Eminent Economists’ Advice

I wish all men, voters and rulers and their disinterested admirers as well as their supporting licence and permit holders, pondered a little over what Professor John Kenneth Galbraith, U.S. Ambassador to India, recently said at a meeting in Calcutta.  His advice and warning should carry some weight, even if what I have been writing and saying so much to the displeasure of my old comrades in the Congress should come to naught. The eminent Ambassador unequivocally expressed his adverse views about borrowing technology and capital from abroad and our trying to plant in our country the Western pattern of advanced industrialization. Surely Prof. Galbraith is not a suborned witness for the Swatantra Party! Nor can his advice so seriously tendered be brushed aside as coming from an ill-informed or biased stranger.

     “Borrowing is no substitute for earning by exports,” he said. Arithmetical budget-makers working in the secretariats eager to help ministers with what they like are making just this mistake which Prof. Galbraith deprecates. “I venture to think,” he said, “that any friend of India will view with some concern the rather uninspiring behaviour of Indian exports in the last five years.” The genius of English idiom is under-statement. The American Ambassador could not properly use stronger language than this to point out the running error in the Plan policy.

     Aid, however generous, Prof. Galbraith said, cannot be a substitute for the independence and self-confidence that actual achievement in production and export gives. National advance depends on this confidence. The psychology produced by unendingly begging for aid retards national advance.

     Prof. Galbraith pointed out that much of the technology of the West represents an accommodation to labour shortage or other special requirements of those countries. Professor Galbraith was clear in his opinion that these labour-saving technologies should not be taken over by countries whose resources are too scarce to be invested in costly equipment, and should be saved for other and immediately necessary purposes. On the other hand, India’s labour resource is not in deficit but is bulging in unemployment, and on that background labour-saving devices have no meaning and are harmful. Surprisingly (or perhaps not surprisingly) the Professor agreed with so-called old-fashioned people in India, who still insist on the use of the potential of manual labour so abundantly available in preference to buying modern machinery from abroad devised to meet labour shortage in those countries. It is principally the exhibitionary complex and ambition to finish the execution of grand schemes quickly, and secure spectacular effects, that prompt importing of Western labour-and-time saving equipment and technology, when traditional manual labour could do the same things, though it may take a great deal more of time. In this, our rulers are not inclined to copy or learn from the example of China. Tempted by a desire to see things completed “in one’s own life-time” and to have opening ceremonies and publicity campaigns, costly technology is paid for and the nation is made to sign to enormous debts incurred on that account. If we could discharge the debts, that is, if we had capacity for earning enough by our exports to meet the obligations so incurred, one could understand the thing. But there is neither need for such extravagance nor hope of discharging the debts involved. And worst result of all, our unemployment problems are only aggravated. Many institutions and services which we seek to establish in India in imitation of Western countries, are “luxuries which developing nations can ill afford”. (I have used Prof. Galbraith’s own words.) The eminent American Ambassador has done valuable service in speaking out so frankly instead of indulging in the usual pleasant remarks about the Government’s achievement which foreign visitors think it is their proper duty to make.

     Another eminent economist’s remarks made at Istanbul in 1955 offers equally strong support to the Swatantra Party’s position as to the inefficiency and evil results of government undertaking industries which private enterprise is prepared to take up. Mr. Eugene Black, Chairman of the World Bank, said in the course of that speech what needs no comment to show its appositeness to our affairs:

     “And even in cases where a government may go so far as to start an industrial enterprise, I think every effort should be made to put the venture into the hands of private capital and private management as quickly as possible. For rare exceptions do not disprove the often illustrated rule that it is not in the nature of government to act with the flexibility or the attention to business considerations that is required of good industrial management. And-successful or not-so long as the enterprise stays in government hands, it does not stimulate the growth of similar enterprises, because private investors who could finance them are not willing to try to compete with government. The net result of these State ventures, more often than not, is to restrict the growth of production-or, in other words, to defeat the very purpose they seek.”