Growth Versus Politics In Democracies

Once upon a time, books used to be the repositories of, shall we say, throughtful throughts. Then came the Americans and, with them, the notion that books were just one more times to be marketed.

From then on, through has prospered but thoughtfulness has become a casualty. This book so no expection and, the impressive list of references at the back notwithstanding, that is my only serious criticism of it.

Gurcharan Das used to be a practising manager of the art of selling. As cuh, it is understandable that there is a uni-dimensionability to his view which closure the entire book.

 

This dimension assumes perhaps without even realising that such an assumption has been made that in the shot term society doesn't nee a referee to apportion the gross national product. You let it grow by unleashing a virtual freefor all. The long run then takes care of itself.

India, Mr Das seems to suggest, tried to do it the other way around. It got too preoccupied with dividing the GNP in the short term. In the process, it fialed to pay attention to the things that would make it growth.

In many ways, this is a fari accusation. But it does overlook an important fact, namely, that India has had a successful pluralist democracy in which an over whelming majority of the voters are poorl. Life it or not, this makes a lot of little differences to the way things work.

To most important difference, ti which Mr Das pays little heed, is that while in the long run there can be an optimised covergence between the forces that drive markets and democracies, in the short run, these forces tend to pull in opposite directions. To the extent that politics is a short run game and growth is a long run one, there will never be a situation which is completely optimal.

The result is that at every point in time everyone willbe disappointed with everything. Books, in such circumstances, are easy to write. The trick, however, lines in sticking to your knitting.

When he does so, Mr Das provides some useful insights. For instance, his analysis of family-owned firms in India tells us why these are losing their importance. His advice to them that they should hand over their empires to professional managers is also sound.

However, his analysis would have been more complete had he included two ther specific reasons why they have all tried to diversify into unrelated areas. Unitl 1991, industrial licensing and capacity fixing played a key but utterly perverse role in these decisions. If you wanted your firm to grow, you had to get into areas where you had zero presence. Since then, directed lending to infrastructure has taken over the role of licensing and capacity fixing. But the consequences are the same.

Mr Das analysis of the dynamics of the middle calass is also pretty much on target. But it would have been useful to examinem, if only in passig, the contribution of the public sector and the government in creating this middle class. It there is pressure today on the government toliberalise and reform, it is coming mainly from person whose fathers were or are in the service of the state directly or through one of its instumentalities.

Likewise the tradition-and-modernity debate. This subject has been done to death by sociologists and political scientists in India. Survival and orosperity are all that matter and the tradition-modernity debate has little to contribute to that. Mr Das does well, therefore, not to think too deeply about it because, in the end, it leads nowhere.

All in all, this is avery readable book. it will strike a series of chords amongst those who like to read this sort of thing. Mr Das has said that there might be about 25,000 of them and one must assume that he is right. But a world of advice for the next 25,000: tighter editing and more meat.