Thoughts on economics and liberty

Rajaji’s interpretation of classical liberalism

Rajaji and I promote slightly different versions of classical liberalism. The difference is small and subtle. He actually thinks that there is a spiritual harmony that should underpin society, and that such harmony can arise from the Vedanta. I disagree that the idea of spiritual harmony in society is necessary in order for it to work harmoniously. In my view the idea of spiritualism must be kept entirely separate from public policy. It can well form part of one's public life. One can talk about one's faith (or lack of it). But its influence on policy must be entirely avoided.

This extract from Rajaji's book, Hinduism: Doctrine and Way of Life (1959) illustrates this difference in approach.

Now, let me also add that most classical liberal philosophers did hold to a faith in God (of some sort, whether dualistic or non-dualistic). And so, having a faith is not incompatible with classical liberalism. But I would caution us from trying to inject our faith into government policy. That's a point which most classical liberals understand well enough, so it is not generally a problem. FTI's religious freedom policy is an excellent articulation of the classical liberal approach.

Now for Rajaji's views:

(I've broken up his excessively long paragraphs into palatable chunks)

What is felt, however, by large sections is that while regulation is necessary, the economy re­sulting from it should be so designed as not completely to stifle individual liberty and indi­vidual initiative and kill the sense of joy which issues out of the exercise of that liberty and in­itiative. Some have no hope of this reconcili­ation and deny its possibility. But others stoutly maintain that it is quite possible and that there is an economy that can combine the necessary over-all regulation with the basic freedom of the individual.

There is, however, so much joy in individual initiative that it is worth while to make an attempt to find a solution which will preserve it, if not wholly, at least in great parts while imposing regulation in the interest of the community. It is never good to give up the battle for freedom as lost.
 
Whichever view may ultimately turn out to be true, one thing is cer­tain, that the pain of a regulated economy is due to the fact that regulation comes from outside, imposed by an external authority. Not only does this compulsion by external authority create pain, but it prejudicially affects the working efficiency of regulation itself.
 
Judged, therefore, from every point of view, an ordered economy as distinguished from laissez-faire calls for the general acceptance of a code of values and a culture that can operate as a law from within and supplement whatever external regu­lation it may be necessary or feasible to impose. [Note: I do not believe that this code requires "spiritual values" but values, nevertheless. Sanjeev]

Such a code of spiritual values [!!!. Sanjeev] and such a cul­ture will help in the preservation of a sense of individual liberty and initiative in the midst of complicated State regulations, to keep which sense alive is the aim of those who seek to re­concile the new order with old liberty.
 
Even those who look upon this liberty as an outmod­ed illusion and plump unconditionally for regu­lation must agree that a law operating from within is more efficient than one externally imposed, and also less liable to evasion. The baser elements of society try to exploit regula­tion and make of it an opportunity for illegal gain either of power or wealth. [This is precisely what has happened in socialist India. Sanjeev] One of the most difficult practical problems in regulated economy is how to meet this evil. A well accepted ethic and culture is the only solution.
 

The question, then, is whether there is any ground for hoping that we can devise and make people accept a culture or an ethic that can ef­fectively operate in this manner. Can we devise and promote a religious faith that will assist large-scale regulation of the life of the individual for the benefit of the community? It may be admitted at once that it is not an easy task, even if it be assumed as possible of achievement, now to found a new religion to serve a particular secular purpose. But Vedanta, for which the writer claims the virtue of ap­propriateness to the new economy, is not a new religion. It figures in the most ancient calendar of faiths, and it is the living faith which guides the lives of three hundred millions of men and women. The common folk living in the greater part of Asia profess religions and moral ideas very closely related in origin to the religion and the moral ideas of India. Although the West has for long accepted Chris­tianity, the faiths that inspired the litera­ture and philosophies of Greece and Rome were faiths that in a large measure absorb­ed and assimilated Vedantic currents from India. An exposition of the basic principles of Vedanta may, in addition to giving adequate information to those who are interested in the religions of the world, secure some attention from important persons concerned in reorder­ing the world in secular matters.

[Note: I do not believe that the Vedanta is necessary for a society to hold on to basic values. A well balanced regulatory regime will increase already existing incentives for values. I hark back to Adam Smith's work, as well as basic repeated game theory for this insight. Sanjeev]

Addendum

Here's an interesting set of books on Rajaji (from Chandra's blog)

 

I meet Rajaji by Monica Felton: This is a great book to know about Rajaji's strong convictions and ethics of life and liberty. This book is also not any usual format which you might think and ignore it. This book contains the conversation about his life and works until he formed the new political party with like minded people.
 
 
 
The Question of English by C.Rajagopalachari
 
Satyam Eva Jayate (Vol I) by C.Rajagopalachari
 

 

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