Sanjeev Sabhlok's blog

Thoughts on economics and liberty

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Where I differ – and quite strongly – from Rajaji

I’ve by now had a good look at Rajaji’s writings. There is much to admire about him.

He has no doubt about socialism being a bad idea. He repeatedly shows how socialism and communism will achieve the same – bad, violent, coercive – outcome. He is prolific in his critique of socialism. To that extent I’m with him.

BUT he was not an economist and didn’t know about the price system and the benefit of trade. And so he did end up with a number of policy errors. E.g.

a) Trusteeship

I agree that trusteeship is a kind of capitalism – but it is based on wishy-washy subjective ideas of “dharma” which no one can explain. That’s not a good basis for policy making

b) Reservations of some textiles for handloom industry

He wrote an essay on handlooms in which he advocated that the textile industry be stopped from manufacturing a few things that handloom industry specialises in. That’s a terrible policy, and prevents the evolution of markets to the more productive forms of production. He wanted production but since he didn’t understand markets, he thought that allowing textile mills to produce sarees would harm the handloom producer. Wrong. Since a handloom producer is not a museum piece, a handloom producer in perpetuity. He and his children will get educated and move up the value chain.

c) Social justice

He allowed the socialists to dictate key terms like “social justice” which is a meaningless pile of rubbish.

d) Capitalism 

Whenever he wrote about capitalism it was with a negative connotation, in opposition of his “good” idea of trusteeship. But that’s simply because he didn’t understand economics.


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Lost its anchor: Rajaji’s April 1959 essay in which he lays out his theory of the individual


CONSERVATION is the first law of progress. It change for change’s sake is to be condemned, why should people be shy about calling themselves conservative ? To conserve is to look after what is good and not to let thoughtless ruin overtake what is essential and good, in a hunt after will-o’-the-wisps.

Britain is not ashamed of being ruled by the Conservatives who openly call themselves by that name. The Labour Party which was for some time called socialist has not attracted all the votes of the poor in Britain. The party now prefers to call itself Labour rather than socialist. I wonder if even in the next election, the socialists of Britain would score over the Conservatives. The poor seem to have greater faith in the latter’s good sense than in that of the Labour leaders.

… the prevalent high-flown rhetoric which has spread everywhere —phrases such as the dawn of the future’, the building of a new world ‘. The first time you heal such talk you think what breadth of imagination, what richness ! ‘ But in fact it’s so pompous just because it is so unimaginative and second-rate.
—From Dr. Zhivago

What the people want is not futile attempts at egalitarianism, but happiness. Freedom and welfare are what they want and what their honest souls hunger for. These cannot be got by cloud formations of vaporous thought. Egalitarianism is the last thing that will bring welfare in a poor country. Freedom is the first and surest casualty in the socialist pattern. Socialism will not bring welfare but result in an all-embracing bureaucracy. Welfare is the last thing to be secured under bureaucracy. What we shall get is waste of resources and the rise into power of a new class or tyrants whose daily function would be the daily interference in private life under various pretexts. Fear will be the air we breathe. If we desire Freedom, Swatantra, and not tyranny, if we desire human personality not to be strangled by over-government, if we desire the general welfare of the poor to be uplifted and looked after, we must have a conservative party whose function will be to restrain and guide the ruling party, if not to replace it. The ruling party has lost its anchor and in its nervous fear of the communists, itself offers to become communist.

The nation and its welfare are like the total crop of a country, its quality and measure. The total is in both cases just an arithmetical idea. The individual seeds must germinate, receive water and sunlight, and grow. So also the individuals among the people of a country must be good, active and grow in freedom so that the total of the individuals, the nation, may turn out to be good, active and progressive. We can make flour out of corn ; but if we grind the corn into flour, and sow it, no amount of watering or manuring or sunlight can make it grow. Grinding the individuals down into a common mass would result in just the same total sterility. This is a universal law. The whole cannot be better than its parts. The parts must live so that the aggregate may be a worthy whole with life throbbing in it. Take care of the seed and the crop will take care of itself. It would be foolish to seek to raise a great ready-made crop of corn-flour. The patriot therefore watches himself, guards his freedom and his life. It is in the individual that the nation lives and grows, not in statistics or government literature wherein figures are collected and exhibited.

April 11, 1959

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