The Hindu Business Line : Which comes first, domestic or global inequity?

Should the people of the developing countries first cooperate with their leaders, however iniquitous, and redress global inequity or, should they first seek domestic equity and deal with the global issue later? Mainstream economists have their reasons for assigning higher priority to domestic inequity.

DEVELOPING countries have to battle on two fronts simultaneously — domestic and global. As the common man is affected the most by the forces of globalisation, there is need to remove domestic inequity. At the same time, 20 per cent of the people living in the industrial countries consume 80 per cent of the world's resources. This inequity too has to be removed.

Which of these should be tackled first? Should the people of the developing countries first cooperate with their leaders, however iniquitous, and redress global inequity; or, they should first seek domestic equity and deal with the global issue later?

Mainstream economists give higher priority to domestic inequity. Prof Amartya Sen has raised this issue in a novel way. He is a strong advocate of global redistribution from the rich to poor countries in order to establish fairness in distribution in the world. But he says that the donor countries should peer into the recipient developing countries and examine the equity of the recipient country's domestic governance.

If aid is given to developing countries having elitist governance then the aid strengthens the elite versus the common man. Aid, then, becomes a tool in the hands of repressive regimes. In other words, the nature of domestic governance takes precedence over global redistribution.

The developing countries have to put their domestic governance in order to be able to receive aid. Global equity is put on the backburner till domestic equity is ensured.

Professor John Connor of Purdue University says that the developing countries should not be encouraged to make OPEC-like cartels to raise the prices of their commodity exports because the incomes form these cartels can be misused to strengthen the domestic elite at the expense of the people. OPEC is a case in point.

The incomes received by the oil-exporting countries have strengthened their ability to either `buy out' the allegiance of local leaders or to repress them. The final beneficiary of the cartel has been the ruling elite rather than the common man.

Professor Connor says that the free market would have deprived these rulers of this wealth and forced them to reform their domestic governance. They would not have had the money to buy out petty leaders and stifle the demand for better governance from the people. They would have had to institute deeper economic reforms leading to better conditions for their people.

Many NGOs are taking money from foreign governments to prevent the violation of human rights by the Government.

They believe that the transfer of India's resources to foreign countries — through profit repatriations and royalty payments by MNCs, technology rents extracted through patent laws, increasing quantity of exports at declining prices and remittances to the developed countries for holding foreign exchange reserves — are less important than the violation of human rights by the Government.

Such NGOs are willing to take money from the foreign governments — who are beneficiaries of this transfer of resources from India — to secure domestic good governance in India. The NGOs believe that the problem of transfer of India's resources can wait.

The redressal of violation of human rights of the Indian people by the Government are to be dealt with first, even by making an alliance with the foreign governments who may, in part, be responsible for India's poverty. These examples show that there is a strong undercurrent among mainstream thinkers that the correction of domestic inequity is more pressing than the redressal of global inequity.

Gandhiji thought clearly, and differently, on this issue. He had a long and interesting exchange with Rabindranath Tagore who had opposed his slogan of Swadeshi. In 1921 Tagore had written: "Alien government in India is a veritable chameleon. Today it comes in the guise of the Englishman; tomorrow perhaps as some other foreigner; the next day, without abating a jot of its own virulence, it may take the shape of our own countrymen... The boycott of Manchester had raised the profits of the Bombay mill-owners to a super-foreign degree. And I had then to say: `This will not do, either; for it is also of the outside...'"

In doing so Tagore had placed domestic good governance before the stoppage of transfer of India's resources to England by the British. Independence could wait till we were able to ensure that the Indian government that takes over would be just.

Gandhiji had replied: "Our non-cooperation is neither with the English nor with the West. Our non-cooperation is with the system that the English have established... Europe has made the exploitation of non-European races a religion." Gandhiji had built a grand alliance including Indian businessmen and princes to throw the British out of India.

He ignored the iniquitous behaviour of these allies in order to first expel the British from Indian soil. Gandhiji said that the global issue had to be settled first. He did not first settle scores with Indian businessmen and princes. Perhaps Gandhiji wanted to make an alliance with the smaller enemy to get rid of the bigger one.

Similarly, Gandhiji thought that if the transfer of India's resources to England continues unabated then the people would not get any relief because there would remain little wealth in the country that could be redistributed. For this reason, Gandhiji took up the question of global equity first while being ever alert about the domestic issues. But he did not put redressal of domestic equity in the forefront.

It may have been possible to redress domestic inequity after the British were expelled. But it would be have been very difficult to expel the British after domestic businesses had been made accountable. Thus the path shown by Gandhiji appears to be the correct one, unlike the one pointed out by mainstream thinkers.

We must see India Shining in this context. It is true that the common man has got little relief. Advisors to the Prime Minister are big businessmen , not social workers. But this is our domestic problem. We should not discredit the improving stature of India in the world for this reason. This is the teaching of Mahatma Gandhi.

(The author is a freelance writer and can be contacted at: bharatj@nda.vsnl.net.in)