Where is India headed? Despite the enormous challenges ahead, India is on way to further chipping away at the pervasive poverty and keeping the momentum of economic progress.
But what about the India's neighbors? The prospects are much grimmer for every single of India's neighbors in South Asia with a possible exception of post-war Sri-lanka, from terror-stricken and mismanaged Pakistan to impoverished Nepal unable to formulate a constitution during a period of nearly a decade, from Bangladesh mired in political instability to Afghanistan struggling to cope with poverty and rising insurgency, and from Maldives facing acute threat of climate change-induced rise in sea levels to Bhutan that has bought tranquility by violently deporting one third of its population.
But are the neighbors likely to learn from Indian experience to at least streamline their own domestic problems (and eventually start solving them) so that they can catch up with the giant neighbor?
India can teach its neighbors in both the ways: inviting them to emulate it where it has been successful and advising them not to follow the trails that have led to mayhem and disaster.
The neighbors can emulate India, for example, on how to make the best of the globally interconnected economic system by exploiting the inherent strengths of the population.
On the other hand, they need not experience firsthand the hazards of casteism and sectarianism as the source of legitimacy of political formations.
The significance of India for South Asia, however, goes much beyond that. Many sharp minds there can show the neighbors a way out of their misery.
This time, Raghuram Rajan, the governor of Reserve Bank of India, has come up with a prescription of momentous importance for its neighbors. Even though he meant the speech--definitely not as a part of his role in the monetary authority in the country--for an Indian audience of a festival in Goa, the neighbors will be wise to adopt them as if they were the intended audience of the speech.
Here he details how the modern nation state can ignore any of the three pillars of liberal democracy--a strong government, rule of law, and democratic accountability--only at its own peril. Adding 'free markets' as the fourth pillar, he goes on to elaborate how the weakness of one pillar leaves the other three in jeopardy and how in absence of equitable distribution of capabilities, all the four pillars start swaying.
Nepal, with all the four pillars very weak with possible exception of the democratic accountability, has pretty long to travel before we can be confident about the future of the country in the new world order. I intend to further this discourse in Nepali later but here is the full text of Rajan's speech, courtesy scroll.in site.
The
train has to run on time, but it has to go in the right direction at the
desired time
A free market requires a strong government, rule of law, and democratic accountability
Raghuram Rajan
Thank you for inviting me to this Festival of Ideas. Since this festival is about ideas, I am not going to tax you with the Reserve Bank’s views on monetary policy, which are, by now, well known. Instead, I want to talk about something I have been studying for many years, the development of a liberal market democracy. In doing this, I will wear my hat as a professor in the field known as political economy, and discard my RBI hat for the time being. If you came here expecting more insights on the path of interest rates, as I expect many of you did, let me apologize for disappointing you.
My starting point is the truism that people want to live in a safe prosperous country where they enjoy freedom of thought and action, and where they can exercise their democratic rights to choose their government. But how do countries ensure political freedom and economic prosperity? Why do the two seem to go together? And what more, if anything, does India have to do to ensure it has these necessary underpinnings for prosperity and continued political freedom? These are enormously important questions, but given their nature, they will not be settled in one speech. Think of my talk today, therefore, as a contribution to the debate.
Fukuyama’s three pillars of a liberal democratic state
In his magisterial two-volume analysis of the emergence of political systems around the world, political scientist Francis Fukuyama builds on the work of his mentor, Samuel Huntington, to argue that liberal democracies, which seem to be best at fostering political freedoms and economic success, tend to have three important pillars: a strong government, rule of law, and democratic accountability.
I propose in this talk to start by summarizing my (necessarily imprecise) reading of Fukuyama’s ideas to you. I would urge you to read the books to get their full richness. I will then go on to argue that he leaves out a fourth pillar, free markets, which are essential to make the liberal democracy prosperous. I will warn that these pillars are weakening in industrial countries because of rising inequality of opportunity, and end with lessons for India.
Consider Fukuyama’s three pillars in greater detail. Strong government does not mean one that is only militarily powerful or uses its intelligence apparatus to sniff out enemies of the state. Instead, a strong government is also one that provides an effective and fair administration through clean, motivated, and competent administrators who can deliver good governance.
Rule of law means that government’s actions are constrained by what we Indians would term dharma – by a historical and widely understood code of moral and righteous behaviour, enforced by religious, cultural, or judicial authority.
And democratic accountability means that government has to be popularly accepted, with the people having the right to throw unpopular, corrupt, or incompetent rulers out.
Fukuyama makes a more insightful point than simply that all three traditional aspects of the state – executive, judiciary, and legislature – are needed to balance one another. In sharp contrast to the radical libertarian view that the best government is the minimal “night watchman”, which primarily protects life and property rights while enforcing contracts, or the radical Marxist view that the need for the government disappears as class conflict ends, Fukuyama, as did Huntington, emphasizes the importance of a strong government in even a developed country.
No matter how thuggish or arbitrary the government in a tin-pot dictatorship, these are weak governments, not strong ones. Their military or police can terrorize the unarmed citizenry but cannot provide decent law and order or stand up to a determined armed opposition. Their administration cannot provide sensible economic policy, good schools or clean drinking water. Strong governments need to be peopled by those who can provide needed public goods – it requires expertise, motivation, and integrity. Realizing the importance of strong government, developing countries constantly request multilateral institutions for help in enhancing their governance capacity.
Strong governments may not, however, move in the right direction. Hitler provided Germany with extremely effective administration – the trains ran on time, as did the trains during our own Emergency in 1975-77. His was a strong government, but Hitler took Germany efficiently and determinedly on a path to ruin, overriding the rule of law and dispensing with elections. It is not sufficient that the trains run on time, they have to go in the right direction at the desired time. The physical rail network guiding the trains could be thought of as analogous to rule of law, while the process by which consensus is built around the train schedule could be thought of as democratic accountability.
