Democratic Socialism In India: Guess What Happened?

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How do you take the stink off of an unpopular word? Try adding a modifier.

‘Socialism’ has been a dirty word in the United States for decades thanks to the spectacular failures of communism in Soviet Russia and every other country where it has ever been tried. Socialism is a milder version of communism. Naturally and rightfully, Americans associate socialism with communism and reject both.

So, how do you make socialism palatable to Americans? Call it Democratic Socialism.

Democracy is a good thing, right? Therefore, Democratic Anything should be a good thing too.

Voila?!

Not so fast!

First, democracy in itself is neither good nor bad. It depends on what it is used for.

In a strict democratic framework, a 51-percent majority can vote to shoot the remaining 49-percent minority. One should note that democracy has historically been used in America to suppress the rights of minorities such as supporting slavery, disenfranchising women, criminalizing gays and lesbians, and condemning Japanese Americans to internment camps.

Another argument being advanced is that the correct form of socialism, Democratic Socialism, hasn’t been tried. Venezuela, Soviet Russia, Cuba, and all other fiascos are bad examples because those nations tried faulty forms of socialism, whereas Bernie Sanders and Alexandria Ocasio-Cortez are championing a newer, better version of socialism.

Have you heard of that old wine in a new bottle?

The type of socialism that Bernie and Alexandria are proposing has been tried. In fact, it is still going strong in India since 1947, the year of India’s independence from British imperial rule.

India is a powerful and resilient democracy. The people of India guard democracy ferociously. When Indira Gandhi tried to establish her dictatorship in India in the 1970s, people fought back fearlessly, overthrew her government, and jailed her. Elections in India are largely free and fair.

As far as economic policies are concerned, every political party in India belongs to the so-called “far left”. Bernie would endorse all their economic agendas, or ‘manifestos’ as they are known in India … remnants of the old Soviet communist influence.

The Indian version of socialism is also known as Nehruvian Socialism, named after the first prime minister of India, Jawaharlal Nehru. It is a well-respected ideology and enjoys near unanimous endorsement from all political parties.

Another description of Indian economy is that it is a ‘mixed economy’, where the government owns and controls all ‘vital’ industries and ‘permits’ private enterprises to function in an extremely limited market space. Which industry is ‘vital’ is for the politicians to define and categorize. Even the small space in which private enterprises operate is stifled via red tape.

Businesses have to go through opaque mazes of permits and licenses, also known as “License Raj” (reign via licenses). The permits and licenses are required, we are told, to ensure businesses do good for society because, get this, politicians and bureaucrats know best what’s good for society!

Government, federal or state, owns and operates companies with monopoly or near monopoly positions in almost all critical sectors of the economy: power generation and distribution, oil (exploration, refining and retail), mining, railways (passenger and freight), public transportation, passenger car production, defense, healthcare, education (schooling and college), procurement and distribution of agricultural produce, and telecommunications.  

In addition, the government runs a massive welfare state with authority to disburse funds arbitrarily at the discretion of democratically-elected leaders. For example, on several occasions, governments waived all crop-related loans owed by farmers. There is a myriad of welfare programs such as jobs guarantee schemes (National Rural Employment Guarantee Act), “free” education (Right of Children to Free and Compulsory Education Act), and so on.

This should be music to Bernie’s ears. Indians have been “feeling the Bern” since 1947!

The only problem for Bernie is that the Nehruvian Socialism produced pathetic results in spite of unanimous support from all political parties. The average GDP growth rate of India from the 1940s to 1990s was below three percent compared to the average of seven percent growth rate since mid-1990s, when India began liberalizing the economy allowing private companies more freedom to operate. Over 70 percent of the population lived in extreme poverty (less than a dollar a day in today’s dollars). Almost half the population could not read and write. The average life span at 50 years old in the 1970s was approximately 20 years less than that of people in the United States and Europe. An overwhelmingly high percentage of the population were born, lived, and died in grinding poverty. According to some estimates, 7,000 people die from hunger or malnutrition every day (including 4,500 children per day). WFP estimates nearly 200 million people (one-sixth of the population) go hungry every day.

The “socially-owned” companies, run by bureaucrats appointed by democratically-elected politicians, produce only second-rate, poor quality products. Innovation by government companies means indigenously replicating technologies that other nations like the United States had produced decades ago. For examples, developing a new fighter aircraft, nuclear submarine, or aircraft carrier.

The socialist government does everything inefficiently. For example, Food Corporation of India procures food grains like wheat and rice from farmers at prices determined by bureaucrats. Arbitrary pricing causes surplus production of some products and deficit production of others. The storage and distribution network for food is so poor and mismanaged that a large share of agricultural produce goes waste. According to estimates, approximately 20 percent of wheat grown in India or 21 million tons, equivalent to entire wheat production of Australia, rots in government-operated warehouses and never reaches the people. Every year, unable to bear the crop losses, thousands of farmers across India commit suicide by drinking pesticides.

Until the early 2000s, Indian government owned and operated Air India as the only India-based airline. The license raj was so stifling that no other Indian airline could operate. Air travel was a privilege only the rich and upper crust of the middle class could afford. In spite of enjoying a monopoly in air travel, Air India was chronically bankrupt and had to be repeatedly rescued via government bailouts.

Recently, the loosening of restrictions allowed sprouting of several Indian budget airlines. Today, thanks to the private Indian entrepreneurs, air travel is not a privilege anymore. It is accessible to the middle class. On some routes, the prices of air tickets are so low that they rival first-class ticket prices on the pathetic Indian Railways that is completely owned and operated by the government. Meanwhile, Air India continues to teeter on bankruptcy.

Indian government completely owned and operated the nation’s telephone network. After four decades, by early 1990s, the penetration rate of landline telephones was 0.6 percent with 5 million telephones for a population of over 800 million. Even those networks had spotty connections and poor call quality. In 1995, the government began to allow private companies to operate mobile phone networks. The thinking by the wise government bureaucrats was that mobile telecommunication was a niche market meant only for rich people. Within 15 years, the innovators of Indian mobile phone companies achieved market penetration of over 80 percent, nearly one billion mobile phones for a population of 1.2 billion. Today, one can acquire a smartphone for a small refundable deposit, and enjoy unlimited data on a 4G network for about two dollars per month.

Worker unions in India enjoy enormous power and political patronage. Free schooling and college education is available for everybody … at least on paper. Healthcare is free where it is available, although “free” hospitals and clinics are pathetic and inaccessible to most people. Many companies operate as employee-owned cooperatives with heavy government subsidies and regulations to restrict competition. The government has arbitrary powers to allow or restrict operations of private companies, can set price ceilings or price floors, and impose production quotas, import-export quotas, and tariffs at will. All of this is done under the supervision of vigorous democratic institutions.

India is the purest form of democratic socialism there can exist.

Everything Bernie wants to do in America, India has been doing for more than half a century.

Yet, neither Bernie, nor Alexandria Ocasio-Cortez, nor any of the Democratic Socialists of America would hold up India as the economic success story for America to emulate.

A quarter-century after the collapse of the Soviet Union and liberation of its people, and a quarter century after India and China have achieved tremendous progress for their citizens by shunning socialist and communist ideas, the United States is moving unabashedly towards socialism. For outsiders who grew up in socialist countries and have witnessed the horrors of socialism, this turn of history in America is baffling.

It feels like Igor Shafarevich is correct after all in bizarrely postulating that similar to individual human beings having a Freudian death wish (“death instinct”), society collectively also has a death wish. Socialism is the manifestation of this death wish of society (From Under the Rubble).

Socialism is an inhumane, repressive system that is only capable of delivering misery, deprivation, and widespread death to hundreds of millions of humans. No amount of magic fairy dust, including democracy, can change that cold, hard fact.

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Satish Bapanapalli is a freelance writer and ardent admirer of the great economist and Nobel Laureate Milton Friedman. Satish’s ideas closely resonate with Libertarian or Classic Liberal thinking.