Demonetization and Swatantra
Can demonetization be seen as part of Dharma? Vikramjit Banerjee asks whether self-restraint is an oft-forgotten but intrinsic element of that which makes the Indian economy distinct from those around the world.
This is the last essay in a five-part series examining demonetization from the perspective of policy, economics, and political agenda. The previous essays in the series can be read here: 1, 2, 3, and 4.
We all know that free-market economies come in different shapes and sizes. Any market economy is a reflection of the values of its people. In a sense therefore every market economy is unique. This is because every market is a product of unique social factors. As is now well-known, this results in different market models for different countries and different societies. The market model for the United States of America and for the Anglo-Saxon world is different from that of Europe. The market model for Japan, China and Southeast Asia are also different from each other, sometimes as different as chalk and cheese.
The reason for this difference is both economic as well is cultural. Economic: because nowhere in the world do two countries have the same economic factors shaping their markets. Cultural: because we all know our demands and the co-related supplies are dependent on cultural factors. I would like to think that the market economics in India is not the market economics of the West, which is merely a “Free market economic system” or “Capitalism”. It is rather a system which for want of a better word could be termed as Swatantra.
Swatantra has two aspects. The first is individual choice and the duty or Dharma of the society to recognise that individual choice. The second is the duty or Dharma of the individual to accept the objectives of society when exercising that individual choice. It is an interplay of both which makes Swatantra work.
Importantly our society is different from the individualist societies of the West. Not better or worse but different. India’s greatest political exponent of the market and market-based society predicated on the right to choose, C. Rajagopalachari or Raja-ji understood this crucial difference. He wrote in “Hinduism: Doctrine and Way of Life”:
“Everywhere now in the civilised world , men want a wise allotment of work to individuals as well as groups in accordance with demands of common interest in place of personal choice or caprice. They feel that they have had enough of laissez faire and of the “divine right” of making unlimited profit. It is essential that individual efforts should be regulated and controlled in the interests of society , this vital duty cannot be left entirely to the spy and the policeman employed to keep a watch over citizens. We must build up a social conscience and a cultural incentive to cooperate from within and create a spiritual yearning which makes a joy of restraint and strenuous discharge of duty…….In Vedanta we have a teaching which is rooted in immemorial tradition and associated with sacred names and memories of a long line of seers, which can serve as the spiritual and cultural basis for a new and more just economy of life, if not for all over the world, at least in India itself.”
I see demonetization in that context. Various aspects of demonetization have been discussed threadbare. The economics of it, the politics of it, the sociology of it, the legality of it, and the financial aspect of it and the security angle of it had been discussed in great detail. However the most crucial part that the recognition that the ability to restrain oneself while having the ability to exercise one’s choice is a crucial aspect of Indian society and market is something which has not been addressed in any debate. When we discussed the conception of Dharma and the conception of Sva-Dharma we realise that exercise of self-restraint is a crucial part of Sva-dharma . We also realise that the obligation of the society through government to use Danda or punishment to nudge us back to the path of Dharma is a crucial part of a Raj Dharma. The failure to perform this act of correction is a Dharma on part of the state and the failure in the performance of Raj Dharma.
It is my belief and my experience while talking to a diverse section of people in the country, that people have perceived the steps of demonetization in that context. May not be explicitly in terms of the Dharma paradigm but possibly inherently as a deep inner truth and an exercise of the duty to self correct for the long term good of the society. They have perceived their difficulty of being unable to access their money not as a restriction on their individual rights in a free-market but as an exercise of Swatantra or the duty to regulate oneself for the betterment of society. For those of us who are not aware of the civilisational resonance of this, the response to demonetization comes as a surprise. Indeed politicians of various hues have been taken aback as to how people have not chosen the path of resistance but have almost joyfully cheered on this exercise.
It seems today that there is an all-round recognition that demonetization was a much-needed step. There is however surprise that people have not protested their difficulties. It is noted how the same people who object to traffic barricades have borne this great difficulty with fortitude. It is my view that demonetization whether deliberately or inadvertently has relied on wellsprings of Indic civilisational norms which underlie the Indian society and therefore the Indian market economy. To that end it has showed us why in spite of all our notions of the universal application of the laws of demand and supply, we are frequently wrong in predicting Indian economic outcomes. The problem lies in our inability to factor in cultural norms and understandings.
The biggest lesson I perceive from demonetization and the contradictory reactions which we have received from experts and the people is that while recognising that there is universal recognition that the market regulates the affairs of people’s needs and wants better than the state, including in India, in India it is still the society which holds primacy over individuals. In the future while shaping policy it is a lesson that we should all keep in mind.
