As the prime minister vowed to make India Self-Reliant, ‘आत्मनिर्भरता’ is suddenly the new buzzword. Or may be not so new. We have in the past either heard its glorification or have ourselves indulged in advocating it. Who doesn’t like to be self-sufficient and live with dignity after all? Individuals and states alike, aim to achieve this not-so-bad-thing to have.
But wait, have we correctly understood what it truly means to be self-reliant. Going by the dictionary style definition, it is the ‘reliance on internal resources to provide life with coherence and fulfillment (Baumeister)’.
In the context of a nation, it may imply that if its citizens collectively produce goods and services of value greater than or equal to what they consume, the country is self-sufficient. But it is certainly not to infer that a country needs to produce every product and service it wishes to consume. Rather, in an exchange economy, everyone produces and sells limited products which they are good at producing in greater numbers and with the purchasing power attained by the proceeds of the sale, buys remaining things from whoever is the most efficient producer of those respective articles. That’s the basic principle of comparative advantage and division of labor.
When governments refrain from overarching regulations and red tape and simply perform their basic duties of providing quality health and education, rule of law and basic infrastructure for the private enterprise to flourish, markets operate through spontaneous order and private citizens take care of what needs be produced and in what quantity. Market as an instrument can predict and smoothen the demand supply like no bureaucrat or government, not even the one with most superior level of intellect will ever be able to do. Countries such as USA have implemented (to whatever extent) capitalist and free enterprise policies after WW-II and have reaped the rewards with increased wealth and standards of living for its people.
May be some of us have pondered deeply on the subject and have a nuanced understanding of the matter, but most of us probably believe and buy more simplistic arguments put forth by our parents, friends, social media and other forms of media we consume. Ideas which have stood the test of time and are backed by research and science are complex and difficult to follow without getting bored (unless you’re an economics nerd). We love simplicity, and we love to look at the world around us with our binary lenses. Because simplicity is attractive and easy. Zero or one. Good or bad.
One such simplistic narrative is that we can only become ‘Atmnirbhar’ by stopping or reducing imports and producing everything at home even if it means buying costly and below par quality products. A blanket perception is that local is good and imported is bad. And many arguments are put in favor of this. The primary one is that the root cause of most of our problems are foreigners making profits and killing local jobs in our country and that the government should discourage and ban foreign products and investments. But history has proven time and again that protectionism has always led to economic catastrophe.
The main fallacy involved here is the flawed understanding of Capital. The point to remember is that capital is a scarce and limited resource, it is generated and accumulated by human labor and production. Such capital can then be invested in the growth of business. When a country indulges in protectionist policies, its efficient industry is robbed of precious capital because the capital is diverted to incompetent industries which were otherwise unable to survive in free market. And as a double whammy, the costlier product made by inefficient companies must be bought by consumers leaving them short of choice and also poorer by exactly same amount as is the gain of that unproductive company.
Some of what we think also comes from the nationalistic and patriotic position, roots of which possibly go to Pre-Independence era when the Mahatma ran the popular Dandi march and non-cooperation Swadeshi movement against East-India company. If he was right then, we must be right today in becoming isolationists? Well, what’s missing in the puzzle is the fact that he advocated protection against East India Company which was a complete monopoly and not a market force. English Imperialism was never about equal opportunity and Free market, one could at best call their trade mercantilism, an arrangement in which economic powers sought more and more external markets for their exports and that resulted into colonialism.
Years have passed by. Willingly or unwillingly, we have slowly opened up some part of our economy to market competition by loosening the grips of license raj and none would disagree that it has resulted into tremendous positive results. Millions of people got uplifted out of poverty. But the stigma and undue fear of all things foreign still persists. Interest groups and cronies, the likes of which had a free run Pre-liberalization with no real competition are suddenly required to face the heat of global and domestic competition. Obviously, they aren’t happy. That’s why we see campaigns and agitations in support of Swadeshi, a supposed elixir for making the country prosperous. But unfortunately, there isn’t an iota of empirical evidence that it can achieve any such thing.
In these difficult times of Pandemic, it is in good spirit for all of us to try and become more innovative and competitive through constant adaptation. But probably the right way to attain Self-Reliance is ‘स्वावलंबन’ and not ‘स्वदेशी’.
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