The Hindu Business Line : Damn not the market

The efforts of Ms Medha Patkar to secure adequate compensation for those displaced by the Sardar Sarovar Dam are commendable. The National Alliance of People's Movements led by Ms Patkar, in its Hyderabad Declaration of 2000, said that the economy should not be run for a handful of persons but for the masses.

The Hyderabad Declaration also demanded that "production must satisfy basic needs and not the wants of a few... and production and consumption must be labour based." Ms Patkar also sought decentralised production. Speaking at the People's Conference Against Globalisation in New Delhi in 2001, Ms Patkar noted that traditional large-scale employment options were getting lost.

It is clear that Mr Patkar wants to secure people's welfare. But the rejection of the market and the adoption of decentralised production may lead to exactly the opposite result.

The point may become clear by looking at this example. England started building ships fitted with canons in the 17th century. Kings in India chose to stick to the traditional sailboats made of wood and cotton cloth. They rejected centralised and foreign technology. Sailboats could be made in a decentralised framework anywhere.

The result: India remained a weak sea power. The British attacked us, conquered us and took away our resources. In the end, the people of India were left worse off. Or, take this instance: The British invested in steam-driven looms in the 19th century. Our businessmen, however, stuck to handlooms that were labour-intensive and decentralised. The result was that our cost of production was higher than the imported cloth. We could not earn foreign exchange to import tin and copper by exporting cloth. The result was that our weavers and farmers both were impoverished.

Centralised production

The fact is that we cannot escape centralised production that characterises the global economy today. We necessarily have to import a variety of items. To do this we need to export to earn foreign exchange. But we are priced out in the global markets due to the use of decentralised technologies. Correspondingly, our military strength also wanes. Our people are then exploited even more.

The politics of the Sardar Sarovar Dam needs to be seen from this perspective. Though the present dispute is over adequate rehabilitation, it is well known that the Narmada Bachao Andolan opposes the construction of large dams. Not building the dam would mean that water would not be available in the plains of Gujarat. We will produce more rice on the fields saved from inundation.

The farmers of Narmada Valley will have to work hard in the absence of submersible pumps and electricity supplied by the national grid. We will be locked in the production of low-value goods such as rice and become dependent on rich countries for the import of high-value goods such as satellites. That would hardly secure the welfare of our millions.

Countries of Africa and South America delayed the adoption of these advanced technologies of production. They became dependent on the rich countries for high-value, high-technology goods. They were forced to sell their coffee, vanilla and copper at low prices and had to import computers and software at high price. The result is that they are locked in the wrench of poverty.

Issues of economic welfare

The fundamental problem of securing people's economic welfare is that capital becomes affordable as a country develops and labour becomes expensive. Production cost in central- ised, capital-intensive sectors is less.

Further, protection to labour-intensive technologies is often converted into rent-seeking by corrupt politicians and bureaucracy. The result is that we really have no alternative but to adopt centralised capital-intensive technologies, at least for a large number of items.

Our economy will be weakened and the rich countries can economically enslave us by locking us in low-value production of primary commodities. Ms Medha Patkar's sentiments are entirely understandable and wholly laudable.

But there is a need to re-examine the policies suggested. There is no alternative to centralised technologies. These technologies must be reined-in instead of being rejected. Just as the farmer does not kill the obstinate bullock but finds ways to yoke it into the cart, so will we have to do with the centralised technologies.

(The author, a New Delhi-based freelance writer, can be contacted at bharatj@sancharnet.in)