Thoughts on economics and liberty

The myth of appropriate technology

Today a friend sent me this: http://www.tinytechindia.com/engineer.htm. Have a read. In brief it says: 

"Present industrial progress is associated with exploitation, disparity, unemployment, poverty, centralization, urbanization, pollution, displacement of innocent poor people and wars. .. 

"Every type of greed has no end. .. not only small is beautiful and small is possible, but also small is inevitable in every industrial field… Various giant evils seen in the present society are associated with giant industries. IF INDUSTRIES ARE DECENTRALIZED TO TINY SCALE, MAGNITUDE OF THE EVILS ALSO WILL BE REDUCED TO TINY SCALE. …  tiny cottage industries are naturally the most viable units and they can successfully compete giant industries."

These arguments are based on Schumacher's Small is Beautiful. Now, before I go further let me digress a bit and admit that in Phase 2 of the two year training at the Academy (LBSNAA – its website seems to be down so I've referred its Fecebook page) in 1984, my initial philosophical views, strongly influenced by liberals like Ayn Rand and Voltaire, were considerably  weakened by the environment I found there. As a result, in an extensive research essay penned for the LBSNAA and submitted to the outstanding bureaucrat Gokul Patnaik, I compared Schumacher with Ayn Rand's Capitalism: the Unknown Ideal – and concluded that Small is Beautiful provides a better solution to the world's problems than Ayn Rand does!

Such was the atmosphere at the Academy that if you were an economics illiterate and a science specialist (as I was), then the tenor of conversations at the Academy, including a heavy dose of Bunker and Aruna Roy soon made you a semi-socialist! This tenor, of soft socialism and utter mental confusion, pervades the civil services in India even today, despite most senior officers having been sent for advanced education to the world's top universities, and many of them having studied economics as part of this education (Of course, merely studying economics doesn't clarify the fundamentals of freedom, either! At least half the economists of the world are totally confused about fundamentals).

Thus, each time I have proposed reforms to a few senior bureaucrats over the past 11 years,  I sense how their socialist (or rather, confused) frameworks prevent them from taking these ideas further.

In the meanwhile Gokul Patnaik (who didn't quite support this socialist mindset) left the IAS and made an excellent career for himself in the private sector. I believe he is a person of calibre enough to be India's Prime Minister and should urgently consider joining the Freedom Team! Others who had become clearer in their minds about India's problems, like Atindra Sen, left the civil services as well (he now works as Director General at Bombay Chamber of Comerce), thus increasing the average density of socialists in the civil services of India!

While a lot of good friends from the civil services have by now shifted their mindset quite a bit, they still remain deeply confused. They will need to INTERNALISE the concept of freedom in order to "de-confuse" themselves! But that, somehow, may be too late for some of them. I even doubt whether Hayek is available at LBSNAA, or my own book, BFN, for that matter. Till today, the civil services remains sheltered from good sense. 

This was not so at one time. Malthus (yes, the famous Malthus) was one of the first economics professors of the Academy. He joined when it moved from Fort William College in Madras (started in 1800) to Haileybury College in England in 1805 and worked for 29 years till his death. Adam Smith's work was one of the foremost economics texts taught to India's civil servants at that time. But by 1982-84 when I learnt there, Adam Smith was no longer popular.

By 1994 – when I taught at the Academy for a few months – some of these old ideas were returning, but I had not really specialised in economics and needed to learn a lot more so I went off for a PhD and never returned. I do hope that my work will be used to teach the young civil servants. That would be really nice: to teach once again, while sitting here in Melbourne. 

Anyway, back to the main topic. Many years ago I wrote the foundational piece that forms the basis for the appendix on appropriate technology in BFN. This material was first published in The Boss in Nepal many years ago, but now sits in isolation in the Online Notes. It shows why the arguments of Small is Beautiful are deeply flawed.

Appropriate Technology

Technology is, by definition, labour-saving. By enabling us to do many more things in the time available to us, technology—embodied in the latest discoveries and inventions, in the latest machines and software, and in the latest management tools—multiplies our labour, improves the quality of our life, and increases our life span by helping us to fight disease and ill-health. Its direct economic effect is usually seen through lower costs and a greater opportunity set for all of us. For instance, in the USA it costs twenty times less in real terms to produce a bushel of wheat today than its cost 150 years ago. According to Ayn Rand, machines are the frozen form of human intelligence.

“The machine, the frozen form of a living intelligence, is the power that expands the potential of your life by raising the productivity of your time.” “When you work in a modern factory, you are paid, not only for your labour, but for all the productive genius which has made that factory possible” 

This does not necessarily imply that the use of the latest technology is ‘optimal’ for each situation. Factors such as costs, and convenience (or benefits), will always come into play. As discussed in chapter 6, appropriate technology is usually one of the following two things:

a) technology that upgrades tools used by farmers or manual workers; or 

b) technology that is deliberately dumbed down to make it labour-intensive.

1. Technology that upgrades tools used by farmers or manual workers

This can be thought of a form of innovation. In the case of private citizen efforts in this direction, namely, to upgrade an existing technology by a notch, we can say that the most labour-saving technology chosen by self-interested individuals facing a limited budget is optimal, and hence appropriate. If technology of all vintages is freely available in the marketplace, then all individual decisions made in the marketplace of technology are optimal and thus appropriate, making the term appropriate technology tautological, trivially representing free choice. The key is that so long as a government does not spend our money in its invention or promotion, we have nothing to fear. Unfortunately, this is not the case in India where significant tax payer funds have been spent in the fruitless search for such innovation. I will talk of my experiences with the modified handloom some other day, about how this utterly useless invention destroyed significant public money under my charge as Project Director of the District Rural Development Agency in Dhubri. 

2. Technology that is deliberately dumbed down to make it labour-intensive

We should be deeply concerned about this version of appropriate technology. In particular, deliberate effort to not use good technology is a sure way to destroy the country’s wealth. It could be argued that for subsidy-based poverty alleviation programmes, or for public goods such as roads, the choice of appropriate technology may not be self-evident. If an Indian bureaucrat has to choose between hand-made road (labour-intensive) and machine-made road, which one should he choose? And in what sense is a bureaucrat ‘free to choose’? Some observations, first.

First, as in the case of private goods, factors such as costs and benefits will enter the picture. In this instance, a simple cost-benefit analysis would show that a road built with high-quality machines is built quicker, as well as being more durable, thus needing fewer repairs. A higher quality of road can also permits larger trucks to ply and enable traffic to move faster and safely, thus providing significant gains to the society. The higher level of initial investment will be recovered by the tax payer quickly through the sum of these direct and indirect benefits. 

Over and above the obvious calculus of costs, important factors such as human dignity and worker safety must be taken into account. Using manual labour for tasks such as collection of garbage in cities without proper equipment, cleaning public drains, breaking large stones into gravel, and carrying bricks up bamboo scaffolds is inherently unsafe. Considerations of safety would also favour the machine-made road. Since socialist over-population has made unskilled labour cheap in India, we don’t treat such labourers as citizens deserving due regard. Casual workers hired afresh each day by government contractors are treated little better than slaves. Little heed is paid to their safety and little is heard of the injuries, disease, and subsequent lay-offs due to the negligence of government contractors, Only when tens of them are crushed to death to we open our eyes, but then quickly move on. We must also put an end to our rituals which sacrifice the lives of thousands of poor citizens at the altar of our Temples of Low Standards.

Machines demand—indeed, compel—the development of skills both to handle the machines and to build cheaper and better local versions in India. Vocational education can only make sense if the government—the major supplier of infrastructure—insists that its contractors should always employ trained technicians fully empowered with the best tools in the world. If all we want is socialist, hand-made, roads, why do we operate vocational training institutions in the first place?  

      Societies that set incentives for the early adoption of the best technology—even if it may appear to be more expensive initially—enjoy the greatest innovation and hence the fastest growth in wealth, since technology forces the entire society to become intellectually shaper and competitive. Unskilled people are motivated to upgrade their skills and knowledge quickly. Competitive societies overtake, even overwhelm, others in the export markets since they have learnt to create lower costs and better product quality. 

These observations tell us that governments must use the best possible technology in its projects. Japan did not become a great competitor to the West on the foundation of khadi and pot-holed roads. This would be, in the end, a cultural shift for India—a signal that quality is valued in society more than quantity. 

Under the reformed model suggested in this book, when any bureaucrat faces local political pressures to provide jobs through hand-made roads, the bureaucrat would be able to split the problem into two: (a) the problem of transportation and (b) the problem of poverty. For the first of these, factors such as cost-benefit, human dignity, safety and standardisation of quality should be considered. For the second, the solutions must necessarily be redistributive—in particular, the negative income tax. Combining these two objectives into a muddle-headed policy will lead neither to wealth generation nor the elimination of poverty. A society must produce the most it can, through the application of the best, or optimal, technology, and then redistribute whatever it wishes to, using a one-off consideration of poverty. 

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7 thoughts on “The myth of appropriate technology
  1. Sanjeev Sabhlok

    I accidentally chanced upon my last comments on the above post. Clearly I have moved (or rather, clarified) my position on 'redistribution' quite a bit over the past 3 years since BFN was finished. In DOF I'll provide a much better and more satisfying argument re: social insurance, dispensing with phrases such as 'redistribution'. 

    Just shows how one keeps evolving: one's ideas keep getting refined. 

     
  2. Sanjeev Sabhlok

    Milind Kotwal's comment on Facebook: 

    Dear Sanjeev,

    This is a interesting issue and needs very careful thought .. 

    My views:

    Technology and economy are complimentary, thus technologies that are not supported by economy are discared, few examples:

    1. Lorry baker's cheap and environmentally friendly construction technology could not be adopted 

    2. Magarapatta model for urban development involving participation of local land owners could not be effectively replicated elsewhere, 

    3. Town planning concepts eventhough well established are not practiced in India 

    4. Indian organizations can not be research oriented as market here accepts even discarded but cheap technologies.

    5. Cooperative movement of maharashtra lost steam

    Eventhough all above initiatives are great for society, does not make provide incentive to private enterprize and or state controlled economy or to liberallized economy as we understand it !!!

    Another point : Biggest blunder every government is doing is that they are looking at Industry for employment generation .. instead we should look at it as mechanism to meet needs .. this change in approach is must..

    In current scenario system for substantial Unemployment Support payment program needs to be established..

    I do not want to tag any thing as "Socialist" or "Free" .. I want to look at the things as they are ..

     
  3. Sanjeev Sabhlok

    Thanks, Milind

    My point is essentially very simple. The government has NO ROLE in industry policy or technology (including in higher education). All its role is, is to establish the frameworks of infrastructure and the rule of law, and to the step away and let the people do what they will. There can be no reservations for any category (small scale, village scale), no promotions and subsidies, no "making industry a mechanism to meet needs". Nothing. Stay OUT of industry and technology. The industry departments in ALL state and central governments should essentially be phased out, and restructured to focus on industrial infrastructure and facilitation. May I also refer you to the following book review of mine: http://sabhlokcity.com/2009/06/304/. Do read the book when you get a chance. 

    Btw, just because you don't "tag" things as socialist or capitalist (free) doesn't mean these things don't exist. What you are advocating, for instance, is a democratic socialist view (you want an active industry policy where the government treats industry as a means to an end, unemployment  payments, etc.). That is the way people's preferences and views about society are classified in the political science literature. These words are like saying this is a cat or that is a dog. If you  deny that the term socialism has meaningful content, you are most welcome to your views! The ENTIRE world, however, is very clear about what these terms mean, and the MILLIONS of books and articles on political science will not shift just because you say that these terms have no content. I commend you to some standard political science books. Consider Isaiah Berlin, FA Hayek, M.Friedman, etc.

    Regards

    Sanjeev

     
  4. Milind Kotwal

    I think government has to provide leadership to people and society. And leadership is all about vision and guidance..

     
  5. Sanjeev Sabhlok

    As Lao Tse said: "A leader is best when people barely know he exists, not so good when people obey and acclaim him, worse when they despise him….But of a good leader who talks little when his work is done, his aim fulfilled, they will say, "We did it ourselves."

    I am suggesting that the bureaucrat and politician has NO WAY TO KNOW MORE THAN EACH OF US. They should leave us free to work out solutions for ourselves. That is a leadership FAR GREATER than the leadership of telling others what to do. The government can't even guide for it does not know. And cannot know.

    We elect a government to provide justice and infrastructure, and guidance is not one of the things we expect from it. That is the meaning of freedom. Please try to see that point. Please explore this further through my book/s writings/ and those of others like Hayek. Read "The Fatal Conceit" by Hayek – at the minimum. A brilliant book. 

     
  6. Milind Kotwal

    Government is the entity that has power to decide what kind of infrastructure needs to be built, what type of systems needs to be established hence the people who govern must know the direction …
    What you are suggesting if replicated in a private enterprize it shall mean the Management should provide machines, equipment, and leave all business to people in the organization; such organizations will perish quickly.. Organizations need leaders with vision and drive to pursue the vision..
    Also I wanted to communicate a very important argument against your kind of free entrerprize.. Every action has its costs associated with it; some costs are paid by the the person who takes the action but there are many costs borne by the society. In case of an industry producing goods and also polluting environment only material and processing costs are paid by the owner and he is free to benefit from it.. howebver the society bears heavy costs.. Had government not been there to regulate, the industrialists would have destroyed the earth by now.. 
    It is a well known fact in absense of government regulations free enterprize will be a disaster and to enforce regulation in face of strong industrial lobbys it requires committment to society and strong will.. That is what I mean by leadership
    On the point of leadership I think our views are exact opposite and frankly I do not think I will be changing my direction.. so I think let us agree to disagree on the question of leadership..!!!
     

     
  7. Sanjeev Sabhlok

    Milind, I'm afraid you misrepresent my position by even suggesting that I have claimed "absense of government regulations" is desirable. I work in regulatory policy and can reasonably claim to be an expert in economics and regulatory policy (by qualification, experience and philosophy). I know exactly what good regulation means and what it should do. I do not advocate laissez faire. Please be clear on that.

    Second, I never said a government shouldn't provide infrastructure, either. I never said any of what you are implying.

    You need to read what I'm saying a bit more carefully. Please do read BFN at least once before we talk any further, particularly chapter 2. Also read Chapter 4 of DOF (discovery.freedomteam.in/). Much appreciated. I do not propose to engage in any further conversation unless you confirm you have read these two citations.

    Regards

    Sanjeev 

     

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