A great country made small by its socialist policies
A great country made small by its socialist policies

It is undoubtedly a fact that India, as a geographical area, was once a great land – the richest in the world for its times. It is even correct to state that this was so for most of the past 2000 years.

But the entire world was relatively poor, then. India was a little bit better than most places due to its leadership in the fields of mathematics, science and economics.

Chanakya’s knowledge of economics, which influenced many kingdoms in India, was far superior to anyone else’s till Adam Smith came on the scene. He promoted trade, particularly imports. This conception was a revolutionary advance in economics, which many people in the West, such as Donald Trump, do not understand even today.

Yes, there were numerous shortcomings in India – which kept it from modernising on the scale of Western nations today. For instance, India did not understand the scientific method. And it had a caste system which tended to freeze out vast groups of people merely on the basis of their birth.

Yet even these shortcomings were relatively modest for those times. James Tooley has undertaken first hand research into archival records maintained in England and has found that a private system of schooling – superior to the European – flourished in India prior to British rule. The findings of his research are intriguing:

This level of educational enrollment, reported Munro, “is higher than it was in most European countries at no very distant period.” Moreover, the indigenous schooling system found by the British did not just focus on the elite but included the most disadvantaged and poorest. What are today classified as “backward castes” in India amounted to a substantial minority of enrollment in each district—for instance, 38 percent of the school population in Tinnevelly and 32 percent in Salem and Madras. [Tooley, in The Beautiful Tree]

It it is hard to say where India would have become in the absence of British rule – which had a significant negative effect. But the question for us is whether India has operated to the best of its ability after independence.

On this, however, the evidence is unambiguous: that in comparison with many other countries that were placed far worse than India was in 1947, we have performed deplorably. Nehru’s fascination with Fabian socialism hobbled this once great geographical area from rapidly growing back to pre-eminence.

Nehru was influenced by “development experts” – left-leaning intellectuals who imagined they could fix development problems through planning. These included people like Gunnar Myrdal, but also Ragnar Nurkse, W.W. Rostow and Rodstein-Rodan. Nehru was smitten with P.C. Mahalanobis, a statistician with not the slightest understanding of economics, who played an extraordinarily important role in India’s system of “planning”.

On the other hand, Nehru ignored real economists like Chanakya, Ludwig von Mises, Friedrich Hayek and Milton Friedman.

The result was that the worst possible policies were introduced in India. Each policy violated the basic principles of economics.

Till today, India has not a single policy which can pass muster with any real economist. An amazing litany of socialist mumbo-jumbo and “programmes” clutters India’s landscape. Its socialist bureaucracy is, as a consequence, extraordinarily incompetent. This combination of bad policies and hopelessly incompetent bureaucracy is lethal.

Those are some who argue that India had no choice but to take a heavy-handed approach after independence. They also claim that India has done somewhat well. Something about its size and complexity is given as an excuse for poor performance. Even otherwise reputed economists like Deirdre Mccloskey somehow suggest that India has benefited from liberalism. Yes, there has been a small and insignificant liberalisation of policy in India from around 1991, but overall, India remains a deeply socialist country.

India’s socialist agenda is visible everyday in every way. Modi’s recent budget was a classic example – steeped in concepts driven by socialist ideas. A vast number of bad policies not only continue to be funded by the government, but the core functions of government are almost entirely ignored.

There can be no doubt that if standard economics begins to be applied to India, the country will start functioning properly once again and soon achieve parity with the West.

The question for is: who will bell the cat?


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