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Mainstream, Vol XLVII, No 16, April 4, 2009

Development as Swaraj: A Vision for a Just Society

Thursday 9 April 2009, by Rehman Sobhan

The original call for Swaraj by Mahatma Gandhi a century ago sought freedom for India from colonial domination by the British. This call for Swaraj was intended for a geographical space known as India but for the millions of ordinary people who lived under condition of unfreedom in India. Some 40 years later South Asia attained Swaraj through the emergence of three independent nation-states of India, Pakistan and Sri Lanka. Today, a century later South Asia is home to seven independent nation-states but the mass of its people have yet to realise their Swaraj.

A narrow segment of our population have tasted the fruits of Swaraj. An even narrower fraction have managed to integrate themselves with a globalised elite whose opportunity structures, aspirations and lifestyles extend beyond our shores. In contrast, the unfreedom of significant segments of our population originate in their exclusion from opportunities to participate on equitable terms in the development and decision-making process in society. Within our conception of Swaraj those who are denied such opportunities for participation should be termed as the excluded. Swaraj should, thus, be measured through the degrees of freedom available to the excluded to qualitatively improve their conditions of life.

The denial of Swaraj originates in the unequal command exercised by the excluded over both economic and political resources within the society and the unjust nature of a social order which perpetuates these inequities. Such injustice remains pervasive in most societies exposed to endemic poverty and is particularly manifest across South Asia. Any credible agenda to realise Swaraj in South Asia must seek to correct the injustices which exclude millions of South Asians from the opportunities which should be available to all free people. The main areas of unjust exclusion may be addressed in relation to:

• Employment

• Productive assets

• Markets

• Human Development

• Governance.

The Sources of Injustice

The Right to Work

The first freedom which should have been provided to all citizens of an independent country was freedom from want which liberates them from the insecurity of poverty. Any household which remains without assurance of their daily subsistence remains compelled to work on whatever terms and conditions are on offer, in order to feed their children. Those without a sufficiency of assets or skills are compelled to seek employment at whatever wage is offered by the market. Such householders become slaves of the market and those who control their entry into the market. In societies where no programme of social security or unemployment insurance is on offer the excluded cannot afford to remain without work. Unfortunately, work is accessed on enormously unfair terms and often involves a variety of transaction costs, that may include the provision by the excluded of political and other non-work related services to their employer. In some parts of South Asia, inherited social traditions condemn segments of the excluded to specially degrading work which further perpe-tuates their sense of exclusion and indignity.

In such circumstances, those who command the resources and opportunities to provide work, enjoy a social ascendancy which often transforms itself into political authority, over those who seek work. The political economy underlying labour markets thereby compromises the functioning of the democratic process as well as the concept of an equitable society. The Dalits of India may have the right to elect a Chief Minister but they still remain dependent on and obligated to the land-owners who own the land they rent or offer them wage work on their lands, factories and their homes.

If the working class of South Asia is to attain Swaraj from their inheritance of domination and dependency they will have to be equipped with autonomous opportunities for earning their livelihood. This can be provided through access to assets and/or knowledge/skills. These opportunities will be separately discussed. However, it may be some time before a sufficiency of such alternative opportunities are available to the entire community of the excluded. In such circumstances it remains the responsibility of the state to provide an assured or guaranteed source of income or wage employment to all those in need of work. This right must be defined as fundamental to the realisation of Swaraj.

Most states of South Asia have assumed some responsibility for providing work to the assetless through a variety of public works programme. However, India was the first to guarantee such work as a fundamental right. The Maharshtra Employment Guarantee Programme was the forerunner of the National Rural Employment Guarantee Programme (NREGP) put in place by the Congress-led United Progressive Alliance, after their election to office. The NREGP in India has inspired the Government of Bangladesh (GOB) to introduce such a programme, for the first time, in the Budget for 2008-09. The Awami League-led coalition government, elected to office in Bangladesh in January 2009, has committed to guarantee work to at least one person from each family across the country.

NREGPs still have to be universalised and fully institutionalised in both India and Bangladesh. More to the point the idea of a fundamental right to work still has to be internalised into the individual and social consciousness of all segments of the excluded. Until this class can be conscientised to accept that employment is a right, they will still feel that the Sircar is doing them a favour, when they are awarded work under such a programme. In practice, in India and Bangladesh, those seeking work under the NREG scheme have to present themselves to the local elected representatives and officials for work in order to exercise their right to work. The realisation of this right is, however, not always guaranteed. To claim this right money may have to change hands. When work is offered without such payment those receiving the job still feel obligated to those public persons who actually gave them work. It is not surprising that the elected representatives use such employment programmes as a form of political patronage. They have been doing so long before the NREGP when they used various public works programmes as a political resource and continue to do so even today even though such employment is guaranteed as a right. Thus, the intervention of the state as a guaranteed provider of work has hardly eliminated the sense of domination and dependency which serve as fetters on the Swaraj of the excluded.

Unequal Access to Assets

Productive assets provide the main currency which enable people to participate in the market economy. Much attention has been given, in recent years by the policy-makers of South Asia, about the importance of the market in promoting development. However, much less attention is given to who participate in the market and on what terms. In all countries faced with endemic poverty and indeed many middle-income countries, inequitable access to wealth and knowledge disempower the excluded from participating freely in the marketplace. Such inequities are particularly applicable to South Asia where the excluded have little command over productive assets.

Asset poverty remains a source of unfreedom for the excluded to participate on equitable terms in the market and is a significant source of income poverty. Rural poverty, for example, originates in insufficient access to land, water and water bodies for the less privileged segments of rural society. Where the landless or land poor do access such resources, they do so under economically as well as socially exploitative tenancy arrangements. Those of the land poor who live in urban areas command little in the way of urban property, and have virtually no access to corporate assets.

Inequities in little and access to agrarian assets do not derive from the competitive play of the market but from the injustices of history. In South Asia title to land was mostly appropriated through the exercise power or access to political patronage rather than in the market. Ownership of land has thus been used as a source of social authority as well as a political resource. Retention of land, in such circumstances, is not just about its income earning potential but serves as a measure of political power and position in the social hierarchy. These inequities in the right to land are perpetuated through the malfunctioning of land and capital markets which do not make land readily available to those who most need it or provide them with capital on affordable terms to buy such land. In such circumstances the prevailing dispensation governing access to land lacks not just economic justification but moral as well as social legitimacy. Furthermore, the prevailing structures of land ownership remain inimical to the construction of a functioning democratic order which remains contingent on reducing the relations of domination and dependence which define relations between the land rich and land poor.

Such an inequitable access to productive assets in the rural economies of South Asia has kept the region’s agricultural performance well below its full productive potential. Small and even subsistence farmers in South Asia have proven to be both more productive than larger farmers and have played a major role in stimulating the growth of crop production over the last four decades. Moreover, these small farmers spend most of their income, derived from their meagre assets, in stimulating secondary activity in the rural economy. This has contributed to the significant growth of the non-farm economy which has reportedly contributed to the reduction of income poverty in some South Asian countries.

Lack of access to capital and property assets in the urban sector serve as a measure of urban poverty. Lack of landed assets in the urban areas of South Asia is a reflection of market failure. The homeless remain willing to pay market prices not just for land and housing but for the accompanying utilities in the form of water, sewerage, sanitation, gas and electricity as well as for just law enforcement. Neither private providers nor the state have been able to fully, or in most cases even minimally, respond to this effective demand from the urban excluded. Where the homeless mostly tend to be displaced immigrants from the rural areas, lack of access to property rights leave them without a legal identity. The urban excluded thus remain insecure, disempowered and without a real stake in the society where they live. This is dangerous not to just to civic peace but to the sustainability of democratic institutions.

Unequal Participation in the Market

Within the prevailing property structures of society, the resource poor remain excluded from the more dynamic sectors of the market, particularly where there is scope for benefiting from the opportunities provided by globalisation. The fast growing sectors of economic activity tend to be located within the urban economy, where the principal agents of production tend to be the urban elite, who own the corporate assets which underwrite the faster growing sectors of the economy. Even in the export-oriented rural economy, in those areas linked with the more dynamic agro-processing sector, a major part of the profits, in the chain of value addition, accrue to those classes who control corporate wealth.

The excluded, therefore, interfere with the dynamic sectors of the economy only as primary producers and wage earners, at the lowest end of the production and marketing chain, where they sell their produce and labour under severely adverse conditions. This leaves the excluded with little opportunity for sharing in the opportunities provided by the market economy for value addition to their labours.

The incapacity of the excluded to share in the value addition process derives from institutional failure. As long as the primary producer remains an isolated individual who interfaces with the economically more powerful or better organised buyers as well as manufacturers, they will remain condemned to participate in an unequal relation-ship, held captive at the bottom of the product chain. The incapacity of primary producers to come together through collective action, to enhance their bargaining capacity in the market-place, represents a form of institutional failure.

Capital markets also fail the excluded and thereby limit their capability to participate in the more dynamic segments of the market. Capital markets have failed to provide credit to the excluded even though they have in recent years demonstrated their creditworthiness through their low default rates in the micro-credit market in spite of the high rates of interest charged by the microfinance institutions (MFIs). The micro-credit market has originated from the non-profit sector as a response to the failure of the formal credit market but has remained segmented from the formal capital market. Micro-credit has served to meet the subsistence needs of the excluded but is not designed to empower them to participate in the macro-economy. The excluded therefore remain impounded in the ghetto of the micro-economy. Structural constraints leave the excluded with little scope for graduation into a level of entrepreneurship where they could compete with those who dominate the macro-economy.

In the same way that the excluded are denied opportunities to share in the value addition process, low income producers are excluded from sharing in the value appropriated by the developed countries. Thus, garment owners in Bangladesh may extract surplus from the wages of the workers they employ—they are paid $ 30 a month. But J.C. Penny or Walmart also pay the same garment exporter $ 1 for a garment which they may sell for $ 15 to their customers in New York. Thus, an unjust global trading system doubly excludes the resourceless from the benefit of globalisation.

Unequal Access to Human Development

Low productivity remains an important source of income poverty. Higher income and ownership of wealth remain closely correlated to higher levels of education. Low productivity, thus, originates in insufficient access to education and technology. Failure to meet the demand of the resource poor for quality education at affordable prices is yet another example of market failure in South Asia. This market failure is not unique to South Asia and has been universally compensated by state intervention. The problem in South Asia originally lay in the insufficient resources committed to public education. The subsequent move to invest a larger share of public resources across South Asia in education served to expand opportunities for the resource poor. But a combination of poor governance as well as insufficient public expenditure has contributed to the widening disparity in the quality of education which divides the rural and urban areas as well as the majority of the people from a much narrower elite.

In much of South Asia, today, the principal inequity in the education sector is manifested in the growing divide between a better educated elite with access to private as well as foreign education and the resource poor who remain condemned to remain captive within an insufficiently funded and poorly governed public education system supplemented by poor quality private or denomi-national schools. In an increasingly knowledge based global economy, which is driving the IT revolution, inequitable access to quality education could emerge as the principal deprivation of the excluded in South Asia.

Failure to provide adequate education to the excluded is compounded by the failure to provide adequate health care. Whilst public expenditures on health care in all South Asian countries have expanded in recent years, public health services remain both inadequate in relation to the needs of the excluded and deficient in quality of service made available to them. As a result, the excluded are increasingly compelled to seek health care from a variety of low calibre private providers. Quality health care remains the privilege of those with the resources to pay for this from private providers either at home or abroad. When the compulsion for survival drives the excluded to avail of quality private health care services, its costs often drive those with limited income into poverty and the already resource poor into extreme poverty.

Public health care services, where available, have served the excluded but at high transaction costs where access to quality care becomes a privilege rather than a right. As a result, public care, particularly at the tertiary level, tends to be accessed by those who have the access and resources to lay claim to better quality services. In such a universe access to health care has emerged as yet another social divider between the elite and excluded of South Asia. This divide has served to compromise the life-chances of the excluded and thereby continues to perpetuate inequality and injustice in this region.

Unjust Governance

This inequitable and unjust social and economic universe is compounded by a system of unjust governance in South Asia which discriminates against the excluded and effectively disenfranchises them from the political benefits of a democratic process. The excluded, whether they tend to be women, the resource poor, religious or ethnic minorities, remain excluded from the policy concerns of the ruling elite, voiceless in the institutions of governance and hence, underserved by available public services. Where such services are at all accessible to the excluded, they pay high transaction costs for these services. The agencies of law enforcement insufficiently protect the excluded and frequently oppress them for personal gain as well as on behalf of the elite. The judicial system, in most South Asian countries, denies the excluded elementary justice because of their poverty as well as the social bias of most South Asian judiciaries. The institutions of democracy remain unresponsive to the needs of the excluded, both in the design of their policy agendas as well as the selection of their electoral candidates.

In such a social universe the excluded of South Asia remain tyrannised by state as well as money power and have to seek the protection of their oppressors, within a system of patron-client relationships, which perpetuates the prevailing hierarchies of power. Where the democratic process prevails or has been renewed after long episodes of autocratic rule, the excluded of South Asia are denied adequate access to office in the political parties or representation in the systems of democratic governance from the local to the national level. Representative institutions tend to be monopolised by the affluent and socially powerful who then use their electoral office to enhance their wealth and thereby perpetuate their hold over power.

In such an inequitable and politically unjust environment, the benefits of democracy remain the privilege of the elite supported by small collectives of sectional power. In contrast, the needs of the excluded, whether for decent work or improved human development, remain unrecognised. Even where the excluded register their disenchantment at the polling booths by voting a succession of incumbent regimes out of office across South Asia, the political parties in every country have remained largely unresponsive in heeding the political voice of what may be the largest segment of the voting population. In such circumstances the political parties which are contesting for power should be offering a new set of policies and a new style of governance to their respective voters. In practice, government after government across South Asia has continued to offer a broadly unchanged set of policy prescriptions which are in some discredit across much of the developing world and recently even in the developed world. In such a political universe Swaraj has tended to be of largely academic significance for the excluded of South Asia.

The Path to Swaraj: Correcting Injustice

Policy Premise

If we are to correct these injustices which deprive a significant segment of the population of South Asia from more effectively contributing to and sharing in the benefits of Swaraj, our policy agendas need to be made more inclusive. Our proposed agenda is premised on elevating the excluded from agents into principals through repositioning them within the process of production, distribution and governance. Within the production process we seek to graduate the excluded from living out their lives exclusively as wage-earners and tenants by investing them with the capacity to become owners of productive assets. Within the distribution process we seek to elevate the excluded from their role of primary producer, by enabling them to move upmarket through greater opportunities to share in the value addition process. Democratising access to assets and markets must be backed by equitable access to education and health care. Democratisation of access to quality education and health care is both integral to the empowerment of the excluded and instrumental in their elevation from agents to principals.

The disempowerment of the excluded largely originates in their isolation which, within a highly inequitable society, enhances their vulnerability to the vagaries of market forces. Any move to reposition the excluded must, therefore, be built upon strengthening their capacity for collective action. This would also be relevant in the labour market where collective bodies of the excluded would be in better position to bargain for work not just from private employers but in state provisioned employment generating programmes. Institutions for promoting asset ownership and realising a higher share of value addition for the excluded would also need to be designed to develop and sustain their capacity for collective action. Collective action by the excluded remains central to any measures to strengthen their capacity to participate in the democratic process and share in the benefits of governance.

A Vision of a Just Society

If we genuinely aspire to Swaraj for all peoples in South Asia, then we need to correct the injustices which still leave the majority of our citizens bound by chains of domination and dependency. In a work which is nearing completion at the Centre for Policy Dialogue in Dhaka, we have discussed the nature of a policy agenda which can serve to correct some of these injustices, which constrict the freedoms of millions of the excluded. Here I will summarily attempt to project the vision which has guided our proposed interventions designed to build a more just society:

1. Work must be guaranteed for all as a fundamental right. However, it is not enough to just offer work as part of a public development programme. Those seeking work must be, ab initio, empowered through the formation of labour collectives which will be assigned work contracts provided under various NREGPs. These labour collectives would need to be involved in the design of village level development programmes where the labour input is clearly identified and the NREGP is recognised as a resource for the realisation of the programme.

2. The long-forgotten commitment to agrarian reform needs to be revived in order to enhance access of the landless and land poor to cultivatable land. Tenant farmers need to be assured of the security and perpetuity of their tenure whilst the terms of their tenancy need to be made less onerous. Government owned (Khas) land should invariably be distributed to the landless. Similarly rights to water bodies, fisheries and forestry lands, vested with the state, should be assigned to collectives of the resourceless or those of the excluded such as tribals or indigenous communities who have traditionally exercised usufructuary rights over these resources.

3. Those selling their labour, primary produce, skills, or business services in the market must be organised, through collective action, to negotiate better terms, with higher tiers of the market. These collectives must be further empowered to share in the value addition process through provision for equity ownership by primary producers, in part or full, of production and marketing enterprises serving the final market.

4. Opportunities for ownership of urban real estate and corporate wealth should be extended to collectives of the resource poor or slum dwellers.

5. Workers should be invested with opportunities to own shares in the enterprises where they work or to fully own smaller enterprises through various cooperative, collective or corporate modes of ownership.

6. At the global level multinationals, which own plantations and add value to their produce, should provide part ownership to their workers or the primary producers from whom they contract their produce. Global retail multinationals, such as Walmart, who add value to the output of garment workers, should be persuaded to invite their supplier enterprises to become their partners, provided that these, in turn, have extended ownership rights in their enterprises to their workers.

7. The financial policy should be restructured to provide both credit and financial instruments which can underwrite the assumption of ownership of the excluded and workers over productive assets and corporate wealth. The excluded of South Asia have demonstrated their creditworthiness in the micro-credit market. Their sense of fiduciary responsibility should be recognised by upgrading the micro-finance organisations which serve them, into commercial banks that are fully owned by their clients. Existing commercial banks should also include the excluded in their corporate credit programmes as well as extend ownership rights to the excluded.

8. The excluded should be institutionally consulted in the design of the budgetary policy. Public resources should largely be invested in empowering the excluded through enhancing their human development, access to public services and improved infrastructure. Fiscal instruments should be designed to provide the excluded with the same degree of incentives which are perennially being offered to the corporate sector.

9. Access to quality education should be recognised as a fundamental right. Ideally a universal system of high quality education, as prevails in many countries of Europe and East Asia, should be put in place as early as possible. Ad interim to this process, a major investment needs to be made to upgrade the quality of public education.

10. Access to quality health care should also be recognised as a fundamental and legally enforceable right. Investment in public health care should be massively upgraded and reinforced by a universal system of health and social insurance, sponsored by the state.

11. The ultimate and eventually the most important sources of empowerment for the excluded should be extended through opportunities for elective representation in local and national legislatures, in numbers which are more commensurate with their demographic strength. Correspondingly, access to the institutions of governance, the administration, judiciary and law enforcement agencies should be democratised.

12. Multilateral institutions at the global level should be democratised and opportunities should be in-built in these institutions to give voice to the concerns of the excluded.

The Urgency for Change

Our agendas for change have acquired a new urgency in the wake of the ongoing crisis which is consuming the global economy. A world order which has elevated the values of the casio into the central dynamic of the capital market is threatening the livelihood of millions of vulnerable people around the world. We need to design a development process which is less dysfunctional, less unfair and more serviceable to the needs of millions of ordinary people. We believe that providing work, assets, and enhancing the scope for income gain for millions of people in South Asia, located at the bottom of the pyramid, will strengthen the resilence of our economies to cope with such global downturns. This is the right moment to stimulate domestic effective demand, particularly in the more populous countries of South Asia, by locating purchasing power in the hands of the excluded through massive investment in the rural infrastructure. Liberating the productive potential of these millions by investing them with resources and skills will stimulate, internalise and sustain the growth process across South Asia. Transforming these millions into owners of wealth, equipped with the capacity to access the upper tiers of the market, will invest them with a sense of empowerment they have rarely known.

The full realisation of such a transformation in our social order must obviously remain in the future. Much will depend on the evolving political economy which drives or constraints structural change and is unique to each country in South Asia. But if we are genuinely committed to the goal of ending poverty, promoting a more inclusive development process and ensuring the sustainability of our democratic order, then we must, at least, begin to address the injustices which have frustrated the universalisation of Swaraj in our societies.

A social order, where millions of people remain condemned to lives of insecurity, poised on the margins of subsistence, where the quality of their education condemns them to a life of toil and an episode of ill health could drive their entire family into destitution, is not sustainable. An economic order where millions of young women are condemned to earn thirty dollars a month, whilst a handful of people can aspire to First-World styles because such low wages make their enterprises export competitive, is not sustainable. A political order, where those with wealth can use it to capture and perpetuate themselves in power, while those millions who vote them to power have no opportunity to either share this power or to determine how its fruits are consumed, is unsustainable.

We live in dangerous times which are likely to become even more dangerous if we do not correct the injustices which divide our society. A stable democratic order will only be sustainable if enough people across South Asia can be invested with a sufficient stake in defending a social order which invests them with the Swaraj which has been denied them for so long.

[This is the text of the paper the author presented at the International Seminar on “Social Development and the Human Civilisation in the 21st Century” on the centenary of Hind Swaraj, India International Centre, New Delhi,

February 13, 2009]

The author, a well-known Bangladeshi economist, is the Chairman of the Centre for Policy Dialogue, Dhaka.

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