Thoughts on economics and liberty

WHY I SHOW THE RED FLAG, by Rajaji, 16 February 1959 in The Hindustan Times

(A sharp rebuke to Nehru on his land ceiling laws. Rajaji displays remarkable knowledge of local information and incentives: it is almost as if FA Hayek were writing this piece)

THE programme of expropriation of land above a certain allowed maximum will, it is stated by the Prime Minister of India, affect only an insignificant number of people. The truth of this claim depends on the maximum area that is fixed. If this, indeed, be as stated, it will not serve the purpose of giving land to everybody or to a significant number of landless people.

Apart from that question and assuming the accuracy of the statement that the proposal will affect only a small number of people, it is obvious that it is injustice and tyranny to pass a decree of expropriation on a body of law-abiding citizens serving the nation with marketable food-grains because their number is small and, presumably, because they cannot offer effective resistance in a democracy based on universal suffrage.

It would be a tyrannical use of power, unless the purpose of the expropriation is entirely justifiable and full market value plus a percentage for the compulsory character of the public acquisition is paid and not merely promised in instalments as a miserable subsistence allowance.

The object of any infringement of the constitutional right to hold property should be justified. Mere good intentions cannot suffice, but it should be shown that such good intentions will be carried into effect and the object achieved. There is a great deal of reasonable doubt whether the ‘passionate’ desire of the Prime Minister of India will be achieved at all by the policies he has decided to put into effect. His ambition is to do something great and good for the people of India in his lifetime. But the means he is proposing to adopt involve an outrageous amount of disregard of established rights, which makes the affected people, [and well-wishers?] who think ahead, to protest.

Ethics is a discipline of means, not of ends. Expropriation is not ethical at least according to the accepted notions of our country and our Constitution. The good intentions of statesmen are often ‘sold short’ (to use an Americanism) by their unwise and inappropriate policies.

“Power always thinks it has a great soul and vast view beyond the comprehension of the weak.” — John Adams

Socialism, or a policy of general welfare, does not consist in any angry attack on those who have in accordance with the laws of the land acquired a comfortable position. It does not consist in an unattainable aim to do away with all that is above the average. It is a theory of human happiness depending on fruitful work. Every proposal to attain this object should be tested on the touchstone of absorbing the unemployed.

Land absorbs labour, be it in the hands of one or more. There Is no magical power achieved by transferring ownership from one who lawfully holds it to a larger number of donees, just because it will help in the absorption of more of the unemployed. The land now sought to be expropriated was not acquired by any feudal law but under the ordinary common law governing all property. There is no justification available for the measure by way of punishment of sins committed by the present owners or their predecessors in title. Socialistic endeavour must turn from anger and cruelty to sane measures for absorbing the unemployed in fruitful work.

Everyone agrees that centralized factories are by no means enough to absorb all or even the larger  part of our unemployed. Everyone agrees that the progress of the country towards wellbeing depends on providing scope for full employment. This cannot be done by providing government posts or jobs in government-controlled industries. Population cannot be shifted according to arithmetical plans on this huge continent. It must be done only by smaller industries springing into existence in small towns and what may be called the rural areas round about the farm villages.

The big industrialists are not going to bring these small workshops into existence. Nor can the State undertake and manage a vast number of such small concerns through the bureaucratic machine. The only hope for such rural industrialization, as is necessary for the well-being of this large country, is that the richer landlords may find this a good investment, supplementing their own interests. They are the natural entrepreneurs of the smaller decentralized industries that should come into existence. It is, therefore, not good policy to depress them by so-called reform and make them disinclined and incapable of any such enterprise which will be the result of the present drive against the richer agriculturists.

The smaller peasants will find it hard enough to find the capital even for their own agricultural operations, not to speak of investing in minor industries. This is the only way out of the vast unemployment problem. The possible alternative is co-operative bodies being constituted out of small peasants to start small industries. This answer would be right in an academic way but not likely to fructuate in practice.

Many are the reasons advanced against the adumbrated changes by persons who are not unpatriotic or hard-hearted and have had close contact and considerable experience of affairs. What has been here specially pointed out is an aspect which has not hitherto been discussed and which deserves more than casual polemic attention.

The decrees of expropriation contemplated will not increase food production, and will not absorb any additional unemployed men. They will fatally affect prospects of rural industrialization. Any attempt on the part of the Government through bureaucratic organization to start and manage small industries spread over the million acres of our land will fail miserably and it should not be necessary to go through that experience to learn the inescapable weakness of official enterprise. We must depend on local capital and local enterprise and the urge of honourable self-interest for this change of the face of India. We should not allow any resort to the Fabian adventure of uprooting what is too deeply imbedded to be tinkered with.

An open mind is an essential substitute for want of direct experience. It is a pity that the bulk of our legislators are men and women whose only experience has been a patriotic struggle and not any productive occupation. Agricultural experience in the field and in the village is not a part of the working equipment of the majority of our political leaders. I appeal to them for opening their minds to what equally patriotic men have been urging against these proposals whose only merit is that they may bring more votes into the ballot-box.


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Sanjeev Sabhlok

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