Communism, the Russian Experience and India

I Satya Sundaram

The year 2018 marks the 200th birth centenary of Karl Marx (1818-1883). True, Marx could influence thinking worldwide through his writings. However, some of his observations remain polemical even today.

A study of Russian experience in the economic sphere is both interesting and rewarding. It offers useful lessons to other countries. The former USSR could become a big power within a short period, that too with its own resources.

The relative roles of the market and the state remain polemical even today. While some assigned a major role to the state in the economic sphere, others argue that optimum utilisation of resources takes place only under capitalism. True, capitalism had created not a few formidable problems. However, those who support it say that there is an in-built mechanism in capitalism which will take care of the problems.

However, socialism gained importance in many countries, glorifying the state's role in the economic sphere. Even after the collapse of the Soviet economy, not a few intellectuals strongly support the state. Some cannot but remember communism and socialism. But, there are critics too.

One writer has said that there is the super myth of our age: statist myth of socialism. The degeneration of the socialist revolution under Stalinism created a class system which consistently presents itself as socialism. Unfortunately, almost everybody believes in the socialist identity of Stalinist society. (Stoganovic 1976)

Be that as it may, the significant role being played by the state in most developing countries is palpable.

The Russian economy began to deteriorate since the early 1970s. The Perestrokia of Gorbachev was expected to bring about a turnaround. But, that was not to be.

Most of the ills of the USSR economy can be attributed to excessive centralisation. Everything was sought to be done through commands. The Soviet economy was called command economy. However, what is happening at the grass-roots level is also important. The nature and dimensions of some problems need to be observed and at the local level. For instance, problems of the agricultural sector vastly differ from region to region. Some have advocated centralisation on the grounds of its potential benefits. (Prud'homme 1995)

In a vast country like the USSR, the principle of decentralisation should be respected. On the other hand centralised system, based on commands, was created. When the principle of decentralisation is skirted, mistakes cannot be rectified in time, leading to wastage of precious resources.

The too much stress on capital goods production was sought to be justified under the veneer of accelerating the rate of growth. There is nothing wrong with this approach. But, the fact is, there should be a change in favour of consumer goods at the earliest. This has not happened. Hence, the USSR was forced to import even essential goods.

The pricing system was not allowed to perform its legitimate role. It should be related to cost of production, and also consumer preferences. If the demand for goods increases, producers produce more of it. There will be a decline in price. Thus, price mechanism ensures optimum utilisation of scarce resources. In the USSR, the price mechanism was jettisoned. The country did not realise that there are limits to subsidisation of goods. The economy cannot thrive on a preposterous pricing pattern. (Sundaram 1993)

The economic system should offer some incentives to the labour-force. Competition, private property and profit motive are supposed to be potent incentives in a capitalist economy. Communism discarded them totally. It has of course evolved a set of incentives, but these failed to deliver. The bureaucracy misused its enormous powers.

The Soviet experience offers some lessons for India and other countries. These need to be carefully studied. Also, conditions vastly differ from country to country. For instance, the USSR was a vast country, with limited population. India is a densely populated country.

At one time India thought that state alone can deliver. Planning in India could not accelerate the rate of growth, nor could it ensure distributive justice. Now, they are going to the ether extreme: privatisation or market-oriented economy.

The present proclivity towards privatisation is not justified. It is puerile to presume that markets function well. The market mechanism is criticised as being either ineffective, unreliable or irrelevant for the problems facing developing counties.

It has been rightly said that, while there is increasing skepticism and, renewed doubts about the efficiency of the state, there is still a substantial degree of confidence amongst the common masses and especially the poor about the inherent indispensability of the state apparatus which may still be expected to deliver the goods. (Nayak 1996, p. PE-21)

It has been observed by Harry G Johnson that even if the market functions perfectly it will not produce the best possible results by its own criteria if there is a difference between social and private benefit or cost. The income distributor produced by the market is unjust and socially undesirable. (Meier, 1970)

It has been rightly pointed out that while the profit motive may work well in the sphere of commodity production, in the production of shoes, say, it is fraught with serious problems in the areas of health, education, poverty alleviation and famine relief. There is no alternative other than to have substantial state action in each of these areas.

Glorifying the state blindly is not justified. For instance, India has miserably failed on literacy and education fronts. Some neighbouring countries have done better. The priorities in these sectors have been well summed up: integration of higher education with skills and vocational education; attracting the most credible talent to the teaching profession; building global recognition to the education system; and streamlining regulation to attract credible private sector entities to education sector. (Kapoor, 2017)

Thus, while the role of the state in the Indian economy is significant, its scope should be restricted to vital sectors. If privatisation is good in some sectors, it should be encouraged.

Long ago L K Jha observed that the execution of public sector projects was done in a lavish way, with stress on enhancing investment and enlarging capacity. No attention was paid to the demands of their products and ultimate profitability.

The capital goods and heavy industry play a crucial role in accelerating the pace of growth. The USSR could become a big power in a short period that too without any external aid. Nehru was inspired by this. India's second five-year plan (1956-61) gave importance to heavy industry. However, some economists criticised Nehru's economic policy. The conditions in India are completely different from those of the USSR. India is a densely populated country. The challenge here is to provide gainful employment to the huge labour-force.

However, some economists argued that the problems faced by the Indian economy are not to be attributed to heavy industry model. Prof A K Das Gupta, who taught at Dhaka University, had stated long ago that there was nothing wrong with the Russian model of development. He declared that India's fault lies in not properly utilising the capital goods. And planning declared that there should be less stress on comforts and luxuries. But, the same were imported, leading to balance of payment crisis. (Dasgupta, 1978).

India respects the principle of decentralisation in the economic sphere, believes in multi-level planning. Importance is given to matching the proposals originating at the higher and lower planning levels, to ensure their consistency with the over-all parameters and framework set by national planning. (Mukherjee, 1990).

The 73rd and 74th Constitutional Amendments are designed so as to build a strong base for democratic structures at the grassroots level. It has been rightly observed by Gopakumar that local governance and decentralisation should be viewed in the context of need for reconciling two conflicting tendencies—globalisation and local self- governance. (Raj, Ed 2006)

Gandhiji had aptly said, "Distribution can be equalised only when production is localised… distribution will never be equal so long as you want to tap other markets of the world to dispose of your goods".

Elsewhere he wrote, "The end to be sought is human happiness combined with full mental and moral growth. I use the adjective moral as synonymous with spiritual. The end can be achieved under decentralisation. Centralisation as a system is inconsistent with non-violent structure of society. (Harijan, January 18, 1942)

A vast country like the USSR ought to have paid special attention to decentralisation. However, this norm was jettisoned.

The relative roles of the market and the state change over a period of time. It has been said, "There are few grounds for creating exact replicas of socialist structures of the twentieth century despite their great achievement, since their many weaknesses too are now apparent". (Moosvi, 2011)

The capitalism that was in the mind of Karl Marx no longer exists today. It had undergone many changes because of new developments. The emergence of powerful trade unions is one. One also now speaks of public private partnership and corporate social responsibility.

It is true that the Russian government had identified its past mistakes, and tried to rectify them. But, the travails of transition are palpable. The transformation is facing formidable problems.

The march towards a market oriented economy in the case of the USSR should have been more cautious, well planned and pragmatic. (Sundaram, 1992)

There are writers who do not find anything useful in the Marxian system. Beer has stated that Marxian theories of value and surplus value are significant only as a political and social slogan and not as an economic truth.

It has been rightly observed by Merilee S Grindle, "improving public policies and their implementation and creating stronger and more stable institutions of governance are essential if the developing countries are to tackle the causes of the problems they face and begin to address their vulnerabili-ties internationally". (Nye)

Besides, communism and capitalism, there are two other important sectors which have been neglected. These are voluntary sector and the cooperative sector. The voluntary sector has an edge over government departments in sectors like education and health. People have to utilise the services of voluntary agencies to minimise wastage of precious resources.

Economists like J S Mill accorded top priority to the cooperative sector. They believed that this sector does not suffer from the drawbacks of communism and capitalism; it will preserve the good features of both.

In India, there is a tilt towards Public-Private Partnership (PPP) mainly because the government suffers from resource crunch. The PPPs are expected to play a major role in sectors like infrastructure. However, it is said the PPPs focus more on fiscal benefits than effective service provision. It is said that slowdown and delays impact developers' interest. The PPPs across the countries have failed primarily due to mismanaged risk and lack of a structured response to unfavoured situations. (Subidhi, 2017)

It is puerile to presume that Marx is irrelevant. Whether one agrees with him or not, one has to admit that at least two of his ideas are germane to the prevailing conditions in most developing countries. These are: (i) the state has to play a significant role in the economic sphere, and (ii) the high incidence of poverty and, unemployment would retard progress on the economic front.

Thus, some of the ideas of Marx have permanent value. It is true, and even axiomatic, that the "strong" continue to exploit the "Weak". Any attempt to marginalise Marx would be Sisy-phean.

Frontier
Vol. 51, No.5, Aug 5 - 11, 2018