Atanu Dey On India's Development

Overtaking China

October 4, 2003 by atanu

Here is another bit from Anand’s comments.

The collective leadership that is fueling china’s growth today will have to go away in the future. Communism is not going to last long enough for china to become a developed nation. Once communism collapses and democracy begins to form in china, there will be a prolonged period of little or zero growth in the country’s economy.

That is when India will overtake china.

It is very likely wishful thinking combined with admirable patriotism that motivates Anand above. The engine of communism has been decoupled from the Chinese train long ago and it is the engine of capitalism that is driving that one. As Pranab Bardhan had observed, the Chinese were better socialists than Indians, and now the Chinese are proving to be better capitalists than Indians.

The Chinese are collectively smarter than Indians. That proposition can be rather simply defended by causal empiricism. China is an economic power to be reckoned with; India has promise but all too often we are unable to realize that promise. The Chinese are better at solving problems that require collective action, Bardhan has argued.

And what about democracy? The virtues of democracy are notably absent in practise while theory never seems to lack it. Envisioning democracy in an environment of full information, morally and intellectually powerful leaders, full literacy, an empowered population, etc, immediately compels one to the position that democracy is the best way to order society. Democracy in all levels of society is certainly the first best recommendation in a first best world.

But if you care to note, it is not a first best world. The system has too many distortions. For instance, half the people are illiterate; only single-digit percentages are somewhat educated; information gaps you could pass an oil-tanker through exist; leaders whose moral fibre is as weak as their feeble intellects stand out; politicians whose only compelling interest appears to be personal aggrandizement and enrichment are the only choices one faces during elections. It is definitely a second best world.

It has always been a second best world. Recognizing that, we must defend against advocating first best solutions. Democracy as it exists in reality in India is a mill-stone that has kept India poor. No where in the world has democracy worked at a stage of development that India is in. Democracy has not even been tried in any country with India’s characteristics.

The Chinese are not stupid. They will get democracy when they are good and ready, when the conditions are such that democracy will help rather than hinder.

Have you ever noticed that the most powerful ‘democracy’ in the world does not ever support democratic action internationally? The US is so dead set against democracy in international settings that you would think that they were raised on Genghis Khan’s mother’s milk.

The US talks loudly about democracy but is not stupid enough to actually practise democracy abroad; at home, they do have the regular circus act of choosing between Tweedledum and Tweedledee. You may recall that Tweedledum and Tweedledee agreed to have a fight. So also, the Democrats and the Republicans agree to have a fight every four years. They are pretty much indistinguishable when it comes to matters of substance, such as how much to spend on weapons of mass destruction, how much to subsidize their rich farmers (thus starving poor farmers in poor countries), how much to protect their trade barriers, etc. Sure they differ on matters such as school prayers, abortion rights, school vouchers and other relatively trivial issues.

No sir, even at home they have a form of shadow democracy. And abroad they drop even that pretense and subscribe to the only sensible policy that the rich and the powerful have: dictatorial.

Coming back to the point, China is way ahead of India in terms of economic might and momentum. India will have to play the game of catch up for a very long time. To shorten the time, we will have to use the power of ideas. Unless we act totally rationally, our chances of becoming a developed nation are far slimmer than China’s.

  • anand

    The Chinese are collectively smarter than Indians.

    Ooh la la. Where did that come from ? I would have to ignore it because the alternative it to say indians are smarter than chinese :)

    The Chinese are not stupid. They will get democracy when they are good and ready, when the conditions are such that democracy will help rather than hinder.

    You dont think, one can wake up one fine day and say, “Conditions look good today. Let us have democracy.” It is much more complex than that.

    The advantages of democracy are manifold and in most cases not so obvious.

    The stock exchanges in china are full of state owned companies with huge barriers for private companies to enter. This stems from the traditional mistrust that communists have against capitalists gaining control.

    When financial times launched its china edition around last month, it was immediately censored in china because it carried three articles comparing china to india with the suggestion that India might perhaps have the edge.

    Do you think such a society has the right foundation for growth.

    I don’t think so.

    The day will come when the transition has to be made and like the USSR, the transition will most likely be painfull. I am not saying china will go into recession but it is hundred percent likely that china will experiance periods of slow growth. If we are rightly placed then, we will be in a position to go ahead.

  • anand

    A single case study can easily highlight the difficulties faced by a democratic country vis a vis communist country.

    The three gorges dam has a fair number of detractors like the narmada dam. But since the people of china don’t really have a say in the matter, the government just went ahead with the construction. In India, the case got caught up in a legal tangle for years.

    The recent dis-investment supreme court ruling is also a fair indicator on how “everyone in india has a veto”.

    Such are the difficulties faced by a democracy and when china wakes up to such a reality, it will slow down. India on the other hand, being a “mature” democracy, should be on growth path still.

    PS : This article, http://www.nationalpost.com/financialpost/story.html?id=F12EC40E-E198-4893-B955-706359ED8537, says china will maintain its lead well into 2050.

    Forget China, I would be happy if we could hit $30 trillion by then :)

    PPS : A point to note. Indians are seen to be traditionally negative and prone to play down their own successes. This is rarely seen in other countries and certainly not in china. Shourie wrote about this a while back. I remember, a gartner analyst being surprised about the generally negative attitude in the media. I wonder why. Maybe, you could write about that ?