On Naxals, Ambedkar And Gold

A Naxalite document presented at the chief ministers’ conference on security by the central police minister, P Chidambaram, reveals interestingly that these armed rebels are enthusing their supporters with anti-capitalist jingoism. They oppose the “liberalization” of India’s markets, which they dub “neo-liberal reforms.”

Ludwig von Mises becomes relevant here. He said:

The desire for an increase of wealth can be satisfied through exchange, which is the only method possible in a capitalist economy, or by violence and petition as in a militarist society, where the strong acquire by force, the weak by petitioning.

By ignoring The Market, these poor, unlettered tribals are ushering in a militaristic order. They are heading for disaster.

Of course, the real problem is socialist “politics” – none of these jokers on our political stage today champion the liberalization process or seek to extend it to the fullest extent imaginable.

But ideas have to be fought with ideas. Our political elite are devoid of political beliefs; hence they are devoid of ideas. Yet, armed might can hardly contain this popular revolt across four states. It requires “politics” – by which I mean liberal politics. This is unconstitutional in India. The good guys, the sane guys, are debarred from the scene.

In the meantime, our The State keeps on rapidly losing all credibility. The news today says that the governor of Assam has been asked to quit after it was found that he engaged in serious corruption while he was governor of Jharkhand – a state where Naxals are strong. Such incidents erode State legitimacy even further.

And there is more: Replying to the government’s demand that the courts immediately clear their backlog of 30 million cases, “chief justices of 21 High Courts met in the Supreme Court and unanimously passed a resolution seeking uninterrupted power supply for trial courts.” How can courts function without fans? they ask. Actually, courts functioned extremely well in the 18th and 19th centuries under the British – when there was no electricity. I would suggest that the judges stop making lame excuses and hire punkha-wallahs.

Moving on from State failure, a fact of life, nothing new, let us turn our attention to some unknown facets of Ambedkar that Chandra has brought to our attention on his blog today. It is heartening to note that Ambedkar, also considered a “founding father of the nation,” was firmly a Gold Standard man. Chandra has referred us to Professor S Ambirajan’s Ambedkar Memorial Lecture delivered at Madras University, available online here. Ambirajan speaks of Ambedkar thus:

In his memorandum given to the Hilton Young Commission in 1925 he [Ambedkar] pointed out: “a managed currency is to be altogether avoided when the management is to be in the hands of the government”. While there is less risk with monetary management by a private bank because “the penalty for imprudent issue, or mismanagement is visited by disaster directly upon the property of the issuer”. In the case of the government “the chance of mismanagement is greater” because the issue of money “is authorised and conducted by men who are never under any present responsibility for private loss in case of bad judgment or mismanagement”. In short, Ambedkar’s conclusion is clearly towards price stability through conservative and automatic monetary management. This is of such current relevance that in these days of burgeoning budget deficits and their automatic monetisation, it would appear that we could do with an effective restraint on liquidity creation through an automatic mechanism.

Ambirajan’s scholarly assessment of Ambedkar reveals the dimensions of this great man, who was much, much more than a mere “dalit leader.” Ambirajan says:

Ambedkar firmly belonged to the Judeo-Greek-enlightenment tradition and was an uncompromising modernist. This shows in his approach to economics, politics, law, society and everything else including the matter of sartorial habits. He himself was always impeccably dressed in western clothes, and chastised Mahatma Gandhi for going to the Round Table Conference in London to discuss political settlement “as though he was going to a Vaishnava shrine singing Narsi Mehta’s Songs”. His preference for a modernist approach comes most clearly when he compared Ranade and Gandhi: “In the age of Ranade the leaders struggled to modernise India. In the age of Gandhi the leaders are making her a living specimen of antiquity. In the age of Ranade leaders depended upon experience as a corrective method of their thought and their deeds. The leaders of the present age depend upon their inner voice as their guide. Not only is there a difference in their mental make up, there is a difference even in their viewpoint regarding external appearance. The leaders of the old age took care to be well clad while the leaders of the present age take pride in being half-clad”. But more importantly he believed in material progress, constitutional approach to solving problems, rule of law, right to property, civil liberties, democracy based on the liberty, equality and fraternity principles enunciated by the French Revolution. His extensive critique of the caste system is also based on enlightenment principles of economic efficiency through private initiative, individual liberties and human equality.

To conclude, let us contrast something our The State is doing now with what Ambedkar understood as good economics. It is reported in Mint today that the central minister for commerce has announced that “the government plans to explore export markets.” That is, our The State has become an "export agent"!

This is, of course, nonsensical when the same The State disallows imports: like selling and selling and never buying. However, Ambedkar had a different take on this. He clearly saw what was against the interests of the poor, whose cause he relentlessly championed. According to Ambedkar:

Low exchange rate increases exports and boosts internal prices. This benefits the trading classes at the expense of the poorer people at home.

Gold: The Only Answer.