Which economic theory is Right: Left or Right?

The raging debate on what is a superior economic philosophy – the left of centre communism or socialism or the right of centre capitalism – still persists. Karl Marx’s “Das Kapital”& the Soviet model appealed much to intellectuals post the RED revolution in 1917 so much so that intellectuals like Kim Philby - educated in the hallowed institutions in England - turned “double agents”;  it is therefore unsurprising that most of the Indian Leaders – educated at the same institutes - of the freedom movement were attracted to the same tenets.

The leaders of Independent India decided on a “mixed” economy - with both the public & the private sector playing a defined role, albeit the former playing a more dominant role.  Was the decision on a “mixed economy” an act of “political compromise” struck between the rival factions of the Congress or pure “pragmatism” emerging from the ability to “touch tomorrow” is indeed debatable.  Ambedkar argued for non- inclusion of the word “socialist” in the constitution, insisting on posterity to take an adequate call consistent with the times which was ultimately accepted. That perhaps “pragmatism” triumphed at the end can be gauged by two decisions taken during those days. The decision to include the “right to property” – a more capitalistic thought - as a fundamental right &  non - replication of Communist China’s collective farming model implemented by Mao  between 1958 to 1961 during the “giant leap forward” campaign which tuned an absolute disaster.  

The founding fathers were visionaries & damned right they were proved. The Soviet Model  without an iota of freedom with “Big Brother” watching over all your activities - eerily reflected in George Orwell’s classic “1984” - & lack of incentive for individual excellence stifled  innovation. Eventually “glasnost” – openness & “Perestroika” – restructuring were introduced in 1985 but it was too little too late due to which the tottering edifice crumbled in 1991. The shock effects reverberated in Eastern Europe in the “Warsaw pact” countries prompting Capitalists to announce the death of communism with much fanfare & proclaimed the inevitability of capitalism as the panacea to the world’s evils. However Communism survived in Cuba & socialism has taken deeper roots in Latin America with heroes’ like Hugo Chavez emerging in Venezuela. The economic crisis of 2008 has revealed the excesses of capitalism neatly elucidated by Gorden Gekko’s in the film “Wall street”:  “Greed is good.” History is therefore an impartial judge revealing that both the competing economic philosophies have their faults.

The rise of socialistic parties like Syriza in Greece as well in continental Europe & the continued hold of the socialistic parties in Latin America is but a reminder of the new people’s voice.  Contrast this with the rise of China to a $10 trillion economy -the 2^nd largest in the world - after initiating & sustaining economic reforms.  Winds of change are blowing across both the worlds – the capitalistic countries are appreciating socialistic principles better with economists like Thomas Picketty raising concerns about the rise in economic inequality in an un-bridled capitalistic system while communist countries like China - post reforms - are enjoying the variety & choice offered by a quasi free market economy.  Perhaps the excesses either of capitalism or communism needs to be shunned & a middle ground found.

What are the lessons for India? Free enterprise should be the name of the game & in a mixed economy scenario the public & the private sectors should compete & the best allowed to win. Regulators should play arbitrators & should be safeguarded from coming under external influences. Ease of doing business should be massively simplified through an IT backbone & the growth in innovation clusters should spur a “start-up” culture & jobs. The consequent rise in economic activity would spur govt. tax revenues which should  be used for uplifting the plethora of people living below the poverty line - estimated by different commissions to be anywhere between 22% to 40% of the population. Is it not a paradox that while the 42nd constitutional amendment in 1976 proclaimed our country as “socialist”, the concept of a “social security net” - a socialist tenet – has eluded our citizenry even while capitalistic economies have embraced the concept? 

Therefore neither the Right nor the Left is fully right; the right economic philosophy paradoxically lies somewhere at the centre.