Thoughts on economics and liberty

Comments on Chitra Sudarshan’s review of my book

I welcome reviews of my book, Breaking Free of Nehru, whether positive or negative. Indeed, I look forward to useful information that I may take up for further investigation. Unfortunately, this particular review (here), despite being sympathetic to my work in many ways, has technical flaws that have meant my work has been misrepresented quite significantly! For a classical liberal to be depicted as an unthinking libertarian can lead the liberal to serious heartburn!

I appreciate that a reviewer's job is very hard and thankless, and it is not hard to get away from one's preconceptions about terms like 'capitalism' and 'free markets'. So while I thank Chitra Sudharshan for her review, could I suggest she consider reading the book once again, with a mind that is open to reading carefully and understanding what I'm trying to say? The points below may help in Ms. Sudarshan forming the correct impressions about the contents of the book, should she read the book again.

"Sabhlok equates ‘freedom’ with capitalism, believes that Adam Smith had all the right answers, and that laissez faire is not only economically sound, but morally superior. … And he is not quite happy with the steps taken in the last 18 years – he believes India has far to go in the free market path yet. …Sabhlok’s holding up of the US, the UK and Australia as perfect capitalist examples for India to follow is naive at best."

My comments:
While Ms. Sudarshan has got the broad idea correctly, the way it is represented shows she has clearly failed to appreciate that I'm not advocating a 'free market' in the sense of freedom to cheat or harm others, but in the sense of the freedom to be moral. It is thus the freedom to be good that I'm advocating.

What could possibly be wrong with the demand for freedom subject to accountability and integrity? I'm calling for a free market with good regulation so that accountabilities are enforced. This is what I have actually written: "We can define markets that are minimally regulated in the manner discussed above, as ‘free markets’." The discussions preceding this comment talk (at huge length!) about the need to ensure accountability and prevent cheating, harm to health and safety, environmental damage, and so on. Indeed, I've discussed at quite some length the ethical failures found in the market and what needs to be done to reduce them.

I've also got major sections in Chapter 2 and in the last chapter (through the Online Notes) outlining good regulation and the kinds of processes we need to consider before framing regulations. We need good regulation, not absence of regulation! No unregulated market do I advocate!! Unfortunately, all this finesse, the complexity of argument, the detail, has been lost while simplifying my message to make me sound like an extremist.

Hayek had this great problem as well. Even after his death people (including the Australian Prime Minister Rudd) constantly misrepresent him – poor man. No one reads him. Even if they read him they don't really read him. Virtually the first thing he said in his book, The Road to Serfdom was, 'Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez faire.' I'm not a wooden 'liberal'. I have not only cited Hayek in terms of why the market is to be preferred for its price system and allocative efficiency, but I've extensively outlined why good regulation is needed.

I feel that Ms. Sudarshan has 'read' my book, but not really read it. How could she miss out tens if not hundreds of signals about good regulation and accountability strewn across the book? For instance she has completely ignored the concept of accountability that I have discussed at length in the Appendix. I have insisted repeatedly that there is no freedom without accountability. That is my fundamental claim, made repeatedly and persistently. But that was perhaps not made sufficiently persistently!! for Ms. Sudarshan has completely misread the message of the book.

More details on this concept of freedom are provided in my second (sister) book (currently manuscript) The Discovery of Freedom. I hope Ms. Sudarshan will read that some day to understand what I'm trying to say.

Re: comparison with US, Australia etc., I've not suggested they are perfect! Far from it. I've had this to say: "most of ‘my’ ideas are road tested, many of them being things I have seen and experienced first-hand as practical working solutions to the problems of governance in the USA and Australia. Some of my ideas, of course, go well beyond the levels of freedom experienced by citizens of these countries; for I assure you that even these countries could do with more freedom." There are many freedoms that are unnecessarily blocked in the West.

But this book is not about the many defects of Western nations. I have (briefly, again) touched upon their defects in my second book, The Discovery of Freedom, currently a draft manuscript. I have said they are NOT role models, but they have got many things right. I have plenty of thoughts about what needs to be improved in the West (and part of my job in Australia involves helping to make such improvements).

But my point in this particular book is that the differences in ethical behaviour between the West and India are so vast (On a scale of 1 to 100 on corruption, India is at 99 compared with, say, Australia, at 1) that we will be better off in India by not wasting time thinking of improvements to be made by the West, and focus on getting our own house in order.

India is a moral midget compared to the moral giant – the West (on average! I don't claim that everyone in the West is a saint, or even that sainthood is a requirement for a moral society. Please do read me carefully!). So we should not worry about why the Western giant is not even taller, and focus, instead, on our improving own tiny height – a height in comparison where we cannot even rise above the soles of the feet of a fly stuck in garbage? The total corruption found in India is a shame to humanity. I've called for hanging our heads in shame.

"Sabhlok does not seem to be aware of studies that show otherwise: that land ceiling laws can actually facilitate industrial development and growth as they did in Japan and Taiwan. This is just one instance of how misplaced his criticisms are of certain progressive steps that the Indian government took in the early years"

My comment
Of course I'm aware of a range of research in this area! But the research is highly mixed in its findings. Some research shows minor benefits to the poor; other research shows significant harm to farm productivity. The examples of Japan and Taiwan are not comparable since in India land ceiling was not even 'properly' implemented except in communist Bengal and Kerala – and we know how little any of these reforms have helped these two states in any way. They are among the worst performers in India – which is not to say that India performs better than them in any significant way!

But the main point that Ms. Sudarshan has clearly missed that this book is not about economic 'benefit'! This is a moral book, not an economic book. The debate I'm having in this book is a MORAL DEBATE – not an 'efficiency' debate. I'm talking ethics, not economics.

The point in relation to 'land reforms' is this: Of course if we steal someone's property and give it away to someone else, that someone else will 'benefit'. But the much DEEPER question is the moral one: is theft a moral option for anyone in a free society?

I couldn't care the least if India became rich at the expense of its ethical foundations.

That is my main message. We want an ethical country first. Then comes wealth. Not the other way around.

Sanjeev. 8 April 2009

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One thought on “Comments on Chitra Sudarshan’s review of my book
  1. Chandra

    Sanjeev,The response to review is well written perhaps I agree with that. I am very much admirer of F A Hayek ideas. So I wanted to point out a similar to what you have expressed .even after his death people (including the Australian Prime Minister Rudd) constantly misrepresent him – poor man. No one reads him. Even if they read him they don’t really read him.It is not surprise to me when Australian Prime Minister misrepresent because even the well known economists with subject knowledge misrepresented Hayek ideas. As you may be aware that I am talking about economists like Milton Friedman, Murray Rothbard etc!Of course there are Indian versions of misinterpretation about Hayek ideas in the ugly EPW!RegardsChandra

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