Thursday, May 22, 2014

On Narendra Modi and his alleged Free Market Economic Vision

So, Narendra Modi and his BJP party won a clear majority in the just concluded 16th Lok Sabha election. On Monday Modi will become the new prime minister of India. The atmosphere all around the country, mostly as seen in the mainstream media frenzy, is euphoric at this moment of so-called historic win of Modi. Most people see Modi as some kind of messiah who will save this country from corruption, economic stagnation, lack of political power and influence with her neighbors etc., etc. I want to focus here on one alleged thought that is going around mainstream media re Narendra Modi's economic vision. Many articles are describing Modi's economic vision - I have dealt with his development model in past article - as, lo and behold, "Free Market" vision (see this for example)!!! Is it really true that Modi's economic policies in Gujarat were free market policies? The best way to tackle this question is to first see the true definition of the free market, and then contrast Modi's actual policies with this definition. If what Modi did resembles this definition then the mainstream media is correct in terming Modi as a free market prime minister. Any deviation means media is, as usual, lying.

First, we see some definitions of 'free market' from varied sources. Wikipedia defines 'free market' in this way:
A free market is a market economy in which the forces of supply and demand are free of intervention by a government, price-setting monopolies, or other authority...The laissez-faire principle expresses a preference for an absence of non-market pressures on prices and wages, such as those from government taxes, subsidies, tariffs, regulation (other than protection from coercion and theft), or government-granted or coercive monopolies.
Investopedia defines it as:
A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sells are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.
World English Dictionary defines it as:

an economic system that allows supply and demand to regulate prices, wages, etc, rather than government policy 

Merriam-Webster dictionary defines it as:
an economic market or system in which prices are based on competition among private businesses and not controlled by a government
And most importantly, the famous free market economist of the twentieth century, Ludwig von Mises, defined a market economy as:
The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybodys actions aim at the satisfaction of other peoples needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens.
Another champion of free market, Murray Rothbard, outlined the necessary condition for the existence of the market economy:
This means that the key to the existence and flourishing of the free market is a society in which the rights and titles of private property are respected, defended, and kept secure. The key to socialism, on the other hand, is government ownership of the means of production, land, and capital goods. Thus, there can be no market in land or capital goods worthy of the name. (Read the whole article What is the Free Market).
Now, contrast these characteristics of a free market economy with Modi's policies in Gujarat. Do Gujarat has any private property rights regime - which is secured by the State itself - in the means of production? Not at all. In fact, Modi has robbed many farmers of their land during his 13 years stint in power. Do we have different prices like wages, rents etc., being regulated by the free market forces of demand and supply in Gujarat without any interference from Modi's state? No. Just like any other state we have myriad of legislative acts interfering the free exchange between a buyer and a seller. Modi's government taxed like any other government. Modi's government gave subsidies to farmers and industrialists like any other government. Modi's government gave monopoly powers to business tycoons like Tata, Adani etc., like any other government. Modi government has put the people of Gujarat under a heavy burden of public debt like any other state government in India (see this). In fact, Narendra Modi dictated every policy in Gujarat from the get go.

If someone truly understands the system of free market, then, he can immediately see the logical fallacy of the term 'Narendra Modi's Free Market Policy'. If there is a free market, then, there is no Narendra Modi because, as Ludwig von Mises explained:
The market economy [capitalism] was not devised by a master mind; it was not first planned as an utopian scheme and then put to work. Spontaneous actions of individuals, aiming at nothing else than at the improvement of their own state of satisfaction, undermined the prestige of the coercive status system step by step. (The Ultimate Foundation of Economic Science, p. 109)
And, if there is Narendra Modi's free market policy, then, there is no free market. It is Modi's whatever vision that is forced on people!

Actually, Narendra Modi is a fascist leader. There is no free market in Gujarat. It is only socialism where, in reality, government owns the means of production. It is fascism where the state and big corporations loot the hapless public. It is crony capitalism. There ain't any free market in Gujarat, and there won't be any in India now that Modi is the PM of India.   

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