Ground Zero: On Capital

The concept of Capital is a mental "category" that is an essential part of the "logical construction of the human mind." Even the unlettered nomadic goatherd is possessed of this mental category, and keeps a close watch on his herd to ensure he is not "consuming capital." Even he distinguishes between "capital" and "income."

If we fast forward to the modern age of cities, high streets, and their shops and shopkeepers, it becomes obvious that these shops are precious Capital. I asked around and found out that on this Main Street in Hassan, Karnataka, the going rate for shop space is 5000 rupees a square foot. If that be the case, then try and imagine the "capital value" of the Main Street itself, which is millions of square feet. Indeed, multi-laned expressways in the countryside are not built on such valuable land. This implies that city streets are the most important capital assets under collective ownership.

It does not appear to me that our civilian administrators have realized the huge capital value in the city streets they control. So let us engage in a thought experiment and imagine a scenario in which these were privately owned.

Any private owner of such an important capital asset like a city high street would attempt to preserve the capital value of this asset. He would see his fortunes tied to the fortunes of the property owners on his road, and would therefore work towards preserving the capital value of their shops too. He would build wide footpaths for the shoppers, he would regulate traffic so that the most scarce resource, the road, is used "efficiently." Being in the road business, he would build by-passes for all the "through" traffic, especially the heavy vehicles and the long-distance buses, so that Man Street focuses on its core business, which is shopping. He might even lease out a section to a private tramcar operator - because this would make road use even more efficient, and add even more to the capital value of the street and the shops on it.

Now, we expect nothing more than common sense from administrators in important positions of authority and responsibility. How is it that they do not understand the concept of "capital"? - something that a goatherd knows so well. To the IAS administrator, trained the "socialist" way, "collective capital" is the Steel Authority of India Ltd. He dreams of retiring as Chairman & Managing Director of SAIL. He does not "perceive" all the Capital under his stewardship as the administrative head head of a district comprising many towns and cities. His training at the IAS Academy includes a "public sector attachment." His professors feed him Das Kapital.

The word "capital," in ordinary usage, always indicates something of supreme importance - as in the case of "capital city" or "capital punishment." This very word lies at the root of "Capitalism" - a word that socialists hate. Yet, under the socialists, all that is happening is "capital consumption." The capital value of this high street is being consumed by overuse and abuse. The capital of the jungles is being consumed by stealing iron ore - and let it also be noted that iron ore trucks abuse the roads between mines and ports, which could be used by tourists. To top it all, every one of New Delhi's grand plans of "welfare" involve "capital consumption." They never ever speak of building capital assets - like roads. The latest budget aims at borrowing 3,75,000 crore rupees (1 crore is 10 million) - and this is but capital consumption once again.

Yes, it is indeed a purely "academic question" whether India remains "socialist" or not. I believe there is an urgent need for equipping our mis-trained civil servants with the basic concepts of Market Economics, something they are obviously blind to. From top to bottom, they have lost the mental category of Capital. It is as if their "education" and "training" has performed a frontal lobotomy on their brains, ridding them of this pillar of logic.

It is a Herculean task to imagine how this huge sub-continent with so many towns and cities in conditions like I am seeing in Hassan, or even worse, will be "fixed." The task requires thousands of city and town administrators armed with "local knowledge" and also the basic logic of their critical functions - as, for example, the concept of Capital. Our only hope lies in an intellectual revolution. Socialist training and education must be dumped forthwith.

The question therefore is not whether Manmohan should be Prime Minister - which is a "political question." The real question is whether Manmohan should be The Teacher - and this is the more important "academic question."