In my first post in this series I described India’s elites as the vast collection of politicians, bureaucrats and intellectuals associated with the endless Nehru-Gandhi dynasty/Congress Party that has ruled India almost continuously since its independence sixty years ago. India became a republic in 1950 and since that time the country has been ruled by the Congress Party – and headed by a Gandhi – virtually continuously.

The elites that dominated the Congress Party began their political lives as died-in-the-wool Fabian socialists.(1) Jawaharlal Nehru was exposed to Fabian thought between the wars, and after independence he committed India to a soup-to-nuts socialist diet: the Indian state owned the means of production, taxes were extremely high (and often imposed retroactively), and virtually all private economic activity was discouraged via the phenomenon of the “license Raj,” a system of Byzantine permits and licenses that suffocated individual initiative.

None of this was especially surprising – following World War II virtually the entire world was either socialist or Communist. What was surprising, and devastating to India, was the failure of the elites to adapt. During the 1980s, and especially after the collapse of the USSR and the switch by China to a more market-based economy, most of the world gave up on socialism. And, indeed, during the 1990s attempts (encouraged by a devastating debt crisis in 1991) were made to reform India’s economy and these modest reforms ignited terrific growth, averaging 7.5%/year. People began to speak of India catching up with and even surpassing China.

But instead of recognizing that continued free market reforms were likely to keep India on a rapid growth trajectory, the Congress Party halted further reform efforts and used its new-found wealth for more and greater redistribution schemes.(2) The results over time have been stunning. At independence, India’s average worker earned 25% of that of the world’s average worker. By 1980, after 30 years of Fabian socialism, India’s average had dropped to 14.5%. Thirty years ago India and China had the same GDP per capita: $300. Today, China’s is at $6,750 while India’s is around $1,700. The cost in human suffering and lost human potential has been simply incalculable.

By the end of the first decade of the 21st century, India’s growth was stuck at 4.5%/year – not much better than older economies like the US, and far behind China.(3) The result was the complete overthrow of the Indian elites. In 2014 Narenda Modi’s Bharatiya Party won fully 282 of 545 seats in India’s lower parliament, while the elite Congress Party won just 44. (Congress had won 207 seats in the prior election.) A more thorough repudiation of a national elite can hardly be imagined.

But as with the rising right-wing parties in Europe, what replaced the fallen Indian elites was distinctly unattractive. Narenda Modi’s reputation internationally was so unsavory that the US and many other nations had refused him permission to enter their countries. Modi’s notoriety was based mainly on his Hindu nationalism, which led him to do virtually nothing to halt vicious Hindu-led riots in his home state of Gujarat that killed nearly 2,000 people. But Modi is also known for crony capitalism, book-banning, an almost endless series of scandals, and for what India’s leading historian, Ramachandra Guha, has termed Modi’s “fascism.” Modi likes to style himself as the “Indian Ronald Reagan,” but if you take his campaign promises seriously, he sounds good deal more like an Indian Jimmy Carter.(4)

Still, Modi is obviously a capable man and rarely has any politician been handed such a compelling mandate to effect change in a large society. The world’s hopes lie heavily on his shoulders, because what happens in India over the next decade might just be the most important national project on the planet. In the first place, India will soon be the largest country in the world by population, given its rapid growth and China’s declining growth. Therefore what happens in India, for good or ill, effects huge numbers of human lives. In addition, India remains the head of the group of non-aligned nations,(5) and while that role is less important than it was when the US and USSR were vying for global supremacy, it’s still viewed as critical by many countries and India’s example will resonate far beyond its own borders.

Finally, and by far most important, India’s economic success or failure may resolve permanently the question whether free market democracy is a globally applicable alternative for societies everywhere, or whether it will remain an approach largely applicable to smaller, homogeneous(6) countries in the West and East Asia. For while it’s true that, following the collapse of the Soviet Union and the switch by China to market-focused economic policies, democracies grew like wild bamboo,(7) few of them could be described as stable or just.

In other words, if a democratic state is nothing more than one that elects its national leaders, then democracy is a poor thing, indeed. A true democracy must offer a wide array of rights to its people, including protections for minorities, and – perhaps most important – must succeed in providing high quality lives to its citizens. In other words, the institutions associated with successful democratic societies are every bit as important as the elections themselves.

Since independence, India has made to its population the opposite promise Deng Xiaoping made to the Chinese. While Deng offered economic growth and prosperity in return for continuing authoritarian rule by the Communist Party, Nehru offered democracy in return for socialism. So far, that’s been a bad bargain for the Indian people, thanks to the consistent and ongoing failures of its elite citizens. It will be interesting – more than interesting – to observe what happens next.

(1) The Fabian Society, organized in London in the late 19th century, advocated the implementation of socialism through gradual reform, rather than via violent revolution, as with Communism.

(2) These redistribution schemes could be said to be consistent with socialistic economic theory – taking from the rich and giving to the poor. But by the end of the 20th century socialism was such an empty idea that it was obvious the Congress Party was simply engaging in crass “vote-bank politics,” that is, buying the votes of the poor by distributing money to them, especially just before elections.

(3) And the “law of large numbers” was also working against India. If the $16 trillion US economy grows by 3%, it adds almost $500 billion. If the less-than-$2 trillion Indian economy grows by 4.5%, it adds a mere $90 billion. Despite its slightly more rapid growth rate, India has now fallen an additional $400 billion behind the US.

(4) Just as random examples, Modi proposes to increase some of the most notorious redistribution schemes and to retain the bloated, inefficient state-owned enterprises that control one-fifth of India’s economy.

(5) The so-called Non-Aligned Movement was founded in 1961 by Nehru himself. As recently as 2102, the Non-Aligned Movement boasted no fewer than 120 country members, plus another 17 “observer countries.”

(6) The European countries, and Asian countries like Japan and South Korea, are stable democracies but they are also utterly homogeneous societies. The US is a large, heterogeneous society, closer to the Indian model, but our democracy was established while we were still small and much more homogeneous.

(7) In case you’re wondering about this metaphor, bamboo is the fastest-growing plant in the world (according to that esteemed authority, Guinness World Records). In any event, in the mid-1970s there were only 35 democracies in the world, while today there are 117.

Next up: Our Floundering Elites, Part 6: Our Floundering Elites, Part 6: Implications for the USA

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