SUBHASISH RAY | 7 MARCH, 2017
The Myth of the Developmental State and Support for Authoritarianism among India's Middle Class
There is no doubt that an extraordinary political moment has arrived in India. The country’s middle class, which wholeheartedly embraced laissez-faire economic reforms in the 1990s, has now done an about turn, and given its assent to what is arguably the biggest encroachment of state powers into the private economic domain in India’s post-Independence history – Prime Minister Narendra Modi’s seismic demonetization initiative.
What explains this about turn? And that too when there is robust evidence that reforms have disproportionately benefited big business and the middle class? In the view of this writer, this can be a - traced to a belief that has taken hold among the middle class - almost as if it were an article of faith - that economic reforms under the conditions of democracy have simply not translated into the status gains that ought to come naturally with greater wealth. For all the chatter about India’s democracy in the West, a Shanghai will always score over a Bangalore for “the ease of doing business.” So it is merely a simple logical step from there to conclude that India needs more Shanghais. But for that to happen, the baton for economic reforms must be passed over to a strongman who can rule with few checks and balances. After all, isn’t that the Chinese story? That a strong state with formidable powers of surveillance can carry out the boldest reforms?
Wrong, says a recent book by the political scientist Yuen Yuen Ang. Ambitiously titled, “How China Escaped the Poverty Trap,” the book argues that the Chinese story cannot be locked up neatly into the “strong institutions equals to economic growth” narrative. On the contrary, China’s growth resulted from a three-step bottom-up process in which markets and local institutions co-evolved with each other. Indeed, the first step of the process involved building markets with weak local institutions. Note, the central government was, of course, present as a key actor in every step of the process, but its role was that of a facilitator, improvising and adapting to developments on the ground. In sum, the source of economic dynamism was the grassroots, not the central government.
The implications of these findings for India are clear. The idea that strong state capacity will promote the type of growth that will propel India into great power status is flawed and incomplete. Yet, by sacralizing Narendra Modi based on this flawed logic, the Indian middle class may have wagered an extremely reckless bet on the country’s future. Take, for instance, the IMF’s recent assessment that India’s growth rate took a full one percentage point hit because of demonetization. A shock of such magnitude is damaging even for the more advanced economies, let alone one where millions live under conditions of extreme precarity.
There are really two paths from here. The Prime Minister could learn from his policy mistakes and divest some of the decision-making powers he has arrogated to himself and keep his electoral promise of “minimum government.” Or else, the middle class will have to end its tryst with authoritarianism. The third path – more of the status quo along which the state arrogates more and even more power and the middle class bends even further on the question of democracy in lieu of “big bang” reforms– belongs, as the Chinese evidence suggests, to the realm of speculation.
(Subhasish Ray is Assistant Professor, Department of Political Science, Faculty of Arts & Social Sciences at the National University of Singapore)