Sunday, January 01, 2017

As stagnant West gets meaner, rising India spells hope but there’s a big if

2016 was a dreadful year and it is a relief that it's over. The values I cherish most took a profound battering. As a classic liberal, I want equal rights for all; I reject racial and caste discrimination; I revere religious freedom; I seek a free economy based on competition; and I uphold dissent. These beliefs have been undermined by Donald Trump's election in America, Britain's exit from Europe, and rising racism, intolerance and nationalism in the world, including in India where Narendra Modi has made his first big mistake with ill-considered notebandi. The fault partly lies with privileged liberals who have ignored growing discontent in their backyard.

A quarter century ago, at the fall of communism, the political scientist, Francis Fukuyama proclaimed the triumph of liberal democracy based on free markets. He called it the 'end of history' and predicted that the liberal order would spread globally as it best served the human desire for peace, liberty and prosperity. But the willingness to risk one's life for abstract goals and daring acts of imagination and idealism would be replaced by the satisfaction of ever more sophisticated consumer needs. Hence, he warned that the 'end of history' might become a boring place.

Today, it appears that Fukuyama was wrong. Liberal democracy and globalisation are under attack. China's 'Marxist capitalism' has delivered enormous wealth without freedom. The Middle East has seen the rise of violent Islamic fundamentalism instead of democracy. The 2008 global downturn has challenged the deregulation of banking and finance. Thomas Piketty, the French economist, has persuaded us that free markets have enlarged the gap between rich and poor. And white working class men in the West have let out a wail against outsiders because their political system has ignored them and religion's loss has left them with monotony without meaning.

Yet the post-war globalised liberal order has been one of the best periods in world history. It has been relatively peaceful. It has seen the spread of prosperity and decline in poverty, especially after the rise of China and India. The number of democracies have risen from 35 in 1974 to 120 in 2013. But there have also been job losses in the West due to technological change and the failure to compete with Chinese, Indian, and Third World workers, amidst economic growth that has mainly favoured the top one percent.

Despite electoral setbacks in 2016, the present world order is not in danger of dying. Yes, it will undergo change but Fukuyama's basic thesis remains sound. For one thing, there is no competitor. Radicals in the Middle East may dream of restoring an Islamist caliphate but the average Muslim does not want it. Neither is the rest of the world attracted to a 'China model' that mixes dictatorship, market economy and technocratic competence.

The model might, in fact, collapse in China as growth slows and people clamour for freedom. Ironically, many Indians admire China because it has delivered what the aam aadmi wants from the government: personal security, growing prosperity, and functioning public services. Although India's democracy is impressive, it has not delivered good governance.

In these dark times, India's prospects look bright. Unlike economic stagnation in the West, India has a rapidly growing economy with an upwardly mobile middle class, which is traditionally a bulwark of democracy. Stagnation has made the West meaner, less generous, and suspicious of people who look different. India's historical strength is its diversity. With over 50 tribal groups and 3,000 sub-castes, we are used to 'people who look different'. This is why the majoritarian project of the RSS is doomed to failure, although we must be wary of the intolerance of saffron groups in the short term. India's soft underbelly is governance. A confident new middle class, which pays taxes and feels entitled to hold public officials accountable, may well provide a cure in the long run.

Although a badly executed demonetisation has been a profound economic setback, it has not turned political sentiment against Modi. Ours is an age of rising expectations in India unlike the mood of diminished expectations in the West. India's ascent after 1991 has been based on the classical liberal values of democracy and free markets with multiplying connections to the global economy, Thus, India offers the best endorsement of Fukuyama's thesis. If only Modi could control cultural intolerance, India could become an inspiration to the world, helping restore faith in a liberal future. But it is a big 'if'.

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