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June 10, 2006

Pankaj Mishra

Poor, poor India and China, they’ve been suckered into this western idea of free market capitalism when what they really want and need is the loving embrace of socialism.Well, that’s what Pankaj Mishra seems to be saying:

Indian and Chinese elites borrow no less eagerly than their western counterparts from the discourse of neo-orientalism as they attribute India and China's recent economic growth to the free markets they embraced in the 80s and 90s. But even a casual glance at their claims will reveal them to be caricatures of a complex political and economic reality.

India registered its most impressive gains from 1951 to 1980, after emerging from more than two centuries of systematic colonial exploitation, during which it was, in effect, deindustrialised. Until 1980 India achieved an average annual economic growth of 3.5% - as much as most countries achieved. In this period India's much derided socialistic economy also helped create the country's industrial capacity.

Note that he doesn’t tell us what Indian growth has been since the adoption of those free market (well, they’re not "free market" so much as less not free market than what went before but still): from memory in the 6-7% per annum range. That is, as Mr. Mishra says, less impressive than 3.5%, is it not?

Much popular literature about China, such as Jung Chang's recent biography of Mao, makes it seem as though China did little after the communist revolution in 1949 but lurch from one disaster to another. In fact, China's national income under a planned economy grew fivefold between 1952 and 1978. Though wages were low, the welfare system - the famous "iron rice bowl" - guaranteed lifetime employment, pensions, healthcare and other benefits that created a high degree of personal security.

A high degree of personal security? Well, I guess so, as long as you weren’t one of those tens of millions starved by the incompetence of the regime (some would say deliberately), or of the further tens of million purged, jailed and discarded in other manners. Be interesting to know how much the Chinese economy has grown since 1978 as well really, wouldn’t it? Was the Chinese economy 5 times larger in 2004 than it was in 1978 (to give an equal number of years). We’re not told though.

China is now one of the most unequal countries in the world, even more so than the US.

Well known to happen at certain stages of development, inequality rises then falls. Brazil, for example, is more unequal than the US or China.

In India, too, the pursuit of economic growth at all costs has created a gaudy elite but also widened already alarming social and economic disparities. Facilities for healthcare and primary education have deteriorated. Economic growth, confined to urban centres, is largely jobless. Up to a third of Indians live with extreme poverty and deprivation.

Hhhmm. Indian poverty figures. I read a paper on this recently, where is it, ah, yes, here.

The evolution of poverty in South Asia is similar
to that in East Asia: the poverty rate fell from 30 percent in
1970 to 2.5 percent in 2000. The poverty head count fell by 178
million people, from 211 million poor in 1970 to 33 million in
2000. This success was achieved primarily over the last two
decades. Most of the decline in the poverty head count (178
million), can be attributed to the success of the post-1980
Indian economy (between 1970 and 1980, the total number of
poor Indians actually increased by 15 million).


Figure IIb reproduces the income distributions for India, the
second most populated country in the world. The positive aggregate
growth rates of India over this period have also shifted the
distribution to the right, especially during the 1980s and 1990s.
The total area increases dramatically over time (corresponding to
the large increase in the Indian population), while the area below
the poverty line (the fraction of population that is poor) declines,
which implies that poverty rates have fallen.

So free market-ish economic policies have produced growth and that growth has reduced poverty rates. Really, who would have thought it? And, err, where does that leave Mr. Mishra’s innovative analysis?

Well, quite, not anywhere very much, certainly nowhere close to the real world or the universe of truth. Ho hum, still, it is The Guardian.

June 10, 2006 in Idiotarians | Permalink