Societal Analysis

Economic Response to Emerging Political Economy - June 2022

1. Political Economy

When the 3,000-year-old feudal/colonial order finally ended, nascent technologies along with the euphoria of freedoms ushered in economic participation by all. Democratic institutions evolved over time to defend everyone's right to enterprise and maintain a healthy balance between small, medium and large ventures that together created broader income and employment for the urban population.

Participatory democracy took a while longer to penetrate the villages. Eventually, stringent State interventions like land ceiling, compulsory education, primary health infrastructure, caste-class reservations, direct cash influx, employment guarantee and minimum wages, locating large state enterprises in rural areas, and the like started to attract entrepreneurial capital to the countryside.

The market economy started to end feudalism's economic base in the villages. However, it merely weakened the feudal social order which lingers to this day in severely obnoxious manners. In many pockets, undermining the prevalent culture only hardened the feudal social order.

This led to an exodus of people from the villages. At first the peripheries of cities started getting drained of schooled youth and abled persons — semiskilled construction workers, carpenters, masons, artisans, et al. Then with an inflow of trade and capital into Moffusil towns, more villages started getting emptied. Direct employment and remittances made an impressive dent in the standard of living of those who stayed behind; abject rural poverty looked like a thing of the past in large tracts of the land.

In its normal course, the pursuit of efficiency and higher rents leads to an advancement of technology, mechanisation, digitization and automation. There is a phenomenal increase in the volume of production. Raw materials (natural resources) are rapidly gobbled up. Correspondingly, the volume of capital needed for competitive enterprises also increases manifold. This wipes out many small and medium scale enterprises, oftentimes entire sectors of the informal economy. Unprecedented unemployment and loss of income, hardly ever before seen in industrial societies, follows. Every advanced economy is grappling with this issue.

Capitalism takes several centuries to create a sizeable Middle Class that forces democratic institutions to stay agile, representative, and ensure equity in economic growth and wealth distribution. But developing economies face problems that comes with rapid industrialisation, far too soon. There is no robust middle class; merely a poorer version of the nouveau riche who are suddenly elevated from abject poverty in a single generation. Monopoly leads to crony capitalism and the capture of the political class. Populism toggles on the verge of the oligarchic.

An archaic form of capitalism develops, where a microscopic minority enterprise, create direct, indirect and ancillary employment to produce goods, services and incomes for the entire population. Capitalism morphs into feudalism. Enterprise ceases to be the economic activity of everyone at large. In spite of vastly increasing GDP and creating global brands and billionaires, we term this as archaic and outdated since it is an emulation of the feudal logic where landlords alone owned the means of production to keep village society afloat. Along with a depletion of natural resources, this socioeconomic order is doomed to the same fate as the antiquated one of yesteryears.

Socio-political responses and indignant protestations are aplenty. But here we need to discern a viable economic response. The climate crisis, depletion of natural resources and rapid unemployment were, till very recently, the concern of only scientists and activists. This has changed in the recent past.

Enlightened thought leaders struggle as they recognise debilitating limitations in the current path of the economy. They see that this model will not work for much longer and are prepared to experiment with environmentally sustainable, decentralised modes without immediately concerning themselves with replicability. A faith akin to the spirit with which the early burghers willy-nilly transformed the funda of the economy in the middle ages.

Business leaders worry about conscience and legacy issues. Their pursuit may not be a statement against inequity and disparities; but based on a recognition that without liberty and justice, long-term economic development cannot be sustained.

2. Response

This past week we have already spoken to more than 750 rapt and receptive Coolie Sangha members in two taluks. We will cover all 2,000 functionaries and representatives by the end of this month. We elaborated the economic philosophy behind the concept of decentralised, community owned and managed service provision, over the long haul, in an environmentally sustainable and commercially viable manner.

We explained that they have to transcend to the 4th stage in the employment of their social capital.

  • 1st stage was when they used social capital to gain a hitherto denied recognition as Humans and obtain a fellow citizen status in village society.
    They achieved this by ridding themselves of the experience of caste (as distinctly different from claiming to destroy caste) and overcoming disparities/untouchability, indentured labour, usury, and various forms of servitude. Immediately after, they addressed the gender divide.
  • 2nd stage was when they obtained their collective Rights and Entitlements through disciplined and relentless struggle.
    This was when almost all their 6-16 year olds stayed in school for ten whole years, the girl child got emphasised/protected, age at marriage went up to 21 years, not a single reproductive ailment was left unattended, et al.
  • 3rd stage was getting into petty entrepreneurship, including the tilling of their own lands that had been left uncultivated for generations, off-farm ventures, provision of environmental services, etc. They did this as individuals supported by strong communities.
    This was when they started to exit from feudalism and the peasant political economy with firm, albeit weak, attempts to enter into emerging market economies.
  • 4th stage is to now jointly take up serious businesses at scale, providing goods and services to the surrounding population. Individual entrepreneurs from the upper caste-class can go it alone, with their own capital, know-how and resources. The rural poor need to venture collectively, with the support of enlightened business leaders with a futuristic mindset, accompanied by a critical intelligentsia.

3. The Project

The "Project" is to assist 40-50 families in one chosen village to set up a financially viable "Unit" to provide two vital services to rural families around them in an environmentally sustainable and commercially viable manner, with capex provided by Atria CSR:

  1. Safe drinking water
  2. Cold storage for perishable agricultural produce

The final choice will be determined after making a detailed study, supported by professional market surveys, of several villages.

  • Solar Panels will be installed to provide the required energy for a borewell pump, operate a water purification plant and cold storage room — i.e. the output of these panels will be just enough for this purpose and not for supplying electricity to either individual users or feed into the grid.
  • A Water Purification plant will be installed on this land. The quantity of clean water production will depend on the market. It cannot be to just meet the requirement of the 40-50 "owners" of the unit. It has to serve ten times more households in order to be commercially viable.
  • A Cold Storage unit will be built. Once again, this unit may serve very few of the 40-50 "owners" since not many Coolie Sangha members have wetlands to grow vegetables, flowers, and other perishable produce. To be commercially viable, the Cold Storage must serve bore well owners who grow irrigated crops in a 3-5 km radius.

ADATS will train and initially handhold the venture for a few years; Atria Foundation will provide technical knowhow and an investment of ₹ 1 crore for the village. Once stabilised, the unit should, after meeting operational costs and providing for recurring expenditures, be able to give each "owner" family a minimum annual income of ₹ 10-15,000.