Empowerment and Growth key to prosperity, not redistribution

Except for land reforms, property redistribution has not played any major role in the achievement of massive poverty reduction around the world

https://timesofindia.indiatimes.com/blogs/cursor/soak-the-rich-wont-help-the-poor/

As tumbrels trundled their way to the guillotine over the cobbled streets of Paris, carrying their load of the former lords of the land, the crones who sat watching and knitting debated many things, but not whether to redistribute erstwhile feudal estates. That decision had already been made by the act of the Revolution.

As our learned judges of the Supreme Court debate the meaning and ambit of Article 39(b), which enunciates the directive principle enjoining the state to make sure “that the ownership and control of the material resources of the community are so distributed as best to subserve the common good”, they would do well to bear in mind two things.

One, radical redistribution of property has historically been a feature of revolutions that turned the world upside down; and, two, the only exception to this has been land reform to end feudal rent, hand over ownership of land to the tiller and incentivise investment and enthusiasm to raise output.

The Constitution of India was drawn up to build a modern nation out of diverse elements, ranging from the debris of Britain’s foremost colony to the hopes and aspirations of 40 crore Indians to end poverty and ignorance and disease and inequality of opportunity. The Constitution was meant to bring order and organising principle to the building of a new nation, not to create new ructions and revolt – unless it was by way of resistance, from the entrenched traditional elite, to the spread of democracy.

Historically, the bourgeoisie – the burg- or town-dwelling capitalist – has been at the forefront of the fight for democracy and liberation from the arbitrary authority of kings and feudal lords. Democracy and private property have walked into the modern world of capitalist prosperity, holding hands, rather than at each other’s throat. The makers of India’s Constitution could not have included private property among the material resources of the community meant for redistribution.

The only exception is agricultural land. The French Physiocrats believed that land alone was the only source of wealth and income. Such a misconception is natural in any pre-industrial culture. The industrial revolution put paid to that illusion. In today’s advanced economies, the share of agriculture in income generation or employment would be less than 2% of the total. An artificial intelligence unicorn today needs land only in the sense in which Archimedes needed land when he declared, give me a place to stand and a lever long enough, and I will move the world.

In the world after the scientific and industrial revolutions, concentrated ownership of land only served to hinder democracy and retard the spread of education and generalised healthcare, essential to create a productive, industrial workforce. In the conquered territories it controlled after the end of World War 2, the US implemented thoroughgoing land reforms, most effectively in Japan and South Korea, and laid the ground for subsequent industrialisation and prosperity. Taiwan and Vietnam, besides China, forge ahead, powered by past land reforms.

Land reforms are, thus, integral to reconfiguring social relations in a fashion more conducive to democracy than in the days of non-economic obligations to and dependence on the landlord, on the part of the majority of society. Land reforms are essential for creating the human agency that drive people to acquire education, access healthcare and aspire for social mobility. Land reforms do, in fact, arrange the community’s resources in a manner the subserves the common good.

This is evident from the southern states that carried out land reforms and the associated politics of empowering the people, and have relatively advanced indicators of social development and very little poverty. Another state that fits this description is Jammu and Kashmir, where the National Conference, under Sheikh Abdullah, carried out land reforms before Independence.

But doesn’t redistribution of private assets have the potential to solve the problem of widening inequality, accompanied by unemployment, poverty and hopelessness that induced 170,000 suicides in India in 2022, 27% more than in 2018?

At no point in humankind’s known history has the proportion of the population experiencing absolute deprivation been as low as it is today. More and more people have been delivered out of poverty and want across the world. Nowhere has this process been primarily the result of redistribution of assets. Growing the pie, and giving people a slice of the increment, rather than cutting up the original dish for redistribution, has achieved this.

Economic growth is not a zero-sum game. Everyone could win, with nobody losing. The point is to broaden the participative base of economic activity, as a portion of the growth would accrue to those creating it. That calls for investing in organising people into citizens with rights, dignity and associated expectations from the world, including the provision of functional education, healthcare, and infrastructure, physical, as well as financial.

Globalised growth which offers unprecedented access to the world’s ideas, talent, technology, markets, and even capital marks a new dawn, in which bliss it is to be alive, but to be young is very heaven. Dreaming of a golden past, magic carpets or redistribution of wealth is part of the night. The point is to wake to that dawn, fully equipped to grasp it.