Liberal politics in India

No liberal political party?
The legitimacy of capitalism is unlikely to be accepted by the general electorate unless corruption is restricted, writes Niranjan Rajadhyaksha in the Mint, on 11 July 2007.

Why doesn’t India have a liberal, free-market political party?
The lack of such a party is a paradox, since India has seen the benefits of an open economy since 1991. So there should ideally be politicians out there who are keen to embrace the twin goals of an open economy and an open society—and reap electoral dividends. Yet, the political rhetoric we keep hearing is uncomfortably statist.
Over the past few weeks, several commentators and letter writers have discussed this issue in this newspaper. S.V. Raju, for example, has been fighting a long battle in the courts because the current law stipulates that every political party in India needs to swear allegiance to socialism. This he refuses to do—and hence cannot get the Swatantra Party, the lone voice against Nehruvian socialism in the 1960s, registered in our democratic republic.
But I think the issue is far deeper than such absurd legal requirements. It is rooted in social attitudes towards capitalism: The fault lies not in our politicians but in ourselves. The problem is endemic in many other parts of the poor world. This is perhaps why hardly any developing country has an overtly pro-capitalism party, and also why economic reforms have often been introduced by stealth rather than through open debate in most of these countries, including India. (Some even argue, perversely I feel, that the military dictatorships in Latin America in the 1960s and the 1970s were essential because the democratic debate there was too left-wing for its own good.)
Getting to the root of these problems is essential if India has to build a new variant of the Swatantra Party— one that openly supports markets and globalization. A new academic paper, Why Doesn’t Capitalism Flow to Poor Countries, by Rafael Di Tella of Harvard Business School and Robert MacCulloch of Princeton University, offers an interesting explanation for the lack of pro-capitalist parties in countries such as ours. The two researchers say that the most important issue is corruption. It reduces the “moral legitimacy of business”. Citizens come to believe that success depends on luck or corruption, rather than on hard work and enterprise. Hence, there is always likely to be support for high taxes and regulation, even though these will harm long-term economic growth. “Existence of corrupt entrepreneurs hurts good entrepreneurs by reducing the general appeal of capitalism,” say Di Tella and MacCulloch.

Please read the complete article here.