It has been a long while since I wrote on my Substack, but I got some great inspiration from my friend Peter Ryan’s and the great Angela Nagle’s collaboration, where they produced a 10 Point National Development Plan for Irish Reindustrialization. A great piece that I do recommend my readers to check out.
While some of the problems faced by Ireland are different to Bharat’s (in the sense that Ireland has no monetary sovereignty due to the Eurozone, and is essentially just a tax haven), the issue of industrialization lingers over for both nations.
Even after 75 years of Bharat’s independence, while we have become the world’s 6th largest economy, our economic picture is far from rosy. In a country with a nominal GDP per capita of just over $2000, the top 10% hold sway over more than half of its national income. We have feudalist landowners & oligarchs on one side; and IT coolies, gig workers & peasants on the other.
Worse, the value added to Bharat’s GDP by its manufacturing sector’s has been in a constant and worrying decline ever since 1991’s liberalization, but especially since the 2008 financial crash. From 17,9% of GDP in 1995 to a disastrous 13% of GDP in 2020, the deindustrialization of Bharat pales in comparison only to the Anglo-Saxon countries that deindustrialized almost all of their supply chain & manufacturing to China, bar some areas of technology.
However I am not an opponent of Bharat’s 1991 liberalization program to be quite honest. It’s not like Nehru & his daughter Indira actually brought us to the levels of industrialization that was present in former Socialist countries. If anything, all they could do was implement Socialist-style central planning to appease their base of rural feudalists while inhibiting the growth of Bharatiya industries with their nonsensical License Raj.
If Nehru & Indira were serious about Socialism, we would have actually had strong industrialization and a welfare state, but we didn’t and we still don’t. In sum, Nehruvian Fabianism, masquerading as Socialism, was merely centrally-planned feudalism.
Thus, my diagnosis comes from a Dengist and Marxist sense holistically in which I recognize the necessity of developing productive forces in coordination with the national bourgeoisie to create a base of national proletariat, as our economy is currently a semi-feudal one. But my praxis comes from the nationalist & developmental school of economics, which consists of people like Friedrich List, Ha Joon Chang, and Mariana Mazzucato.
In sum, my belief is that Socialism, if it does spring in Bharat, can only spring out from the development of, and the contradictions of, Capitalism. However the way to proceed forward is where I differ from the bulk of modern economists & advisers in Bharat.
Our elites have, since 1991’s liberalization, drunk the kool-aid of “free markets”, “deregulation”, “financialization”, and worst of all: “IT sector parmo dharma”. If Bharat continues onto its current path, it quite literally risks becoming like a basket case of unequal & stagnant Latin American economies in the near future. Neoliberalism has done unending damage to the potential of Bharat’s economy, and it too is inhibiting Bharat’s potential just like the License Raj did.
So to clarify, no country has developed on the above-mentioned fantasies. If anything, countries like Bangladesh, China and Vietnam (the latter of the two being socialist) have monumentally surpassed us in both industrialization and GDP per capita. The solution, therefore, lies neither in the Soviet model nor in the American Neoliberal model. It lies in an indigenous model of state-led development that has worked wonders in East Asia, which combines the good aspects of the Soviet & American models, which in turn is derived from the early and forgotten tradition of nationalist political economy.
Therefore, my 10 point plan for Bharat’s industrialization are as follows:
1. Central Planning & State-led Development must be implemented in a way done by China, Vietnam and South Korea. 5 Year Plans must be brought back. The plans should focus on self-reliance, with a greater focus on export-led industrialization.
South Korea, for example, used these plans to target certain industrial verticals to nurture greater focus on them, and switched to other verticals once it was believed that these companies can work under the 5 Year Plans without the level of government intervention necessary for a nascent enterprise. During the period of 1966-1990, South Korea’s economy grew close to 10% per annum on average.
Plans should also offer guidelines on various welfare policies. For example, the most recent Chinese 5 Year Plan has detailed reports on how it plans to achieve “common prosperity” to bridge its vast inequality, while also focusing on keeping industrial quality as a central pillar of its growth.
In this sense, Bharat must reintroduce formal 5 Year Plans under the NITI Aayog with a focus on coordinating industrial development and promoting exports.
2. Financial sector must remain mostly nationalized, with a few private banks allowed to function on the condition that they must follow government quotas on lending to industrial verticals.
In South Korea, as Ha Joon Chang mentions, “the government owned all the banks, so it could direct the life-blood of business-credit”. Similarly, this is also a model followed by China and Vietnam where their financial sector is almost completely nationalized.
In Japan, where banks were not nationalized to the extent of South Korea and China, its Ministry of International Trade and Industry acted as a central-planning agency that introduced quotas for banks to lend to certain industries, thereby increasing growth of key industrial verticals for export promotion and national self-sufficiency.
Peter and Angela write in their piece for Irish industrialization to “organize quantity of credit quotas for private banks to invest in specific sectors that support industrialization, with special consideration given to SMEs, to encourage domestic finance over foreign finance. Areas of focus will be machinery, electronics, and medicine”. This I feel is overall a good model to consider for Bharat’s private banks as well.
Bharat’s state-owned banks are actually extremely necessary for development. In fact, during the 2008 crash Bharat weathered the global recession fairly well thanks to our nationalized banks, which recorded a positive growth rate of 3,7%. Furthermore as Mr.Chaubey notes, “nationalized banks such Bank of Baroda, Indian Bank, Vijaya Bank, Corporation Bank and State Bank of Travancore registered a positive rally from 5% to almost 20% in the post-demonetization period. On the other hand, private banks like Yes Bank, Axis Bank, HDFC and Lakshmi Vilas Bank showed negative growth from –3% to –7% soon after demonetization”.
3. Government must foster ecosystems for the private sector to thrive, like it has successfully done for startups. If one looks at the example of Israel with its thriving ecosystem for startups, it offers a great clue as to what can be done moving forward as a goal.
Although Bharat has been successful in this so far with a massive boom of startups propping up, it still has a long way to go. Furthermore, the government ecosystem must also ensure fair regulation to ensure the growth of Bharatiya startups doesn’t turn into our version of a dotcom bubble. This is why it is essential to ensure that within the broader ecosystem, priorities must be given to industrial startups because their time horizon for profitability is longer than what most investors look for when investing money in startups.
Furthermore, Bharat’s nascent military industrial complex must also be promoted with the addition of private players as part of the overall entrepreneurial ecosystem.
4. 25% of investment by Venture Capitalists must be given to industrial startups. This is a policy the government must look towards so as to not crowd out the private sector. Let’s be honest, while I do recognize the necessity of the state in leading the charge ahead, it is bound to have blind spots that only the private or the cooperative sector can fill.
This is why it must be necessary to not alienate the national bourgeoisie in the road to development. Venture Capitalists today mostly focus on apps, websites, and fintech startups. They are free to do so, however, with a focus on industrialization coming first the government should create quotas like they would for banks to foster startups that offer ingenious solutions to industrial issues.
5. State Owned Enterprises need to be heavily bolstered. Countries like China, South Korea and Singapore have global created behemoths, for which Bharat too has strong potential.
China practically owns the world with its vast mining and energy SOEs that are building projects-after-projects in Africa and Asia.
22% of Singapore’s total GDP comes from SOEs like the famous and profitable Singapore Airlines. Their government also owns a sovereign investment fund (Temasek Holdings) which holds shares in many essential private enterprises. This is a model also followed by Saudi Arabia and Norway, and is something worth looking into.
Bharat’s situation with SOEs isn’t as bad as it’s made out to be (it is made out to be this way because of the neoliberal lobbyists salivating for privatization). Out of all BRICS countries, Bharat’s SOEs are actually the most profitable with profits touching 4% of GDP. This is followed by China and Russia at 3% each. Yes, there are some basket cases (like Air India, which honestly could only be saved by privatization at this point), and some areas where it’s absolutely unnecessary for the government to be in (for example I support the privatization of Ashoka Hotels, because I don’t think the government should be running hospitality, automobile and consumer good industries).
But overall, Bharat must continue to bolster its SOEs, for which it also requires a holistic reform of its colonial bureaucracy. How that should occur is, shall we say, a Substack post for another time.
6. Foreign Direct Investment must be encouraged, with the aim of technology transfer or joint-ventures with local companies wherever possible. This would allow foreign companies to set up shop and help proletarianize Bharat’s vast rural population. It would also contribute to the development of Bharatiya companies, like it was done for Hero Motocorp (former partner of Honda) and Maruti (with Suzuki), if joint-ventures and technology transfer is promoted. FDI is something that is prominent in the US and China.
In this regard, Bharat is thankfully moving forward with its PLI Schemes which have seen massive production boosts in areas like mobile phone manufacturing. Electric vehicle manufacturing seems to also be on the rise, but time will tell whether this trend will materialize.
7. Bharatiya private conglomerates (like Reliance and Tata) must be given preference over foreign ones through the use of preferential treatment and tariffs, as was done by South Korea, Singapore, Germany, and America.
Friedrich List advocated imposing tariffs on imported goods while supporting free trade of domestic goods, and stated the cost of a tariff should be seen as an investment in a nation’s future productivity. This model of development has been followed by every single nation including America and Germany. If anything, the famous American School of Economics explicitly favored tariffs for the development of indigenous industry.
This sounds rather alien to us now for a nation that preaches free markets like a missionary, but it is the story of how America developed.
Germany’s Staatssozialismus (State Socialism) under Otto von Bismarck also followed a model of tariffs coupled with government control of banks for targeted industrialization.
South Korea’s famous Chaebol model led to the creation of conglomerates like Samsung, Hyundai, Daewoo, and others. Similar policies were and are followed in Japan, Taiwan, and China.
However, there is one lesson from South Korea and America that China has learnt, and that Bharat too must take important note of. It is that although these businesses led by the national bourgeoisie gain preferential treatment, they must not be allowed to gain enough power so as to influence government in a way that businesses remain above government.
In America and South Korea, their political model is seen as vastly corrupt to anyone with an iota of common sense, as politicians are literally in the pockets of oligarchs. Furthermore, politicians in America actively hold a conflict of interest as they own stocks of companies they seek to regulate. China has applied this lesson with Jack Ma, and particularly with Evergrande so as to avoid a catastrophic crash of its property market by adequately managing its decline, punishing its owners, while also seeking to possibly nationalize it.
8. Worker cooperatives must be encouraged for industries as they offer massive and stable employment opportunities. This would be something similar to the Market-Socialist model of the SFR Yugoslavia, and the Kibbutz model of Israel. Looking at Israel in specific, its Socialist past has played a big influence in the development of a strong mechanized agriculture sector, a broad industrial and research sector, and a leading technology sector. Many Kibbutzes today offer community development while also greatly contributing to the Israeli GDP.
If anything, this is a policy that was favored by the RSS & Bharatiya nationalist economist Dattopant Thengadi in his “Third Way of Economics”, where he suggests workers should be part of corporate decision-making with seats on the board, and in other cases should directly own and control enterprises for a truly Hindu path to Bharat’s development.
9. Creation of a National Labor Union & tripartite bargaining. This would follow the policy prescriptions of Germany, China, Singapore and Vietnam. Although Germany here does not have a sole legal national trade union, it is in such an advanced stage of development that it does not need the government to manage the labor sector.
In Singapore there exists the National Trade Unions Congress (NTUC) which serves to unite all legal trade unions under the umbrella of a government organization. The NTUC, just like it is done in a decentralized manner in Germany, helps facilitate tripartite bargaining meetings between shareholders, unions and the government for companies where they agree to salaries, benefits, dividends, and so on.
This is done as a way to ensure worker representation on the board, and to create outcomes that reduce the need for labor strikes which could be disruptive to industrial development.
One of my most controversial policies is to only allow labor strikes if 67% of union members agree and with written permission of the National Labor Union. While I have shown support for striking truckers and farmers in Canada, it is necessary to realize that Canada is an advanced capitalist nation that does not need the government to enforce such restrictions on unions.
My control of unions for a semi-feudal nation like Bharat exists solely to ensure strikes are minimized, but not in a way that makes workers literal wageslaves as one can see in Foxconn factories in China (which the government has now begun to reform). This is a policy followed by Socialist countries like Vietnam that has ensured wider delivery of benefits while also reducing the need for strikes that hamper industrial growth.
10. Massive spending on human capital, public infrastructure, research, and healthcare. Bharat’s spending on healthcare, education and research is rather abysmal to say the least. Countries like Japan, South Korea, Singapore, and Taiwan all spent heavily on proper healthcare and education for its citizens, with vocational education being a big part of this. This point here is important, because many of our elites have drunk the kool-aid of “university education for 50% of our population”.
Frankly this is an insane proposal, and will worsen the jobs crisis in our nation by also accelerating elite overproduction which, as the great Peter Turchin says, is a precondition for some of the most bloody and violent revolutions in history. While universities need to be improved, and woke curriculum like gender studies needs to be replaced by dhārmik studies, a majority of the population would rather be better off with vocational and technical education.
While education and healthcare paint a grim picture, Bharat’s spending on highways, electrification, sanitation, and metro lines has skyrocketed. This has led to a staggering pace of highway development, rising to a record 37km/day while Bharat’s roads minister seeks a target of 100km/day.
Metro lines have also begun to open in many Tier-2 cities, along with massive airport projects either under construction or opened. The Jal Jeevan mission has vastly improved access to drinkable water in villages, and the campaign for full electrification has been a huge success.
Bharat’s development of High Speed Rail (HSR) has thankfully kicked off, but it is currently at a very slow pace of development when compared with Japan or even with China.
Although the Mumbai-Ahmedabad corridor would be ready in 2026-2027, other lines such as Mysuru-Chennai-Bengalruru may only be ready by 2050. The pace Bharat has shown in highway development is something they need to emulate when it comes to HSR as it allows for better and cheap connectivity for goods and people.
At the same time, greater spending needs to be made towards cleaner energy. However, the focus here should be on nuclear energy as it is the most efficient and powerful source of renewable energy on this planet. Other sources like geothermal, solar and wind can also be developed. But at the same time, given our stage of development, we must not shy away from coal and oil which, for us, is an absolute necessity.
This list is by no means fully comprehensive, but serves as a general guideline on what Bharat can do by bringing up examples from China, Vietnam, Taiwan, South Korea, Japan, Germany, Singapore, and the US. It shows us that the alternative path to development requires a positive synthesis of both Socialism and Capitalism, of government control and markets, and of regulation and export-promotion.
The aim for us should be to become an industrial power first and foremost, because it is the secondary sector which acts as the link and fulcrum between the primary and tertiary sector. It is the sector that can absorb our excess rural population for productive work, while sustainably boosting our long term economic growth and helping in reducing the vast disparities present in our country.
The path for Indian renaissance, a dhārmik civilizational revival, runs through the development of productive forces towards an indigenous blend of Socialism and Capitalism while seeking to learn the best from the best. The path to our emergence as a superpower rests on a nationalist economy that focuses primarily on industrialization and mechanization, and aims to deliver a strong public, private and cooperative sector contributing to a robust welfare state.
-by Alexei Arora
(This article was first published on the author’s blog on February 6, 2022 and has been reproduced here with consent. A few minor edits have been done to conform to HinduPost style-guide.)