Wednesday, September 10, 2008

Inequality, Choice and the New Indian Dream

In the image (see New York Times article Vogue's Fashion Photos Spark Debate in India) a child from a visibly poor Indian family is shown wearing a bib prices at $100. The cation says "Its never too early to start living in style." But what defines India in this neoliberal period is not merely the such obscenity (unthinkable in media before the 1990s), but the even more incredible fact that apologists for this obscenity are not afraid to make a case publicly for its legitimacy.

This particular story was carried in several newspapers and blogs. One particular one caught my attention: the brief blog post in Managing Globalization, an International Herald Tribune Blog run of Daniel Altman. Read it. Then read my comment, Daniel's response and my long rejoinder. I am pasting only our exchange below. But to get the context you will have to go to the link above and read the brief original post.
My first comment:

Your assertions that “…India is a democracy, and you can’t simply tell people what to do with their money.” and “Nor can you tell poor people what they should aspire to in life” are laughable. One doesn’t know where to begin with such statements. The mythical “all-powerful planners” are faulted for their hubris in wanting to decide who spends how much on what, but the all too real market forces that effectively force the same decisions (tell people what to do with their money and what to aspire to) are rendered completely invisible in your “analysis.” Of course, from a neo-classical perspective this is perfectly “natural”, because as we know the free market is a force of nature like gravity while government interventions, except when they come to the rescue of capitalists, are to be fought tooth and nail. Such simplistic reasoning can masquerade as analysis (or better still “science”) only when it serves as a pathetic apology for power.

(From India)

Moderator’s note - Apologies for believing that people should be free to buy and aspire to whatever they want!

Posted by: Amit Basole — 03 September 2008 1:51 pm

[The "Moderator's Note" above seemed designed to invite further debate. So I obliged with the following]

My follow-up comment:

At the risk of appearing overenthusiastic about posting comments, I feel I should respond to the “moderator’s note” on my comment above. I fear that you have willfully misunderstood me. You may by all means believe that people should be free to buy and aspire to what they want. All I ask is that you not be naive enough to think that these wants and aspiration somehow appear out of thin air (or in economic terms are exogenously given). Rather I wanted to emphasize that they are endogenously generated within capitalism via advertising (and in other ways). Whether planners do it or the market, the point is wants and aspiration cannot be unproblematically taken as given. It is over one hundred years since Veblen wrote on conspicuous consumption. It is ten years since Juliet Schor wrote on the contemporary consumption culture in the United States and the damage it has wrought. It is a sad comment on Economics as a science if important discoveries made so long ago need repeated reminding.

And to return to your point about India being a democracy, i should point out that it is a political democracy, not an economic democracy. In the face of such massive economic inequality the power of political democracy is very seriously curtailed. And in a market system it is ability to pay that decides who buys what (you vote with your dollar or rupee), unlike political democracy where you get a vote regardless of whether you have a dollar or not. So conflating political democracy with economic decision-making is dangerous and misleading.

(From India)

Posted by: Amit Basole — 03 September 2008 6:59 pm

Daniel's response:

Amit, I want to be sure I understand you. Are you saying that advertising luxury goods to poor people is like advertising cigarettes to children? That somehow it should be prevented, in a spirit of beneficent paternalism?

I would like to hear your specific policy prescriptions for undoing the problems that you mentioned in your most recent comment. Do you propose to change the nature of advertising, marketing and production, or to change human nature itself?

Posted by: Daniel Altman (moderator) — 03 September 2008 7:00 pm

My rejoinder:

Dear Daniel
Yes, you raise important questions, which I fear I cannot do justice to in such short notes. But here goes.

First off, in these days when media is so pervasive, targeted advertising, though by no means extinct, has started to lose “targetted-ness.” In a sense this is what happened when television became universal in the US. People’s reference groups changed form their neighbors and friends to people seen on TV leading what seemed to be far more opulent lifestyles. So luxury goods (like $50,000 automobiles) are routinely advertised to people who can’t afford them (whether in India or the US). There is no question of preventing this in, as you say a “spirit of beneficent paternalism.” Taking that position would be tantamount to saying that there is a class of people who are “worthy” of being advertised to and others who should be “protected.” Further this type of want-creation and aspiration creation has fueled US capitalism to a large extent in recent times and made possible growth of other economies that depend on US consumption.

In fact rather perversely I see capitalism’s demise in this very process. Since I believe (an act of faith on my part) that the fruits of modernity can only be promised to the poorest of the poor, never actually delivered, if we set in motion processes by which the poor can increasingly make these demands (for higher wages, to be able to buy better and more expensive products) the contradictions of the system (which continually creates inequality and creates aspirations that cannot be fulfilled) will become clearer and clearer. If you are at all familiar with old-school Marxist arguments, what I have said above may sound awfully like the idea that capitalism’s contradictions will one day be its un-doing. I am not denying the affinity though I am not one to see socialism round the corner either.

Now to your second point. The problems of inequality and lack of economic democracy (by which I mean grossly unequal decision-making power in the economy) are not going to disappear with some magic policy bullet. But for starters it would help if sovereign governments stopped genuflecting to international capital and gave themselves some policy space. Economists themselves can help by acknowledging that free trade and free mobility of capital is not a universal, unimpeachable good. There is no dearth of good proposals to make globalization more pro-poor. I see that one of your contributors is Joe Stiglitz, who has also written on this, as have Dani Rodrik, Amartya Sen and many other not-too-radical folks.

Naturally this above is a less ambitious program than imagining a wholly alternative economic system (”changing advertising, marketing, production”). Although there is no dearth of such alternatives either, they tend to be more piecemeal, experiments here, experiments there. If neoliberalism continues to wreak the havoc it is wreaking (mind you by havoc I don’t mean only poverty creation, I mean unprecedented wealth creation together with poverty creation), I am confident that these grassroots resistances (of which there are several in India, which one will not read about in the pages of the English language national press) will only grow. Mind you, I am not saying that as the poor are empowered they will necessarily demand this thing or that thing (because as you rightly say, who I am to decide what people should want).

Lastly, the human nature thing. This one really cannot be addressed properly here. Economists are fond of appealing to human nature when it suits their models. Stretching myself back to my biology days, the nature versus nurture problem was endlessly debated. I came away from those books and papers with the idea that human behavior is so complex and interconnected with its environment that any simple statement about it (humans are selfish, humans are altruistic, humans always want more, humans inherently want to help other humans) are sadly open to many caveats. Thus the interesting question is not what is “real human nature” but what values and visions guide us in our behavior. Different circumstances will bring out different behaviors (the same profit-hungry capitalist who will not hesitate to fire workers will become a loving and doting father and so on), the challenge is to create institutions that nurture our desirable natures (plural).

I must really apologize for this long essay. I realize this is not the place for such a debate.

Posted by: Amit Basole — 03 September 2008 8:00 pm

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