Published by the Centre for Civil Society, a public policy think tank based out of New Delhi, the excerpt below has been borrowed from the handbook “Free Your Mind: A Beginner’s Guide to Political Economy” by Sauvik Chakraverti in 2002.
The handbook is a concise introduction to the principles of political economy and is aimed at readers who are new to the subject. An easy read for anyone interested in understanding how the politico-economic system works and makes them conversant with the essential errors of socialism, the book is written in a clear and accessible style. It uses real-world examples to illustrate its key concepts.
One of the book’s central themes is the importance of individual freedom and the harmful effects of excessive government intervention in the economy. The author argues that a free market system, where individuals can make their own choices and pursue their interests, is the best way to promote prosperity and innovation.
Sauvik Chakraverti was an Indian columnist and author. He wrote extensively on politics, economics, and culture, and his writings often focused on promoting classical liberal ideas.
Chakraverti regularly contributed to several Indian newspapers and magazines, including Livemint. He was also the author of several books, including “Udarwad: Raj, Samaj aur Bazar ka Naya Paath,” “Antidote: Essays against the Socialist Indian State,” and “Natural Order: Essays Exploring Civil Government and the Rule of Law.”
Chakraverti’s writings were known for their incisive analysis and unconventional perspectives, and he was a strong advocate of individual freedom and free markets. He passed away in 2014, leaving a legacy of thought-provoking commentary on Indian society and politics.
You can read the original, unabridged version here.
Having said that Homo Economicus is a machine programmed to generate wealth, it becomes necessary to examine the argument taught in Indian Economics that India’s substantial human population is a cause of poverty. If humans are the only species capable of creating wealth, then how can more of their number cause poverty? What is the truth?
The truth is that every dot on the map, representing a town or a city, is densely populated with human beings–and is rich. More millionaires, cellphones, Mitsubishi Lancers, and swimming pools are in crowded Delhi than in vacant Jhoomritalaiya. Why is this so? For the answer, we must turn to Economics, which studies the production of wealth.
Because we can trade, we SPECIALISE in doing what we do best and exchange with others for what they do best. Unlike animals, human beings are not self-sufficient. Instead, they tend to find specialised niches in which to work. They produce goods and services from these niches, which they exchange in the market economy. Thus you have farmers, fishermen, goatherds, journalists, dentists, washermen, etc. No other species specialises in this manner because they do not have a market economy, resulting from our remarkable trade ability. This is how wealth is created.
Human beings, being “economical”, should never be advised to be “self-sufficient.” Imagine your plight if you decided to opt out of the exchange of goods and services and had to do everything yourself. Imagine what would happen if your family became “self-sufficient”; and then your village or town. This would mean that not only would you be compelled to grow your food and wash your clothes, but it would also mean that you would have to learn to build your own house and learn surgery. At no level does self-sufficiency improve the lives of those who practice it. All it does is divert your productive energies from areas where you are most competent to those in which you are relatively unskilled. If it is terrible for a person, a family, a village or a town to practice self-sufficiency, a great nation like India cannot gain by pursuing such a path. Self-sufficiency is economic suicide.
A little experiment can be attempted: Go to a kindergarten class and ask the little children what they want to be when they grow up. They will answer: actor, dancer, policeman, and so on. I’ll bet that little child will not say: I want to grow up and be self-sufficient. If it goes against the logic of little children, how could it be logical for the entire nation to practice self-sufficiency?
When we specialise in the market economy, a phenomenon occurs that economists call the Division of Labour.
ECONOMICS IS THE STUDY OF THE PRODUCTION OF WEALTH THROUGH THE DIVISION OF LABOUR.
Dividing labour into numerous specialised roles is the best possible in an urban area– denoted by a dot on the map. It is challenging in a rural area where there are very few people, and thus, the minimal scope for being, for example, a successful dentist or even a dhobi.
Therefore, every dot on the map (representing a town or city) is densely populated and relatively affluent. Wherever human veins are densely crowded, as in a city or a town, there is greater prosperity than in any vacant countryside simply because of a more significant division of labour. The extent/degree of the division of labour depends on the market size.
For example, if you wanted to open a Thai restaurant and you needed 100 diners a day to break even, and if one out of every 100 people wanted Thai food on any given day, you would have to set up shop in a town where are at least 10,000 potential customers. This is why crowded cities are prosperous: there is a more significant division of labour. This is a universal phenomenon: not just Delhi and Bombay but London, Tokyo, New York, and Paris are densely populated and affluent.
The world is 50 per cent urbanised today: half the world’s population lives in towns and cities. India is far below the world average at about 30 per cent, but the wealthiest states of India–Gujarat and Maharashtra–report urbanisation levels close to the world’s average of 50 per cent. India’s poorest states, like Assam and Bihar, reported urbanisation levels below 10 per cent.
It is important to note that the word “civilisation” has its root in the Latin word civitas, which means “city.” The story of civilisation is the story of great cities coming up around the Mediterranean and linking up, supplying goods and services to each other: the small, safe sea provides the transportation backdrop around which trade could take place. Mohenjodaro and Harappa were great cities linked to the Mediterranean through the port of Lothal. Cities and towns are the anthills of human colonists. It is futile to pursue “development” while cities face ruin.
Across the world, urbanisation causes prosperity by aiding the division of labour. Countries like India would therefore be better off pursuing urbanisation as a means to wealth instead of doing what our government has been doing all these 50 years–spending money uselessly on “rural development.” A recent Arthur Andersen-Fortune survey of cities worldwide found Indian cities to be the worst in the world! This is not the way to become a prosperous country,
Apart from general misgovernance, one of the prime reasons for the ruination of our urban areas is the undersupply of roads. We shall later discuss this issue in greater detail. For now, let it be understood that there are over 400 names in the STD code book. Still, most of urban India (62.5 per cent of India’s total urban population by some estimates) is focused on a handful of huge metros growing daily. Urban geographers, those who study the geography of towns and cities, call this phenomenon primacy. Primacy occurs when the primary city bloats up because it is not adequately linked to the surrounding villages. If there had been proper roads, satellite towns would have blossomed, and each of the 400 names in the STD code book would have become a tiny Singapore.
The British built many acceptable cities and countless “hill stations” in their time. In the last 50 years, our urban areas have all been ruined. In British India, the hill stations were all linked to a metro: the Darjeeling-Shillong belt to Calcutta; the Poona-Mahabaleshwar belt to Bombay; the Ooty-Coonoor belt to Madras; and the Simla-Mussoorie belt to Delhi. With such strong links to urban metropolises, all our urban centres can become like Singapore. Remember, Singapore received independence only in 1965. From a dirty little town crowded with coolies and hawkers, it has become a thriving city today.
Because of the undersupply of roads, there is urban overcrowding in India, but that does not mean the country is “overpopulated.” Travel by train or plane around India, and you will see vast open spaces. India’s population density (number of people per square kilometre) is LESS than that of Japan, Germany, Holland, and Belgium. And these countries do not report urban overcrowding. The solution to urban overcrowding lies not in birth control but in inroads that will allow many more towns to come up and link up with the central city. With more urban areas–400 Singapore–Indians will have sufficient living space, and overcrowding will end.
This argument, therefore, generates A Conflict of Visions. Instead of seeing the future of India in terms of thousands of self-governing and self-sufficient village republics (the Gandhi-Nehru vision), we can see India as an urban civilisation. With 400 excellent cities, all well linked to each other by rail, road and air, a maximum of trade can take place at the least cost. A poor transportation network makes business slow and expensive. A truck travels 250 km a day on Indian highways; they do more than 600 km a day in the rest of the world!
It is said that “every great city sits like a giant spider on its transportation network.” India needs such cities and towns.
SINCE HUMANS ALONE ARE ECONOMICAL, AND SINCE CITIES ARE RICH, IT MUST BE SAID THAT THE ARGUMENT THAT POPULATION CAUSES POVERTY IS THE DEVIL’S PHILOSOPHY.
It makes mothers and fathers ashamed of producing children. It makes children feel that they are not a resource; instead, they are a problem. It makes cynics look at traffic accident statistics and say that our unsafe roads are a means of solving “the population problem.”
Human beings are the world’s ultimate resource–because they all possess the human mind. You are trying to pour knowledge into that mind. Please make sure that what you feed your mind is the truth. A false philosophy will deaden your mind. It will not make you see that, with your mind and the ability to trade, you can generate wealth by doing what you do best in a free market economy. Instead, it will train you to look upon yourself and your brethren as a huge problem that requires political action to solve. To understand why political interference in the market economy harms us and our country, let us focus on the political market.
I’m off to Bombay
To make my fortune
There are jobs
I’ll be a watchman,
Even a film star—
if I dare
I’m off to Bombay
Where millions live
And a million dreams come true.
My village is poor, with nothing to give
So what else is there to do?
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