Democracy as a concept and economic growth that we perceive are very well correlated. But the major question that arises is whether the implementation of democracy is rightly executed ? The kind of democratic system which we have, can it lead to a sustainable economic growth? The political system in place is itself a big hindrance for growth at the first place .Corruption, regionalism and profit motive just lead to malfunctioning of the economic system. Apart from political democracy, industrial democracy is also very important. The employee power can never be neglected however powerful the management of a firm be. The existing pure capitalistic model doesn’t serve the purpose of an overall economic growth. Along with power in hands of all, regulation of responsibilities has to be there. Hence Democracy can be good for economic growth if we can implement it well.
Many of us might correlate democracy with “Equal Rights for All “and economic growth with “profit making firms “. But the reality is a tad different. To start with, let us take the intricacies of democracy and economic growth and weave them in one common thread. Democracy is a principle that the control of authority comes from public, and ruler and non-ruler are the same. Theoretically speaking, democracy is where citizens, who are not invested with power to govern, have equal access to power. And to take economic growth, it means an increase in activity in an economy. It says about the number of goods and services produced in an economy. But the question is “Is Democracy really the democracy written in books?” and is economic growth only about “increasing the number of goods and services?”. To dwell upon it , we need facts and general emotions that bolster those facts.
Suppose you are going to your office and in broad daylight you are robbed. You go to a police station and asks the concerned person to file a complaint. Is your request registered smoothly , as it should happen in a democracy ? Most of the times “NO”. Rather he would be saying you that this does not come under their jurisdiction with a big grin on his face.
Suppose you are a government employee having an income of ’15,000’ per month and three daughters. Will you be interested in buying the branded shirts or the premium class cars or bikes that are said to reflect the growing prosperity of the country?
The above two cases are just a small drop in the ocean. So is the society to blame or our customs? Maybe not any of them. These aspects of our society have been gradually building and we have come to accept them as a part and parcel of our life. Now considering them, can we say that free and fair competition in our democracy can exist? And even if it does, then can we assure that it leads to economic growth?
If we trace the progress of our Democracy, then we can see that the major boost for economic growth was the opening up of the economy in 1990’s. Apart from that, there hasn’t been any major change that could magnify the growth. The IT revolution was initially subject to a lot of criticism by our Democracy which later on proved to be a major hand in economic growth. If we take the case of Tata plant setup (for Nano) in Singur, we can see that the system of our democracy, that is having distorted relationship between state and central governments, actually led to an unnecessary chaos. Everybody lost , be it the farmers whose lands were left barren and left unemployed, or Tata who lost huge time and profit margins due to it. On papers, there is no license required to open less capital intensive industries but when it comes to implementation, the entrepreneurs cannot get through the uncountable doors of the ‘ Babus’ and get going . Corruption is also widescale . A PWD engineer is killed because he refuses to pay money as so called ‘Gift’ for a politician’s birthday. Considering all these as flaws in the system , we cannot assume that economic growth is possible in the contemporary times. If every state keeps fighting for its best irrespective of others well being, then it’s logical to say that the nation’s economic growth is in danger. According to John Nash’s theory, every individual has to fight for its best and the best of the group. That is what is required in the times of recession. We have to create a political democratic system where the well being of nation comes first , then state , and at the end for individual benefits. That doesn’t mean that we have to move to socialism. Free markets, competition can thrive well in a democracy but the change required is the regulation. SEBI, RBI has done well to protect our internal investors interests and the same should be copied to other fronts of business. Then only feasible economic growth can be achieved.
Now coming to another aspect of democracy – Industrial Democracy. The idea of transferring power to employees in a business enterprise can seem a drastic notion. But it isn’t. The abolition of petty office and shop floor autocrats, management dictators and meaningless work rules can be of immense help to our economic growth. It leads to a transformation of work from a kind of punishment into a source of genuine human satisfaction. It can turn industrial capitalism – which too often has been a fountain of boredom and restriction- into an instrument of liberation and human development.
There is a widespread assumption made in our industries ( goods and services both ) that “managers” and “employees” are fundamentally different, the former endowed with vastly superior thinking powers , the latter totally incapable of formulating decisions of their own, able only to follow instructions, and at that only under the threat of punishment (Job Power Revised, David Jenkins ,2007) .It means the intelligence and knowledge of employees is most of the times under or un- utilized. This current scenario of industrial democracy is a road block for our growth. There has to be a new element. The brutalizing effects of work under capitalism and the democratization of work organizations – are shown to be firmly, clearly and intimately connected, and that the latter can be remarkably powerful in alleviating or eliminating the former. We have had lots of examples where this system has changed for good like codetermination in West Germany, participative management in the United States, democratization of enterprises in Norway ( CRISIL database) .
After political and industrial democracy, we look at the economic growth that we are looking forward to. It is very well possible that we have a positive and growing per capita GDP but at the same time , increasing number of people below poverty line (Economic Growth, Robert J. Barro ). Is this the economic growth that we desire? Or are we looking at an integrated growth of all? The downfall of US economy suggests that the individualistic approach of economic growth, profit motive can be deleterious for the whole economy. We cannot neglect the major part of our society when it comes to economic growth as a whole.
In a nutshell, we can say that if we have to grow economically as one whole entity, not just as individuals, and we need Democracy implemented in its true form or rather any inferior alternative to the idealistic form. Only then our growth will be sustainable.
(The post is written by Indrajoy Bhattacharya. An N.I.T Bhopal grad, he worked with CSC, Noida for 2 years before joining SPJIMR, Mumbai (marketing). He has keen interest in e-businesses and global marketing, blogging, adventure sports and painting.)
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