Market and democracy
Harish Khare
Hindu
May 10, 1999
Title: Market and democracy
Author: Harish Khare
Publication: Hindu
Date: May 10, 1999
When the Prime Minister, Mr. Atal Behari Vajpayee, in his address to
the nation" last week mentioned about the presumed Rs. 50,000-crore
loss suffered by "small investors" due to governmental instability, he
gave respectability to one of the fraudulent tenets of public
discourse in recent years. The manipulations by about two dozen big
players on the stock exchanges were accorded the legitimacy of
correctly reflecting the strengths and weaknesses of the economy;
these handful of unethical, unaccountable and unscrupulous "brokers" -
the Harshad Mehtas and the Hiten Dalals - have been elevated as the
arbiters of not only the health of the economy but also the
governmental policies and political initiatives.
Mr. Vajpayee was obviously pandering to the middle classes' cultivated
distaste for "politics"; this distaste for "too much politics" is
actively encouraged and sustained by the "economic reforms
constituency," consisting of the so-called entrepreneurs and their
apologists among business editors and columnists. The lament of this
constituency is that "too much politics" distracts the government of
the day from the holy task of giving more and more policy breaks to
the "entrepreneurs" to make more and more profits. The Prime Minister
was unthinking, to say the least, in his "Rs. 50,000-crore loss
formulation."
By contrast, a few days later two senior politicians, Mr. Sharad Pawar
of the Congress(I) and Mr. L. K. Advani of the Bharatiya Janata Party,
were refreshingly candid in their remarks at the "kumbhamela" of the
business community - annual session of the Confederation of Indian
Industry (CII). These congregations have become a ritualised occasion
for berating politicians for not fulfilling their governmental
"dharma" of getting out of the entrepreneur's way fast enough so as to
enable him to indulge his "animal spirit" that would, in turn, bring
unprecedented prosperity to the wretched country. At such
congregations the mantra of "lesser governmental intervention" is
chanted with a religious fervour; it is actually a demand for
exemption for businessman from compliance with the law, an immunity
from any kind of accountability and, of course, for higher and faster
profits.
But Mr. Advani and Mr. Pawar appeared remarkably unimpressed by the
captains of industry and their claims as the harbinger of new
prosperity and, instead, spoke a few home truths on the aberrations in
corporate governance and the responsibility of the business community.
Refusing to give in to the "politician-is-the-villain-of-the-piece"
rhetoric, which is central to the CII theology, Mr. Advani implied
that businessman stood on the same pedestal as the politician, neither
higher nor lower. "Why have Indian businessmen and politicians fallen
in the esteem of the Indian people? Why are most Indian businessmen
considered greedy, unscrupulous, and uncaring, in the same way as most
Indian politicians are considered corrupt, power-hungry, and
unprincipled? Is this public image good for Indian business as it
readies to face the challenges and opportunities of the future? Isn't
it a fact that bad business practices and bad political conduct have
vitiated our social life and weakened the moral fabric of our great
nation? ... If influential people in business and politics can break
the law and flout the rules and get away with it, it is futile to
expect the common citizens to have respect for the law."
In his formulation, Mr. Advani drives a stake at the very heart of the
'economic reforms' constituency's creed; he insists that the
businessman is above neither the law nor social obligations. While Mr.
Advani's frank remarks constitute a welcome effort in restoring some
balance in our public discourse of the last few years, Mr. Pawar
reminded the entrepreneurs that there could be no compartmentalised
growth and that the prosperity of the business leaders was
intrinsically linked with the welfare of the larger community.
Like Mr. Advani, Mr. Pawar also pulls down the "entrepreneur" from his
self-assigned superior pedestal and brackets him with the venal
politician: "Ladies and gentlemen, those of us who have been
Privileged by birth, by education and by economic power, need to do a
great deal of soul-searching. We are expected to come up with
solutions. What we are doing is to tackle the frills and skirt around
the main issue. I assure you, gentlemen, that as captains of industry,
unless the aspirations of every Indian is legitimised and an
environment is created for the development of this aspiration, our
attempts at economic growth can never stabilise."
It was sheer coincidence that both Mr. Advani and Mr. Pawar spoke the
same day and the parallelism in their separate thinking points to the
emergence of a new consensus on the content of economic reforms and on
the obligations of the business-man. What is remarkable is that the
two leaders spoke up at a time when governmental incoherence and
political Instability have weakened the politicians' leverage
vis-a-vis the business community; but the two are merely reflecting
our collective loss of innocence about the entrepreneur and his animal
spirit. There is no getting away from the fact that the track record
of industry since 1991 does not inspire confidence in the honesty of
its intentions or the nobility of purpose. On the other hand, the
harsh fact is that the so-called entrepreneurs' "soak the middle
classes" strategy has run its course. Without wider prosperity, the
Indian "middle class," however vast its size, cannot on its own
sustain a regime of economic reforms. A new paradigm is needed to
rearrange the market-democracy relationship in India.
For a new paradigm to emerge it is necessary to recognise the
fundamental requirement: just as democracy and its organs need to be
subjected to the rigours of popular control and accountability, the
business executive, too, needs to be held answerable for his actions
and choices. Just as a stable middle class and vibrant civil
institutions are necessary for the health of the polity, a wholesome
market too depends for its balanced growth on transparency,
accountability and social obligations.
After all, during the old bad days of the "licence raj" the corrupt
politician and the venal businessman were happy to strike a mutually
profitable and reinforcing relationship; both flourished in an
environment that weakened the popular control over the economic and
political elites. The political aberrations led to fragmentation and
alienation complicating the task of coherent governance; the economic
aberrations resulted in massive inefficiency, stagnation and
uncompetitiveness. Since 1991, this pattern of mutual complicity,
albeit in a different ideological idiom and policy package, has been
sought to be continued. Nonetheless, the depositions of Mr. Advani and
Mr. Pawar before the CII congregation are a public acknowledgement of
the recognition that this complicity is as harmful to the businessman
as to the politician and to the wider community.
Now that the country is preparing itself for one more massive
democratic ritual, it need be understood that the time for the
business elite to keep on making demands on the political community is
over. It is time that business leaders wrested the initiative from the
crooks within their own ranks. This cannot be accomplished without
agreeing to open itself up for scrutiny from the other institutions of
civil society. It is not enough that once in a while these leaders
pretend themselves to be enamoured of the idea of "corporate
governance"; there has to be honest entrepreneurship and good
business. Otherwise, the business leadership will never be able to
acquire the moral stature to lay a claim on our collective
understanding of its pains and predilections.
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