National Income Distribution

Under the permit-licence-quota system money, unlike water, flows upwards. That disparity of wealth has been aggravated by the permit-licence-quota regime must be obvious to every one who is able to look at truth without party bias. But we are living in a ‘scientific’ age and therefore do not trust our eyes but demand other proof. The Committee on National Income Distribution led by Prof. Mahalanobis has given judgment. “The concentration (implying disparity) of wealth in the country has increased substantially during the last ten years,” says this Committee according to the Hindu’s staff reporter from Calcutta. The Committee, we are told, deplores that it does not have enough data either to prove or disprove the “‘general impression” that the poorer classes are faring much worse now. The Committee admits that there has been no appreciable increase in the consumption expenditure of the people, although the huge ‘social expenditure’ of the Government creates an illusion of a rise in the standard of living. The continuing low level of consumption of food and cloth has been often pointed out by Prof. Shenoy in the pages of this journal. We are told by the Committee that statistics will have to be organized in a more systematic manner than at present, besides being made more comprehensive than now, and that otherwise no useful or reliable conclusions can be drawn from them. Of course we can expand departments and spend a lot of money to prove what we know, or ought to know, without such expansion of research.

     Socialist governments can act only in one of two ways: either through the State’s bureaucratic machine or through licensees. The former means inefficiency; and the latter means money flowing upward, increasing instead of decreasing disparity.

     “Efficiency is hard for a government bureaucracy to attain and there are not ‘all that many’ competent bureaucratic managers,” says Mr. W. W. Rostow, Chairman of the US Policy Planning Council, in a recent series of articles on the subject of Economic Development. The lesson of history, he explains, is that the interests of an advancing society are best served when industry and agriculture are managed by individuals or associated individuals forced by competition to maximum efficiency, and their accounts reflect true costs, as government accounts do not, and their output responsive to the exacting tastes of the people which, again, no bureaucratic machinery will ever take trouble about.

     Mr. Rostow quotes the experience of the Soviet Union and the countries of Eastern Europe. Their difficulties became worse and worse as they attempted to manage things by central State ownership and control. “The disciplines of competition, of honest prices and rates of interest and of the consumer’s right of choice are beginning to be recognized there as missing and their technical literature discusses this gap.” Soviet as well as Chinese collectivized agriculture has achieved notoriety in gross inefficiency. Khrushchov often talks now of giving increased ‘material incentives’ which is the communist phrase for recognizing the inevitable profit-motive in human endeavour. He has been stressing this for some time past and has reiterated it even in his latest address on the agricultural situation in USSR.

     National programming is required for development. But central planning is quite a different matter. Programming deals with defining and laying down broad lines of progress and undertaking the necessary overhead social projects like highways, railroads, etc. But central planning as adopted in India leads to the devastating system of licences and permits and quotas for everything, and to the daily procession of favour-seekers and the arrogant reaction of men in the bureaucratic machine, which is the necessary quid pro quo for favours sought. There is much and more than enough for the Government to do, even if the competitive system of production and distribution is fully restored and the permit-licence-raj abolished. And we may congratulate ourselves if we achieve adequate efficiency in the field that naturally belongs to Government, without expanding it to kill private initiative and competitive activities.

     The old truth has not been rebutted by either argument or experience, that the individual and his motives (including patriotism but not to the exclusion of other urges) is the only real and continuous source of energy and that the State is only a co-operative adventure, which has its limitations of capacity since it has to work through a bureaucratic hierarchy. A partnership may work well and a joint stock concern, too, can work fairly well through a managing agency but never so well as an individual proprietor or a partnership firm. There is a natural law that limits interest and efficiency as the number of people concerned increases and the concern has necessarily to work through delegated authority.

     Only the individual and his motives sum up to national activity, not the concept called the State which is a computer and does not have the brain and brawn which only the individuals forming the nation have. And so, if the urges and pulls that move the individual are ignored, the government goes down the inclined plane of error; statistical committees and ‘comprehensive’ surveys will not help, as the motion downward gets accelerated by falling standards of morality.