Thoughts on economics and liberty

Masani’s 1944 essay “Reconsidering Socialism” was still a deeply socialist document

This chapter from this book by SV Raju on Masani is illuminating. Ive provided some annotations in blue.


There were two reasons for Masani moving away from socialismhis disenchantment with the ‘Left’ in general and Marxism in particular. The second was the influence of Gandhiji, which we discussed, in the previous chapter.

A London School of Economics brand of socialist of the British Labour Party kind, Masani had the opportunity to see for himself the early beginnings of socialism of the Marxist-Leninist variety when it was just ten years old (the Bolshevik revolution of October 1917. His first visit to the Soviet Union was in 1927). Ten years later during a second visit to the Soviet Union in 1937 he had the opportunity, once again, to observe it at close quarters. The first visit was as a student. The second as a socialist politician and a participant in India’s freedom struggle.

The seeds of Masani’s disenchantment with the ideologies of the ‘Left’, particularly Marxism-Leninism or communism as it is better known, were laid after his second visit to the Soviet Union. In Soviet Sidelights, the little book he wrote and published after this visit, while being all praise for the Soviet Union, he also raised some doubts, which indicated his discomfort with some developments not compatible with socialist thought. But he swept these under the carpet as did so many others like Bertrand Russell and Arthur Koestler who too were ardent admirers of the ‘Soviet experiment’ only to be sadly disillusioned but who resisted accepting the truth for a number of years. Perhaps what triggered Masani’s public expression of these doubts and led to his disillusionment was the behaviour of communism’s votaries in Indiathe Communist Party of India (CPI).

His disillusionment with Soviet communism led him to question Marxist dogma and to a rethinking of his socialist beliefs. The result was a seminal essay entitled Socialism Reconsidered, which he wrote in March 1944, nearly five years after he had quit the CSP. The essay questioned some assumptions of Marxism. In his preface to the first edition he wrote: “The purpose of this essay is primarily to encourage among socialists in India a re-examination of methods and a re-definition of objectives… It is possible that the doubts I have raised will disturb and irritate some of my friends, who will feel I am guilty of heresy. To them my plea is that it is the facts that are disturbing and that those who want to see justice done in the social and economic spheres cannot afford the luxury of closing their eyes or shutting their mouths…

Indeed many of his socialist friends did not forgive Masani for his ‘heresy’. In fact, as he noted wryly in his memoirs, an article reviewing his essay in the Socialist Party’s organ Janata, was entitled ‘The Fallen Angel of Socialism’.

Though some like Jayaprakash Narayan, Achyut Patwardhan, Kamlashankar Pandya, Yusuf Meherally and Asoka Mehta remained friends, other, more dogmatic comrades in the CSP treated him with some amount of disdain. So close was his relationship with Yusuf Meherally that when Masani decided to resign the primary membership of the CSP, the former, even while disagreeing with Masani’s decision, actually helped him draft his letter of resignation!

On the other hand, Rajaji, a critic of Masani’s socialist views during the days of the freedom struggle, wrote to him: “Your pretty little book is as full of truth as it is handsomely got up.” Rajaji had not changed his basic positions in economics and his general approach to men and matters. Masani had moved closer to accept many of the beliefs held by his father, Rustom Masani and moved away from Jawaharlal Nehru. This was to cost Masani dear in terms of the fishes and loaves of office in free India three years later, in 1947 after India attained independence.

Socialism Reconsidered marked a turning point in his public life. It was not an overnight development but began as far back as 1934 when he spent 10 days with Gandhiji in Orissa and after his second visit to the Soviet Union in 1937. His suspicions about the Soviet Union were further strengthened with his experience of having to work with the communists and deal with their ideological gyrations and tactics.

Masani was not an emotional person. He rarely allowed his heart to rule his head. I say this with conviction based on a relationship that lasted nearly four decades. It was this quality that repeatedly came to the fore when he felt a change in the direction of his thinking was called for.

“There are at least four assumptions of Marxismthere may be morewhich I believe need to be reconsidered” wrote Masani in his essay:

The first of these is that the abolition of private property and its nationalisation will automatically bring in economic democracy and a classless society. It has now been shown in Russia that it need do nothing of the sort. The second Marxist assumption that needs reviewing is that the Dictatorship of the Proletariat is a possible and indeed a necessary transition state to socialism! The theory was that having served its purpose the dictatorship would evaporate and indeed, as Lenin following Engels put it: ‘The State will then wither away’. In Russia the Soviet Government shows not the slightest tendency to relax its complete stranglehold on individual liberty of every kind, much less to ‘wither away’.

A third Marxist assumption that appears unable to stand a review of the past two decades is that socialism can be achieved by appealing to the collective selfishness of the working class and its collective hatred for the property owning classes. Unfortunately the appeal to the collective selfishness of the workers leads quite as often to their becoming a party to exploitation and injustice. We have already seen how the British working class, being given a minor share in the profits of the Empire, have become through the Labour Party, a party to the perpetuation of imperialism, which is the very antithesis of a world socialist order…

Yet another beliefand one held till now by all socialists is that socialism is the only alternative to capitalism. I must confess I held this view myself till round about 1937 or 1938. You had somehow to destroy capitalism and then, as day follows night, socialism must dawn. But must it? Is there not a third ‘something’ that is likely to emerge? … [Sanjeev: this is the source of his confusion – a lack of understanding of India’s own ancient economic system of capitalism, and a belief that someone like Gandhi could cook up a new “third” system just because he is a good man]

The questioning of the four assumptions of Marxism that we have found necessary amounts perhaps to nothing more than a shifting of the emphasis which the socialist must lay in the remaining period of the twentieth century. Looked at in this light, the nationalisation or State ownership of property needs definitely to be put in its proper place. Now that it is seen that what matters is not ownership so much as control of property, nationalisation is no longer the kernel of the matter. Besides, it is coming, whether we want it or not…

Who owns the State? That is the question of questions. Precisely because collectivised economy endangers individual liberty and political democracy, these have to be placed right in the centre of the picture of socialism in the years to come. These are the danger points of socialism. Respect for the human personality is likely to be the field on which battles in the second half of the twentieth century will rage thickest, and no one has a right to be called a socialist who does not rally to the defence of the Rights of Man. [Sanjeev: This is a huge assumption, for nowhere have the founders of socialist ever mentioned the idea of the rights of man. These rights were found in the American Constitution but these were part of a full-blown capitalist system of thought]

If individual liberty and political democracy are as essential a part of socialism as economic equality, it is necessary that the methods of achieving socialism, should fit the end. This calls for a repudiation of the Communist slogan that ‘the end justifies the means’ which more specifically means that in practice everythinglying, deceit, murderis justified so long as it helps the Communist Party… Socialism can only be achieved by clean means with clean hands. Without intellectual integrity and adherence to truth, we shall get lost in the woods.

The problem for people placed like us therefore appears to be one of devising a method of social change which is dynamic and which yet eschews the violence of a coup d’etat and of the dictatorship which must inevitably follow. It is here I believe, that Mahatma Gandhi has made certain contributions to the development of political thought which every Socialist, who wishes to enrich his armoury and to devise ever more efficient weapons with which to bring about the social changes which he desires, must carefully study.

Masani had travelled from Marx to Gandhi but without giving up on socialism. His was not an uncritical or blind acceptance of ‘Gandhism’. As he explained in Socialism Reconsidered, “Gandhiji’s teachings do not constitute a well-knit system of economic thought, nor need we accept them indiscriminately, but it is pertinent to note that Gandhiji has always stressed the importance of economic equality. ‘The whole of his (constructive) programme’ he has said ‘will be a structure on sand if it is not built on the solid foundation of economic equality’.” [Sanjeev: It appears Gandhi was even more confused than I had thought – he wanted economic EQUALITY.]

In 1947, three years after the publication of Socialism Reconsidered, Masani was invited by the Bombay university’s School of Economics and Sociology to give an address in their Silver Jubilee Lecture series. This gave him an opportunity to share with the students of the university and the public the outcome of his reconsideration of socialism. He called it ‘A Plea for a Mixed Economy’. Masani may not have been the first Indian politician to propagate this form of economic organisation though he was among the pioneers in promoting this concept. It found its way into India’s Five-Year Plans.

Masani’s ‘Mixed Economy’ was a middle-of-the-road recipewhere the state and the citizen had roles to play in the economy even while ensuring that the freedom of the individual and an open society were safeguarded. The Soviet experiment had convinced him that political power combined with economic power would result in the oppression of the people. In any case is “State ownership and management of industries the answer to our needs?…,’ he asked. In his advocacy of a Mixed Economy he said inter cilia:

The rejection of a policy of State ownership and management of industries need not lead one to be content with the status quo. I put it forward, not as a poor substitute, nor as a mere half way house to the real thing but as a better, more scientific and more modern method of working for the same ends than the so-called ‘scientific socialism’ of the nineteenth century…

There are certain things that need to be stressed in making an approach to the Mixed Economy. The first is that our approach must be free from dogma of any kind. [Sanjeev: This is a sign of deep ignorance, that you don’t know what is right, and are “free from dogma”] The second thing to stress is that India is big enough for all forms of production to be tried out at the same time and since we are still at the beginning of our Industrial Revolution, the mere nationalisation of existing enterprises would in any event touch only the fringe of the problem that faces us. The third factor in our approach is to make the fullest use of the great contribution that has been made to economic thought in our country by Mahatma Gandhi, namely, the emphasis on decentralisation of industry and of its control. The fourth thing to do is to shift the emphasis from the State to increasing workers’ control over industries and to foster the partnership of Labour both in the administration of industry and its fruits. Fifth and last, the Mixed Economy will depend less on ownership and management and more on control to see that the interests of the community reign supreme. [Sanjeev: This last statement is bereft of the slightest logic. Does he mean that ownership and control are to be separated? That’s nothing but socialism.]

In this context a favourite aphorism of Masani comes to mind. He would often say, “You cannot replace something with nothing. You have to replace something with something better.” He therefore concluded his lecture by articulating the kind of Mixed Economy he had. in mind:

Based on these ideas, the structure of the Mixed Economy would be somewhat as follows: There would be three sectors. The first would be a very small sector of existing industries, which may be nationalised.It needs to be made clear at this point that there is no need for the acceptance of any a priori nationalisation of basic and key industries. That is a dangerous fallacy, too easily conceded even by opponents of such measures. We have seen that State ownership and management are bound to impair efficiency and retard industrial progress… Nationalisation should therefore extend only to exceptional cases. In such a case, it would be a wise safeguard to provide that no industry can be nationalised until a Royal Commission–or whatever takes the place of a Royal Commission in a republic – – has publicly investigated the condition of the industry and recommended its nationalisation. [Sanjeev: despite this constraint, the idea that existing industries could be nationalised is fundamentally wrong.]

The second sector would be a very much bigger one and that would be of fresh Public Enterprises. These would be mostly new industries or new units in existing industries, established to the extent that free enterprise is found to be unable to meet the country’s needs. In the case of both these sectors, the relations that are established between the public enterprises and the political authorities who control them on behalf of the community will have a decisive influence on both the efficiency of these enterprises and the welfare of the country. [Sanjeev: This is seriously problematic. How could he, in 1944, advocate such an absurdly socialist approach?]

The third and largest sector of industry would be that of free enterprise. It should be realised as Louis Fischer has put it, that ‘private enterprise is today a public utility’. It should be encouraged and provided with all the necessary incentives, with minimum controls for the purpose of planning and co-ordination. Such controls would obviously vary from, say, 5 per cent in one industry to perhaps 25 per cent in another. [Sanjeev: What does he mean by “controls”? The man is a statist!]

Such a programme of State plus free enterprise is in fact the only practicable programme that any government of India can possibly adopt in the coming years…

In the next ten years he would further refine his thinking on the economy and on the limits to state authority. What needs to be noted is that he was prepared to discard any dogma that not only ran contrary to his basic belief in the centrality of the individual in society but also on empirical data that was then available


Sanjeev Sabhlok

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