Swarajya, December 21, 1963
Between ourselves, honest voter, these private monopolies created by the pernicious system of permits, licences, quotas and controls (to be extended now even to foreign capital which voluntarily comes into the private sector) make the Congress Party's rich friends richer, and the poor poorer. It is a close conspiracy; we have a battle between money and liberty, between dharma and atheism, between freedom and communism clothed in Congress robes.
I wrote last week that the most powerful autocrats must pay homage to fundamental laws of nature; it is a law of nature that unless personal incentives operated on the men who have to work, it will not be done well or done steadily. Brute force and fear of authority may appear to act well enough for a time, but soon they break down. Autocrats in socialist or communist countries must learn to walk with nature and be guided by her. This principle of personal incentives, or what may be called profit-motive, may appear to conflict with public interest and call for society’s intervention. Herein comes into play the secret of right judgment which, when exercised, makes good government.
The profit-motive has by demagogic propaganda come to be looked upon as indecent. But this does not by any means alter the need of it, as in the obvious cases of physical indecencies. “No one must profit from the misfortunes of others” is a socialistic cliche. No one must be allowed to profit from the illness of others: so bring all doctors into State employment and nationalize all chemists business. This is an example of socialist reasoning. It is the same in other cases. Predicaments, disasters, misfortunes become powerful arguments for a whole way of governance that would convert freedom into slavery and the joy of life into unbroken fear and brain-washed existence. A general atmosphere is created by propaganda against all forms of ‘profit’ and honest busy men come to be looked upon as thieves and robbers indulging in unsocial and indecent activities.
Man spends his life working to keep himself out of misfortune and bad predicaments. This is man’s lot. ~ Isaavaasya Upanishad
Total national economic effort consists of the sum-up of individual concerns with the means of overcoming various relative scarcities of goods and services. Individuals seek to make their lot better and assured; statisticians make up out Of it the total national wealth. The net result to society may be important and the Individuals concern in it may be no great matter for the statistician. But the reality lies in the individual’s work and his interest in that work. Figures do not come into existence except through the work of individuals.
Therefore the fundamental problem is how do we make individual men work, that is to say, what would make them work according to the laws of nature. Socialism, because of its name, poses as most productive of results and conducive to welfare. As against this, the market economy seeks to let every one act in his own interest, depending on the laws of competition to produce the total good results. Let each person pursue his own personal gain and let us see to it that he allows the same freedom to others. The friction of competition may appear to be an avoidable waste. But it is not waste, nor is it avoidable, if we want good quality and eager application, which are at the base of production. Let the social agencies of control be limited to enforcement of regulations against fraud, violence and other unsocial destructive activities, but not intervene in the field of creative activities.
To let every person act creatively as he chooses, looks no doubt reactionary and chaotic. But freedom always looks chaotic; notwithstanding this, it is the best means of making people work. It is better than any system of control from out-side authority, which has a knack of multiplying and getting more and more complicated as the unavoidable failures of the control system disclose themselves.
West Germany has proved the correctness of market economy. The right to the lawful fruits of one’s talents and capacity for work, and the labour one has put forth, is the essence of this free system, competition being the fool-proof and fraud-proof safeguard over it on behalf of society. The hope of personal gain is the driving motor-power.
The socialist system is State-direction and State-control over all individual activities, and an organized hierarchy (which must of necessity be a political hierarchy in modern times) planning everything for every one. The few who seize political authority decree all things for the nation. It is State ownership and control of the means as well as the results of production. The name given to it is socialism, because those who swear by it believe that it is good for society as a whole. Ignorant people are deceived by the name. This system has its eye on distribution rather than on production. It has failed wherever it has been tried for production. Socialism presupposes wealth. The creation of wealth and the incentives for work, without which no wealth can be produced, are not given adequate consideration by the intellectuals attracted to socialism. They ignore nature’s laws which demand adequate and suitable incentives and assurances, which socialism denies to the producers. Honours and appreciations are enough for creative effort in arts and sciences. But the drudgery of normal production of the necessities of life demand a more ‘vulgar’ and materialistic motive. Socialism is a system based on possessing and commanding an army of workers willingly toiling under military discipline—a possibility in small dimensions, and an unrealizable and impossible dream in the dimensions attaching to a continent and a population of 400 millions. Golden eggs can be distributed by honest men but socialism cannot lay the eggs. The goose that lays them gets killed by socialism and politics does not breed honest men even for distribution.
Nationalization does not reduce costs. Experience has amply demonstrated this. We can imagine that by saving profits we can reduce costs. But the actual cost including Wastage increases when there is no room for the profit-motive. This has been seen in numberless cases by the Public Accounts Committees of Parliament. The market economy involves profits as well as losses. The hope of profits attracts enterprise and capital. Loss punishes inefficiency, error and lapse in attention, and it is the individual who suffers, not the tax-payers. Efficiency is screened by the profit and loss system and those winning through are more efficient managers of resources than persons advanced to managerial positions by politicians. Going back to the cliche quoted in the beginning, if we remove the hope of profit we shall not alleviate distress or misfortunes but only increase them.
Society’s control over individuals is through public opinion and the sense of decency prevailing in the community. The word ‘socialism’, though etymologically related to ‘society’, does not mean this kind of moral restraint put on the individual by society. Not decency, religion, or the sense of moral values, or public opinion, but laws and decrees issuing from the organs of government regulate and control all the economic activities of the citizen under socialism. Ownership and control of all the means of production are in a socialist State vested in the State. This system is really Statism, not socialism. Control by society through public opinion and education, and the sense of decency developed thereby, would be what Gandhiji advocated and called the doctrine of trusteeship. The socialism, which is the creed of the present Government of India, however, is pure Statism. The control of the State necessarily takes the shape of mandates of the political majority group, enforced through an official hierarchy appointed and controlled by that group. The operations of restraint on individual freedom, therefore, soon become tainted with corruption and oppression in the interests of the party in power as well as the personal interests of those favoured by that party. Freedom disappears and is replaced by private and party monopolies. Society’s interests suffer as a result instead of benefiting by the intervention. The sense of freedom would be kept intact if the restraints and sacrifices came from one’s own good sense dictated by public opinion and encouraged by the State as well as society by appreciation and honours; whereas it is replaced by a sense of tyranny and enslavement when political parties and their leaders impose restraints by law and through legal enforcement.
