Opinion

The current age calls for new policy goals

Satwik Mishra | Updated on December 23, 2019 Published on December 05, 2019

Aiding society The state and the private sector co-create value istockphoto ALotOfPeople

The state, while being a creator of value, should focus on prosperity rather than reduction of inequalities

A coherent development model for India requires a vision for the future and a roadmap ranking implementation structures. To prioritise amongst different possibilities, we need to have a valuation framework. Today, the measure of what is ‘valuable’ in society is indicated by prices. However, there are other ways of judging value in society that are extremely significant.

Mariana Mazzucato highlights the importance of reimagining value in public policy in her book Value Of Everything . She provides a new ‘lens’ of imagining value, based on social desirability, which can help resolve challenges of today and ideate a vision for the future. She argues that public policy must value visions, processes and institutions which benefit people in society.

India could consider using Mazzucato’s framework on many contemporary issues. Here, I try to address three recent debates in Indian policy: Is inequality the challenge in India or is prosperity the thing we should value? How do we utilise transformative technology while still being in the process of understanding it comprehensively? What is the role of state in contemporary times and how does it interlace with value in society?

From inequality to prosperity

The focus in economic policy is shifting towards combating economic inequality in India. However, combating inequality is important in nations where income levels are higher than in India. India should instead value prosperity. We must create an aspiration and opportunity structure conducive to raising income levels in the nation. The given Table highlights a comparative analysis of median income based on a survey released in 2013.

 

 

 

Median income is the amount that divides the income distribution into two equal groups; one group has income above that amount, and the other below it.

It is clear that 50 per cent of our population earns very low amounts, compared to BRICS nations and developed nations such as the US. In this economic reality, the government’s focus on targets such as creating a $5-trillion economy in India is rightly aligned to valuing prosperity. India should first and foremost focus on economic growth before it begins to address redistribution. Unless we begin to value policies that increase wealth in the nation, the amount and forms of redistribution may be limited.

The importance of pushing prosperity as a more valuable policy than fighting inequality can be gazed from the UNDP’s Human Development Indicators. The top 20 nations have an average gross national per capita income of $51,787. India’s gross per capita national income currently is $6,353. The nations that value prosperity tend to have healthier and more educated citizens.

Furthermore, there is a correlation of prosperity with other desirable outcomes in society. In Transparency Internationals’ Corruption Perception Index as well as Sustainable Development Solution Network’s World Happiness Index, the best performing nations are all prosperous with high-income levels.

 

Harnessing technology

Technology is the greatest disruptor of our times. We are amidst the fourth industrial revolution where artificial intelligence, robotics, biotechnology are all merging to create a new normal. Yuval Harari has claimed we are on the path of ‘Gods’ (Homo Deus) being borne out of Homo sapiens with the help of these technologies. Homo Deus will have access to a personalised education curriculum, quicker disease cures, more productive production processes and information processing power, which is unparalleled in human history.

In times of such flux, it is essential that public policy understands the value of technology. Policy frameworks must be created which harness technology toward socially desirable outcomes in society.

To recognise the value of technology, policy needs to simultaneously go back to first principles and also become innovative. The Justice AP Shah Committee has articulated the idea of first principles. They included, amongst other principles: notice to individuals about information collection; consent from user for information collection; purpose limitation of data use for only those functions as has been communicated; security safeguards to be taken by data controller; accountability measures to be taken by data controller, etc.

Policy innovations are required to ensure that we neither shun nor blindly adopt technologies, without analysing them completely. An innovation, which stands out in recent times, is the idea of regulatory sandboxes. An RBI working committee defines it as “live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing.” The value of new technologies must be understood in these “sandboxes”. If there is clarity on social benefits from these technologies, their adoption can be structured for benefiting society and minimising its risks.

Role of the state

Since the 1990s, there has been ambiguity about the role of the state in the Indian society. We must reimagine, redefine and restructure the role of the state. The state has an important role in building the valuation framework. The state in Mazzucato’s analysis creates “tilts” towards those objectives and outcomes which are valuable to society.

John Maynard Keynes had a very optimistic take of his expectations from the state. He had argued that: “The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.”

The state is valuable in itself for its exclusive functions and also because it is a co-creator of value, along with the private sector, in society. The exclusive function which it should develop capabilities for is fixing market failures. Market failure is the inefficient distribution of goods and services by the free market. This would involve curbing monopolies to prevent market distortion and manipulation, fixing information asymmetries to empower people by creating strong accountability mechanisms, minimising negative externalities such as pollution to improve quality of life of citizens and providing for public goods such as education, healthcare, law and order.

Furthermore, a state also co-creates value in society. It invests in projects which are valuable to the society but contain risks, such as space missions. It ensures prices aren’t a hindrance for access to products which are valuable to human life, such as medicines and vaccination. Finally, the state ensures security for its citizens. Its institutions and processes prevent anarchy and create a social security paradigm which ideally creates a plank of equality of opportunity, based on which inequities of merit can exist in society.

The most important takeaway from Mazzucato’s work is her insistence on debating the concept of value and moving beyond prices as its sole indicator. Many public policy debates will get clarity of direction by understanding value based on social desirability. It’s time to appreciate that the value of what is valuable cannot be limited. It is not just important, but imperative to acknowledge social desirability as the bedrock of public policy.

The writer is a Young Professional at NITI Aayog. Views are personal

Published on December 05, 2019
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