healthcare delivery crucially depends on health professionals; the media is unlikely to play its crucial watchdog role in a democracy if it itself accepts payments for planting – or withholding – particular news stories; and if teachers demand being paid whether or not they teach and insist on hierarchy and rote in the classroom, the students are likely to mimic such behaviour.
The weakness in the governance of the professions spills over to state organs, which are already overburdened and dysfunctional. Following the 2010 MCI scandal, the government superseded its powers and has now proposed the establishment of a National Commission for Human Resources for Health (NCHRH) in a new Bill (currently under review in the parliamentary standing committee on health). But under the Bill, all 13 members will be nominated by the government and a quorum of just two members will be required for any decision on accreditation. To say this is absurd would be to call the Pope a Catholic. But this is the fate of the professions when they act as self-serving unions rather than self-regulating professions.
The writer is director of the Centre for the Advanced Study of India at the University of Pennsylvania