The Errors of Arundhati
ARUNDHATI Roy, India's most famous novelist, has
become, thanks to Outlook, its leading polemicist. Her first target was the
Bomb, her second the Dam and now she has taken on globalisation. In doing so she
has fashioned her outrage into a philosophy. As she writes of a protest in which
she took part against the Maheshwar dam: "We were fighting for a
philosophy. For a worldview." And here she has gone disastrously wrong.
Grant Ms Roy her gripes. Perhaps it is true that
dams are ruining millions of lives to no purpose and that some private power
projects are rip-offs. If so, she has every right to her indignation. But Ms Roy
assembles such examples into an indictment of a system, "a malevolent,
incorporeal, transnational multi- gnome", who she thinks is calling the
tune in India as elsewhere. With this she has joined the battles of Seattle and
Prague against global capitalism. If she had her way, the door India has only
just begun to open to the world would slam shut once again.
To explain why this should not happen is not easy
in India, where socialism and swadeshi are the reigning economic passions.
Liberalisation looks like an assault either on the poor or on India's dignity
(for Ms Roy it's both); at best, it is seen as grim necessity. The notion that
free trade and foreign investment should be cheered, by the poor no less than by
the prosperous, has few takers. Ms Roy would be among them if she looked at the
There are no perfect experiments in economics.
But one can see how different sets of policies have affected otherwise similar
countries. The division of Europe between capitalist and communist spheres ended
in a vindication of capitalism. There's also an impressive body of evidence that
open economies grow faster than those that are closed and a smaller, but still
suggestive, set of data showing that such countries reduce poverty faster. Think
of China, which had a lower per capita income than India's as recently as 1980.
In 1998, China attracted more than 10 times the foreign direct investment India
did, which helped it export five-and-a-half times the merchandise. By 1999,
China's per capita income was 75 per cent higher than India's. About half of
Chinese live on less than $2 a day, compared with more than 80 per cent of
A recent study (admittedly by two economists from
the hated World Bank) suggests that globalisation has something to do with
poverty reduction. Looking at 80 countries over 40 years, it found that, on
average, incomes of the poor rose with overall incomes. It also found that
openness to trade spurred economic growth that benefited the poor as much as
others. Of course, education and healthcare promote growth and reduce poverty.
But, as I shall suggest, globalisation and privatisation can help with them,
Yet experience has taught Ms Roy something
different. Her clashes with dam builders, her knowledge of corrupt deals in the
power sector have apparently convinced her that private enterprise is a kind of
larceny, which gets grander as the enterprise gets bigger and more global.
Privatisation, she writes at one point, is a "mutually profitable business
contract between the private (preferably foreign) company...and the ruling elite
of the Third World".
Since Marx, if not before, witnesses to the sins
of capitalists have concluded that capitalism itself is incorrigible. But
capitalists are moral chameleons, not serpents. Companies that used slave labour
in Nazi Germany today offer their employees working hours that are among the
world's shortest and wages among the highest. Enterprises may lack a social
conscience but are socially indispensable. In a competitive market, or a
non-competitive one that is intelligently regulated, the quest for profit yields
efficiency, innovation, employment and reasonable prices. mncs have capital and
expertise poor nations lack, which makes them threatening, but necessary.
Ms Roy scoffs at one of the more useful things
private investors can do: assist India's power reforms. After all, she writes,
70 per cent of industrialists in Madhya Pradesh steal electricity, so
entrepreneurs are part of the problem. Yet if electricity distributors were
privatised, their new owners might chase the thieves, allowing state subsidies
to fall. Governments would then have more to spend on primary education and
health. Yet Ms Roy will not entertain the possibility that private players bring
a useful sort of accountability governments find hard to mimic.
She scorns Jack Welch, boss of GE, perhaps
America's most successful company, for wanting to sell power equipment to India.
She does not mention that GE employs hundreds of Indians to do back-office work
for the rest of the company, jobs that might otherwise go to Americans. But that
would not mollify her. She finds "call centres", which provide such
services, demeaning, because on duty their employees adopt American monikers and
use American slang, showing "how easily an ancient civilisation can be made
to abase itself completely". Ms Roy's napalming of globalisation does not
invite critical thinking about what it can and cannot do and how it can serve
India's interests. It consigns globalisers to a sort of untouchability.
To disagree with her is not to let enterprise off
the hook. Capitalism can't be accountable only to itself. Nor can one pretend
globalisation is the best friend of the environment, cultures, people displaced
by economic change. Enterprise should be answerable to democratic government,
vigorous media, efficient courts, none of which in India is as vigilant as it
should be. No system works on the premise that big corporations (or any other
sorts of institution) are angels.
But to Ms Roy they are Rumpelstiltskin, the foul
homunculus who spins straw into gold. She does not so much want to bury him as
to strangle him at birth. It would be a case of mistaken identity.
(The writer is the South Asia bureau chief of The
Economist. The opinions expressed here are his own.)