Swarajya, August 15, 1964
Sri Gulzarilal Nanda recently said at Ahmedabad that he did not believe in ‘bookish’ socialism but only in ‘true’ socialism, such as Gandhiji advocated. Such a statement coming from one of the most important members of the Cabinet is indeed noteworthy. He added, making things quite clear, that he did not like excessive controls and that controls should be reduced to the minimum, used only as the last resort. These cracks in the walls of Statism are welcome. To seek to run the business of the whole country and its economy, production and distribution, through one managing agency at the Centre in Delhi, is as disastrous as the conception is fantastic. Yet this is what the whole thing amounts to.
The productive way of finding employment, for more and more people and every type of those able and willing to work, is to increase the units of employment in the private sector. That alone would extend the scope for absorbing labour of every variety and help the engagement of people in relative freedom for productive work, without having to add to the tax burden of the people to meet the cost of such employment. Those employed will be free and not subjected to work under conditions appertaining to government discipline.
Statism with its “information and broadcasting” machinery can easily deceive by making people believe that it serves to reduce unemployment and that in a country of vast unemployment there can be nothing so good as large public expenditure conducted under government auspices. But it is a fallacy, because such activities and the expenditure incurred thereon involve crushing taxation plus the inevitable cost of collection. It is unproductive, raised to the power of two as the mathematician would say; for it is not only unproductive, but expensive and wasteful, and adds to the tax burden. It is illusory, for it takes away more from the people by way of taxes on the poor and high prices than it gives to them by way of wages.
The jobs that Statist policies create, it is thus seen, are a wasteful and illusory method of reducing unemployment. They appear to distribute wages, but the reduction in the value of the rupee and the increased taxation and high prices which they automatically bring into being, are too heavy a price for whatever good they do. What the Fourth Plan proposes to do plus the prospective Defence expenditure bill is something that has terrified all the thinking people in India.
Sri Gulzarilal Nanda recently said at Ahmedabad that he did not believe in ‘bookish’ socialism but only in ‘true’ socialism, such as Gandhiji advocated. Such a statement coming from one of the most important members of the Cabinet is indeed noteworthy. He added, making things quite clear, that he did not like excessive controls and that controls should be reduced to the minimum, used only as the last resort. These cracks in the walls of Statism are welcome. To seek to run the business of the whole country and its economy, production and distribution, through one managing agency at the Centre in Delhi, is as disastrous as the conception is fantastic. Yet this is what the whole thing amounts to.
That socialism which the ruling party is wedded to is in the interests of the poor of the country is an untruth, be it spread deliberately or in ignorance. It is on this untruth that the Congress Party has thrived. The poor of any sort, whatever kind of national labour they belong to, cannot be helped by Statist socialism. Socialism as sought to be practised by our present Government, ‘bookish’ socialism, to use Sri Gulzarilal Nanda’s phrase, can certainly increase the number of people being employed in government offices for unproductive work, which means more taxes on the shoulders of the poorer section of the people and more levies on commodities purchased by the millions. This kind of giving with one hand and taking away with the other can never be the right way of increasing the scope of employment. There is a productive way of giving employment and there is an unproductive way, which the latter is.
The productive way of finding employment, for more and more people and every type of those able and willing to work, is to increase the units of employment in the private sector. That alone would extend the scope for absorbing labour of every variety and help the engagement of people in relative freedom for productive work, without having to add to the tax burden of the people to meet the cost of such employment. Those employed will be free and not subjected to work under conditions appertaining to government discipline.
The most obvious demonstration of the difference between government employment and industrial employment is that furnished by the enlistment of men in the Defence Services. The expansion of the defence forces is considerably easing the problem of employment, in that a very large number of people are being recruited to the army, thus reducing the pressure of unemployment. This method of reducing unemployment is the most expensive of all, for the pay and amenities for people drafted to military service should have to be on a liberal scale. And all the expense must come out of taxation with no commodity-return for it. It is no detraction of the defence forces to recognize that they constitute the most unproductive of all the expenditure a nation has to meet. Such unproductive spending is, however, necessary in the interests of the country’s defence, but from the point of view of relieving unemployment, it is unsatisfactory on account of its unproductive nature.
Statism with its “information and broadcasting” machinery can easily deceive by making people believe that it serves to reduce unemployment and that in a country of vast unemployment there can be nothing so good as large public expenditure conducted under government auspices. But it is a fallacy, because such activities and the expenditure incurred thereon involve crushing taxation plus the inevitable cost of collection. It is unproductive, raised to the power of two as the mathematician would say; for it is not only unproductive, but expensive and wasteful, and adds to the tax burden. That an increased army has become necessary as a result of Pakistan’s intransigence may be a good argument—I am not controverting it here. I am only pointing out that we should not look on increasing the defence forces as a Sound solution for unemployment. It is illusory, for it takes away more from the people by way of taxes on the poor and high prices than it gives to them by way of wages.
Let no one be beguiled by the seeming advantages of government expenditure, Additional national expenditure means additional taxation; additional expenditure without increased production in corresponding measure, lowering the value of our rupee in terms of what people want to buy with it. The Dean of the Faculty of Commerce in the University of Allahabad— who is a member of the Panel of Economists of the Planning Commission—declared the other day that the intrinsic value of our rupee was reduced from 100 paisas to 17 paisas during the past 20 years, that is, it has come down to one-sixth of its original value.
The jobs that Statist policies create, it is thus seen, are a wasteful and illusory method of reducing unemployment. They appear to distribute wages, but the reduction in the value of the rupee and the increased taxation and high prices which they automatically bring into being, are too heavy a price for whatever good they do. What the Fourth Plan proposes to do plus the prospective Defence expenditure bill is something that has terrified all the thinking people in India.
President Ayub Khan declared in a recent broadcast of his, that the only future India and Pakistan ought to visualize is for both to live as good neighbours. And as the Hindustan. Times wrote about it on August 3, this inescapable conclusion is fully shared by India’s Prime Minister. “President Ayub Khan’s broadcast will be widely welcomed,” wrote that paper, “because it furnishes an element of goodwill which is a basic ingredient in any lasting solution.”
This nation cannot go on wasting its scant resources on the luxury of an arms race, consequent on failure to make friends. This Statism and this Plan must go. And Defence policy must swerve from an unintelligent armament race to an intelligent realization of the need for a change of heart towards Pakistan, and to a sincere quest for friendship with our neighbour. It is, as General Ayub Khan has said, the only solvent future for both and for either of us, Pakistan and India.
