Learning from the past

In the past few years, India has seen an extraordinary economic boom but it has simulataneously developed a split personality. Driven by energy, skill and ambition, India’s entrepreneurs are scaling new heights, but this growth has come with an overwhelming in corrution in our public and private lives. In earlier blog, I outline the scams that seem to characterize modern day life in India. There is confusion among the elite about what if anything can be done to restrain the growth of unrestrained capitalism and its attendant ill of rampant corruption. Perhaps we need to look around to see how other countries have handled this dilemna..

Both in its rot and heady dynamism, India is beginning to resemble America’s Gilded Age (1865-1900) as noted by Jayant Sinha and Ashutosh Varshney in a recent article. Ending with Theodore Roosevelt’s rise to the presidency in 1901, the Gilded Age transformed an agrarian US into an economic and industrial giant. Yet Roosevelt’s assessment was gloomy: “The dull, purblind folly of the very rich men; their greed and ignorance, and the way in which they have unduly prospered ... these facts, and the corruption in business and politics, have tended to produce a very unhealthy condition.”

Four similarities between America’s Gilded Age and present-day India are worthy of note as pointed out by the authors. And also worth noting is the response of the progressives of the day to the mess that they saw around them.

First, By the mid-1890s, the US nation was more than 50 per cent urban. Mirroring roughly the same trends, India’s population today is 70 per cent rural, but by 2030, half of India will be urban.

Second, America’s industrial capitalism in the 1870s and 1880s emerged in a noisy and participatory democracy with election turnouts often touching 80 per cent. In India, too, turnouts are high. The political ascent of the “lower castes” is India’s equivalent of the rise of the Irish in the American Gilded Age.

Third, India’s recent growth has created billionaires to equal the Vanderbilts, Carnegies, Rockefellers and Morgans of America. India has 6.9 per cent of the world’s 1,000 or so billionaires, while its gross domestic product is only 2.1 per cent of world GDP. The total wealth of Indian billionaires is more than a fifth of the nation’s GDP, equaled only by Russia. And its billionaires are no longer afraid of flaunting their wealth- witness the huge, ugly tower with 400 carparks built by Ambani in Mumbai.

Fourth, like the barons of America’s Gilded Age, most of India’s billionaires have used three methods to tilt the playing field to their advantage: securing rich natural resources such as mines and land; ensuring favorable regulations in various industries; and restraining the entry of foreign competition wherever possible. This has required collaboration, often collusion, with governments at all levels. During the administration of President Ulysses Grant (1869-76), several cabinet members were indicted for financial wrongdoing. At the state level, the story was no different. And cities witnessed the emergence of “bosses” and political machines. India has identified but not indicted a large number of politicians for financial wrongdoing both at the federal and the state levels.

In modern India the scams over the past decade unlerline the rot in the body politic. Licences for the use of spectrum for mobile telephony were apparently sold at rock-bottom prices by the government to telecoms companies at a time of enormous demand, depriving the Treasury of revenue. Using access to power, families of ministers and heads of state governments, belonging to various political parties, have illegitimately bought land and houses at below-market prices. Unfortunately this mania for land has also enveloped the armed forces where three ex chiefs of army staff are under investigation. Powerful business families have procured mining rights in a corrupt manner. Read my blog above on In the land of scams to get a true idea of the depth of infamy.

But it is well to also remember that America’s Gilded Age was followed at the dawn of the 20th century by the Progressive Era, marked by cleaner politics, a bipartisan fight against corruption, more honest business practices and a channeling of private wealth into philanthropy.

The rapid shift from an agrarian to an urban society in the U.S, like in modern day India, caused major anxieties among the rich and powerful. Large corporations and "trusts," representing materialism and greed, were then controlling more and more of the country's finances. Immigrants from southeastern Europe -- "dark-skinned" Italians and peasant Jews from Russia -- were flocking to major industrial centers, competing for low wages and settling in the ethnic enclaves of tenement slums. Party bosses manipulated the political ignorance and desperation of the newcomers to advance their own party machines. To the native middle-class, these ills of society seemed to be escalating out of control and by 1900 America was a tinderbox. Cities were crowded with millions of poor laborers, working conditions were appalling. From the local level to the highest institutions in the land, corruption darkened politics. The situation was summarized dramatically in the Populist Party platform, issued at its convention in Omaha in 1892, which read in part:

“.. we meet in the midst of a nation brought to the verge of moral, political, and material ruin. Corruption dominates the ballot-box, the legislatures, the Congress, and touches even the ermine of the bench. The people are demoralized; most of the States have been compelled to isolate the voters at the polling-places to prevent universal intimidation or bribery. The newspapers are largely subsidized or muzzled; public opinion silenced; business prostrated; our homes covered with mortgages; labor impoverished; and the land concentrating in the hands of the capitalists. The urban workmen are denied the right of organization for self-protection; imported pauperized labor beats down their wages; a hireling standing army, unrecognized by our laws, is established to shoot them down, and they are rapidly degenerating into European conditions. The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind; and the possessors of these, in turn, despise the republic and endanger liberty. From the same prolific womb of governmental injustice we breed the two great classes—tramps and millionaires.” This could well be written of modern day India as well.

Something had to be done, and the progressive movement was the nation’s response. The Progressive Movement was an effort to cure many of the ills of American society that had developed during the great spurt of industrial growth in the last quarter of the 19th century. The frontier had been tamed, great cities and businesses developed, and an overseas empire established, but not all citizens shared in the new wealth, prestige, and optimism. Since the political powers were unwilling or unable to address the rapid economic and social changes brought about by the industrial revolution in America, the progressive movement grew outside government and eventually forced government to take stands and deal with the growing problems.

Progressivism was rooted in the belief, certainly not shared by all, that man was capable of improving the lot of all within society. As such, it was a rejection of Social Darwinism, the position taken by many rich and powerful figures of the day. Progressivism also was imbued with strong political overtones, and its some of its specific goals included:

· The desire to remove corruption and undue influence from government through the taming of bosses and political machines

· the effort to include more people more directly in the political process

· the conviction that government must play a role to solve social problems and establish fairness in economic matters.

The progressives came from a long tradition of middle-class elites possessing a strong sense of social duty to the poor. Inherent in their role as privileged members of society was a certain degree of responsibility for the less fortunate.

Applying this sense of duty to all ills of society, middle-class reformers attempted to restore democracy by limiting big business, "Americanizing" the immigrants, and curbing the political machines. Theodore Roosevelt, wanting to ensure free competition, was particularly instrumental in curtailing monopolistic business practices during his time in the White House.

The success of progressivism also owed much to publicity generated by the muckrakers, writers who detailed the horrors of poverty, urban slums, dangerous factory conditions, and chil labor, among a host of other ills. Jacob Riis exposed the poor living conditions of the tenement slums in How the Other Half Lives (1890) and inspired significant tenement reforms. In The Shame of the Cities (1904), Lincoln Steffens revealed the political corruption in the party machines of Chicago and New York. Most shocking to contemporary readers was Upton Sinclair's The Jungle (1906) in which he traced an immigrant family's exploitation and downward spiral in Chicago's meat packing industry. The novel resulted in the Pure Food and Drug and the Meat Inspection Acts in 1906, the first legislation of its kind.

The window of time that the Progressive Era in the U.S inhabits was a brief one, but not at all insignificant. Its reforms introduced a new role for government. In dealing with the problems of urbanization and industrialization, the country's democratic institutions had to address problems on a very local level. It made possible the major changes in political life that followed with programs like the New Deal, and TVA. It ushered in the era of reform in the U.S which did get rid of much of the more blatant corruption in public life and it restrained the robber barons from continuing to loot the common man.

Can India follow a similar path by creating its own Progressive Era? Can India’s political parties fight corruption as a non-partisan matter? Can the rising middle class throw out the corrupt? Can the wealthy systematically embrace philanthropy? Can thelatent movements sparked by Anna Hazare and Tehelka grow over time? Indeed the question is what can we do to fan these small efforts into a massive blaze that compels the political elite to change its ways?