Our "Rightly Understood Interests"

I concluded my post of yesterday, in which I discussed the evils that arise from interventionism, with a promise to reveal to businessmen why their "rightly understood interests" lie in laissez faire. So, here goes:

Let us begin with Say's Law of Markets - a pillar of classical economics that Keynes and his acolytes hated. Jean-Baptiste Say was the "Adam Smith of France" - and John Rae records that Say travelled to Glasgow just to sit in Smith's chair at the university! Those were the days...

In a nutshell, Say's Law asserts that the production of X creates the demand for all non-X. Thus, if farmers grow wheat, this creates the demand for wine, shoes, and everything else, except wheat. This is because when the farmers sell their wheat, they will not buy wheat; rather, they will buy other goods and services.

Keynesians deliberately distorted Say's Law by teaching their unfortunate students that it means "supply creates its own demand." But the supply of wheat does not create the demand for wheat. Rather the supply of wheat creates the demand for all non-competing goods. And the demand for wheat comes from the supply of all non-competing goods. Savvy?

There are innumerable implications of Say's Law - but here I will detail only two of them: first - and this is what the Keynesians hate - that demand is created by producing goods and services, not paper money. Say's Law rules out "overproduction" - and asserts that anything produced will get sold, even as junk. That is, its price will drop until it is finally sold. This applies to labour too. Markets clear.


The second implication of Say's Law is that businessmen must see that the demand for their produce is entirely dependent on the production and sale of ALL NON-COMPETING GOODS.


Thus, when India Inc. gathers together and demands protectionist tariff barriers, they only hurt themselves. It might benefit Bajaj if foreign scooters are disallowed entry into the Indian market - but that does not benefit Mallya, whose booze would sell better if more scooters were sold, and more cars too, and TV sets as well.


So, if Bajaj, Mallya, Kurien, Tata, Mahindra et. al. lobby for protection - and get it - they all will actually come off losing, because overall demand will drop, despite all the Keynesian policies of the central bank. If cheese imports were free, for example, all except Kurien would gain. And so on...


The "collusion" between these businessmen is wrong-headed: they do not know their "true interests." They do not know the Science of Economics.


Indians of my age can find proof of the veracity of this classical law of markets by comparing demand in the years preceding 1991 to conditions today. Then, the shop shelves were bare. There was not much to be sold - and so overall demand was low. Markets possessed little catallactic energy.


Today, a host of goods and services are sold, many of them imported - like mobile phones, cameras, TV sets, jeans and so on. Cars and scooters and motorcycles are available off the shelf. Thus, the overall catallactic energy in our markets has multiplied - thereby raising the demand for everything that is NON-COMPETING.


The crux of the matter is that businesses that do not compete with each other hurt only themselves through protectionist collusion. Further, those employed in these businesses hurt themselves further as consumers. A sales manager in Bajaj
Auto in the bad old days might love his job because he has no work to do - but when he goes to market with his wages... It is there that he loses.


In yesterday's post I spoke of the "politicisation of economic life" that occurs because of interventionism - and I mentioned one of the"costs": that businessmen must devote more and more attention to cheap and dirty politics instead of simply tending to their businesses as they ought to. But there are other costs as well. If we add up all these costs of lobbying to the other costs of lowered demand and losses as consumers, surely any businessman will see that his "rightly understood interests" lie in laissez faire, in a completely Free Market.


While our businessmen mull over this, the fact remains that the vast majority are workers and peasants. For them, fully competitive, free trading societies are best - because, despite their meagre earnings, they succeed as consumers: they buy the best products in the world at the lowest prices. Thus, laissez faire - and not socialism or communism - leads to a "workers' paradise." American workers enjoy life - unlike their counterparts in the former Soviet Union. The East German worker always envied his counterpart in West Germany - who drove real cars, and not the silly Trabant.


Think it over - and you will realise laissez faire is best.


Recommended readings: 
1. My old column on Say's Law, available here.
2. WH Hutt's A Rehabilitation of Say's Law, which you can download free here.

Interventionism - and The Vision of the Anointed

A question was posed by a reader today - with reference to my morning post on Prashant Bhushan & Co. - regarding corporate corruption. I have posted a reply - but let me take the discussion of this important matter to the main page.

Socialists practise "interventionism." They are always to be found loudly proclaiming that The Market may be fine - but the State must "regulate." This is their ideology. What is "regulation" and how is it carried out?

Regulations are the product of parliaments and bureaus (government departments). Parliaments produce Legislation; and bureaus are empowered by "subordinate legislation." All these rules and regulations are "enforced" upon human beings during their actions in The Market. Thus, they are unfree.

Understand this "vision of the damned": this is their "command economy." They want to turn society into a machine that must obey their commands issued via Legislation. Socialist democracy is nothing but Legislation: the "social market economy." 

The immediate effect of such interventionism is what Peter Bauer called "the politicisation of economic life." Businessmen, realising they must influence the rules under which they will be regulated (by force), begin "lobbying," thereby diverting their attention to worthless politics, rather that tending to their businesses. To the uncritical eye - this is "democracy."

In the US of the 1940s, Ludwig von Mises pointed out how rampant interventionism was destroying American democracy. He said the "representatives of the people" have all become "representatives of special interests" - from agriculture to mining, to whatever. No one represents his "constituency" - and it's all about special interests. The politicisation of economic life through interventionism destroys both politics as well as democracy - and destroys the character of the business community, too.

Then, there is the Vision of the Anointed: those who see Market Society as the Wondrous Creation of God - an "order without design"; something that is "the result of human action but not human design." If humans did not design it - who did? We could call him God. His is the "invisible hand."

This is the laissez faire vision - of a completely Free Market. A natural, spontaneous order based on rules all of us follow - without knowing why. This Golden Rule of Property comes from the past. All I have done is articulate this rule - the Inviolability of Property - but I did not make this rule, nor did anyone else. It is a part of human evolution, which includes our "intellectual evolution" - an "order without design"; the "result of human action, but not human design." It took millions of years before any intellect could articulate this rule - as for example, the Greek philosopher Strabo did in 40 AD, whom I quoted in my post of yesterday.

This commercial, bazaar culture is our real "cultural heritage." It is a culture of of peaceful and gainful exchange. A "commercial culture." A bania can buy from a Scot and sell to a Jew and still emerge with a profit - or so they say in London!

This natural order of the Free Market is what Hayek called a Great Society - as did Adam Smith. And since Smith influenced Darwin, the latter's evolutionary theories also looked at the natural world as an "order without design." This cannot be coincidental.

Similarly, Frederic Bastiat, battling socialists and protectionists in France circa 1850, wrote an entire volume titled Economic Harmonies. There is no "class war." The motive of self-interest does not destroy society - rather, it enriches it, by creating Competition, which is the essence of Liberty, its biggest fruit. Everything and everyone improves all the time. "Competition is Liberty - and the Absence of Competition is Tyranny," said Bastiat. 

He was a devout Catholic, and he proclaimed his faith thus: "To believe in Liberty is to believe in God - and have faith in His creation, Man."

These classical liberals believed in "natural honesty" - and the Scottish Enlightenment was all about "natural religion." This was their vision - of a natural, harmonious order among all mankind, all based on gainful trade, because God planted in all of us "a natural propensity to truck, barter and exchange."  

If the State is completely separated from The Market - laissez faire, private money, free banking under law, private law, unilateral free trade - all businessmen will find that their only way to preserve and accumulate capital will be by "serving the consumer" - and not the politicians and their bureaus. Only then will corporate corruption cease.

Of course, businessmen must realise that their "rightfully understood interests" do not lie in interventionism. That is also the task of the economist. I will address that task in my post of tomorrow morning.

Recommended reading: Ludwig von Mises' Interventionism: An Economic Analysis. This was written in German in the 1940s, shortly after the Miseses had migrated to America to escape Hitler. Mises was working for the National Bureau of Economic Research (NBER) then, and this was translated into English by two NBER staff - but never published till after his death! You can download the book from the Mises Institute here. Obviously, this is how the USA became the USSA - by preferring democracy to liberty, confusing the two, confusing means and ends.

Prashant Bhushan - Yet Another Socialist Lawyer

The lawyer Prashant Bhushan is a leading light of the Anna Hazare-led anti-corruption movement currently underway, along with his father, Shanti Bhushan, who is also a lawyer. 

Today, the Express reports Prashant, while speaking at a public rally, insisting that "post-1991 economic policies, and privatisation, are the root cause of corruption." To Prashant, the freeing of enterprise from the clutches of our The State is the "precise reason" why corruption has grown. Ominously, the report begins by saying:

What was initially showcased as an anti-politician front against corruption seemed to blur into an anti-economic liberalisation coalition...

Prashant was joined on the dais by Arundhati Roy, who said:

As long as we have these [liberal] economic policies in place, the National Employment Guarantee Act will never be able to do away with hunger and malnutrition, anti-corruption laws will not do away with injustice, and criminal laws will not do away with communal fascism, the twin sibling of economic totalitarianism. They will, at best, be mitigating measures. As the historian Howard Zinn said “the rule of law does not do away with the unequal distribution of wealth and power, but reinforces that inequality with the authority of law. It allocates wealth and power in such complicated and indirect ways as to leave the victim bewildered."

Arundhati Roy added that "I have known Prashant Bhushan for years. First as a comrade and now as a close friend."

Other "activists" on the podium, according to the report, were Aruna Roy who championed the MGNREGA "right to employment" and now champions the "right to food." She never supports the "right to Property."

Aruna Roy, interestingly, is a Member of the National Advisory Council attached to Sonia Gandhi. 

So, these are not rebels; they are socialist sympathisers posing as rebels. They are not "against the System." They are against The Market. They are opposed to Liberty - and Property. They champion useless rights while ignoring Property. And they are led by lawyers - that is, socialist lawyers. I have just written a post against socialist judges - all of whom start off as socialist lawyers. Beware of socialist lawyers: Gandhi, Nehru, Jinnah, Patel - all were socialist lawyers.

Since Prashant Bhushan is a "comrade-turned-friend" of Arundhati Roy, let us examine her words quoted above - for the two obviously agree on their politics. Let is begin with her assertion that "as long as we have these [liberal] economic policies in place, the National Employment Guarantee Act will never be able to do away with hunger and malnutrition... " Does she think that if we close all markets down, the masses will be fed by our The State? Where does The State get revenue from to feed anyone - but from wealth producers of The Market?

Arundhati Roy favourably quotes a pseudo-historian who wrote that “the rule of law does not do away with the unequal distribution of wealth and power, but reinforces that inequality with the authority of law. It allocates wealth and power in such complicated and indirect ways as to leave the victim bewildered."

This is NONSENSE!

The Rule of Law protects Private Property from State predation. Apart from the security of possession, this yields the sweet fruit of Liberty. As Mises put it:

Private property creates for the individual a sphere in which he is free of the state. It sets limits to the operation of the authoritarian will. It allows other forces to arise side by side with and in opposition to political power.

Thus, the Rule of Law does not "allocate" anything. Its motto is "to each his own." Then, with Liberty and Free Markets, individuals speculate on how they can serve their customers better, competition enters the picture, people strive, some succeed, some fail, and the previous arrangement of wealth is altered, and keeps on altering forever. Mises says:

It is precisely the necessity of making profits and avoiding losses that gives to the consumers a firm hold over the entrepreneurs and forces them to comply with the wishes of the people.

This Free Market is an "economic democracy" - and not the "economic totalitarianism" Arundhati Roy rails against. Central economic planning is totalitarian - not Free Markets, which are a creature of Liberty, and in which each is free to challenge the superiority of another - to compete. Further, as consumers are "sovereign" in The Market, and every businessman is trying to woo the consumer, there is an "economic democracy" that works even better than the political one. As Mises put it:

The market is a democracy in which every penny gives a right to vote. It is precisely the necessity of making profits and avoiding losses that gives to the consumers a firm hold over the entrepreneurs and forces them to comply with the wishes of the people.

We are "served" by businesses. We are never served by politicians and bureaucrats, who are "self-serving." They are the Predatory State. Prashant Bhushan, Arundhati Roy and Aruna Roy are actually on their side - though they may pretend otherwise. 

There is either The Market - or there is The State. There is nothing else. These anti-corruption activists who are opposed to The Market are all in favour of a Bigger State - a Big Welfare State that will feed, house, clothe, educate, develop and uplift the sheeple. 

They support useless "rights" - while ignoring Property, from which alone can Liberty arise. These useless rights only serve politicians and bureaucrats (whose budgets grow exponentially). 

Thus, they are not against corruption; rather, they will reinforce corruption - and even enlarge it. 

They are looking for State Power themselves. The Jan Lok Pal will be their little bit of The State. 

In exchange, they will allow the socialists at the helm to continue to operate a Big Welfare State - which will consume all our precious Capital and therefore keep our masses permanently poverty-stricken, and our civilisation will soon collapse. 

For the progress of civilisation we must "accumulate capital" - and not consume it through welfarism. All welfare is about consumption, not investment.

I have an earlier post on Anna Hazare's tin-pot dictatorship in his village.

Add to that this nonsense from his closest aide, the lawyer Prashant Bhushan, and you realise that this is another false dawn.

So, I shall stick to my prescription: The Sheeple must rise En-Masse and FORCE our The State to sign a New Magna Carta guaranteeing the inviolability of our properties, the freedom to trade by land and sea, and the freedom to run our cities and towns without interference from higher authorities. The corruption inherent in inflationism must be ended, so that our wealth is preserved with sound, hard money.

We must "Seize Liberty and End Tyranny." Our focus must be to fight tyranny, not corruption.

Our battle must be for Liberty and Property - and we must never accept any freebies doled out by The State. These freebies are paid for by us, anyway. 

Lawyers are very dangerous people - look at Kapil Sibal and Arun Jaitley. Lawyers - like doctors - are a "self-regulating profession." Lawyers become judges, and lawyers teach law. Just as doctors misuse their monopoly of knowledge, so do lawyers. The only cure - the citizens must know law too. That is, the Laws of Liberty and Property.

The Laws of Liberty... And Socialist Judges

The following was written by the philosopher Strabo around the year 40 AD:

As for the constitution of Crete which is described by Ephorus, it might suffice to tell its most important provisions. The lawgiver, he says, seems to take it for granted that Liberty is the State’s highest good and for this reason alone makes Property belong specifically to those who acquire it, whereas in conditions of slavery everything belongs to the rulers and not to the ruled.

Note: Ephorus lived in the 4^th century BC, and he was describing Crete as it had been for many centuries earlier.

So get it straight:

Private Property is Liberty.

Collective Property is Slavery.

Further, this is “pre-classical liberalism” – not “neo-liberalism.”

It is socialism, communism and collective property that are NEW – dating back to the 1850s. 

Nehru was following a “political fashion”; he had not studied the ancients and their wisdom. 

Thus, he did not know that Private Property is not only the foundation of Liberty, it is the foundation of civilisation itself.

Private Property is the basic rule all our unlettered people follow in the Natural Order of the market society. Vast masses can only “act” – that is, act to “exchange” – only where there is a clear understanding of what is “mine” and what is “yours”; and this rule alone prevents conflict.

If a Communist Mayor took over and declared everything in his City to be “collective property,” chaos would ensue, and everyone would raid every shop and every mansion to take whatever he wanted in the name of the Universal Brotherhood of Man.

It follows that the Market Society is based on Individualism, and the rights of Property belong to Individuals.

It further follows that the Market Society is not an “organisation.” It is NOT a Command Economy. Each Individual speculates with his own Property, seeking to satisfy his customers, responsible only to himself for his gains and losses.

What happens when conflicts break out and the Natural Order is disturbed?

Then, an “impartial judge” is called in to resolve the dispute.

How will this judge “discover” the Law of Liberty? Hear Hayek on this:

The distinct character of the rules which the judge will have to apply, and must endeavour to articulate and improve, is best understood if we remember that he is called in to correct disturbances of an order that has not been made by anyone and does not rest on individuals having been told what they must do. In most instances no authority will even have known at the time the disputed action took place what the individuals did or why they did it. The judge in this sense is an institution of a spontaneous order. He will always find such an order in existence as an attribute of an ongoing process in which the individuals are able to successfully pursue their plans…

In the Market Society, individuals meet and make peaceful and gainful exchanges. While doing so, they follow the Golden Rule of Property. This creates a spontaneous, “natural order.” Just as posses of policemen are NOT required to maintain order, so also the “specific commands” of Legislatures are unnecessary. The impartial judge is concerned only with the disputes between individuals  - and not the “will” of any “organisation” like The State. Let’s call in Hayek, again:

The judge, in other words, serves, or tries to maintain and improve, a going order which nobody has designed, an order that has formed itself without the knowledge and often against the will of authority, that extends beyond the range of deliberate organisation on the part of anybody, and that is not based on individuals doing anybody’s will, but on their expectations becoming mutually adjusted.

The judge thus takes into account decisions made in similar cases in the past; and, if he does set a “precedent,” he only “delimits the range of permissible actions” that will apply to unforeseen instances in the future. The judge is a servant of the Natural Order. He is not a servant of The State. He is there to “preserve the peace” – a peace that existed before conflict broke out. This is what Common Law is all about. Common law judges did not impose the monarch’s will – and the monarch never “made new law.” Common law judges “discovered the law” from the past – from custom and usage, and precedents.

Hayek says:

The efforts of the judge are thus part of that process of adaptation of society to circumstances by which the spontaneous order grows. He assists in the process of selection by upholding those rules which, like those which have worked well in the past, make it more likely that expectations will match and not conflict. But even when in the performance of this function he creates new rules [sets precedents], he is not the creator of a new order but a servant endeavouring to maintain and improve the functioning of an existing order. And the outcome of his efforts will be a characteristic instance of those “products of human action but not human design” in which the experience gained by the experimentation of generations embodies more knowledge than was possessed by anyone….

He must thus be conservative in the sense only that he cannot serve any order that is determined not by rules of individual conduct but by the particular ends of authority. A judge cannot be concerned with the needs of particular persons or groups, or with “reasons of State” or “the will of government,” or with any particular purposes which an order of actions may be expected to serve. Within any organisation in which the individual actions must be judged by their serviceability to the particular ends at which it aims, there is no room for the judge.

So, can a Socialist ever be an “impartial judge” – or will he always side with authority? Hayek notes:

In an order like that of socialism, in which whatever rules may govern individual actions are not independent of particular results [like “redistribution”], such rules will not be “justiciable” because they will require a balancing of the particular interests affected in the light of their importance. Socialism is indeed largely a revolt against the impartial justice which considers only conformity of individual actions to end-independent rules and which is not concerned with the effects of their application in particular instances. Thus a socialist judge would really be a contradiction in terms; for his persuasion must prevent him from applying only those general principles which underlie a spontaneous order of actions, and lead him to take into account considerations which have nothing to do with the justice of individual conduct [as with rent control, nationalisation, land acquisition or the war on drugs].

Hayek goes on to say what kind of judge – and what kind of justice – best suits the Natural and Spontaneous Order of the Market Society:

The difficulty many people feel about conceiving of the judge as serving an existing but always imperfect abstract order which is not intended to serve any particular interests is resolved when we remember that it is only these abstract features of the order which can serve as the basis of the decisions of individuals  in unforeseen future conditions, and which therefore alone can determine an enduring order; and that they alone for this reason can constitute a true common interest of the members of a Great Society, who do not pursue any common purposes but merely desire appropriate means for the pursuit of their respective individual purposes.

All this MUST be based on the Institution of Private Property.

Law, Liberty and Property are an inseparable trinity.

Thus, there can never be any Justice under Socialism and Socialist Judges.

And a Socialist Constitution.

Onwards to a Second Republic!

And a Private Law Society – based on Property, Contracts, and Torts.

To conclude – here is Adam Smith’s good friend, David Hume:

But, though it be possible for men to maintain a small uncultivated society without government, it is impossible they should maintain a society of any kind without justice, and the observance of the three fundamental laws concerning the stability of possessions [property], translation by consent [free exchange], and the performance of contracts. They are therefore antecedent to government.

I would insist that Torts are also antecedent to government. With Torts, “criminal justice” becomes redundant – as I have argued earlier. On this subject, do read Bruce Benson’s The Enterprise of Law: Justice Without The State.

So, dear reader, contemplate the desirability of a natural and spontaneous order in which we all can peacefully co-exist and pursue our own individual ends – under the Law.

So, its not just about Liberty.

It is Liberty Under Law.

                       

[All HAYEKsplosive quotes are from Law, Legislation & Liberty, Vol. 1, “Rules and Order”, Chapter 5 titled “Nomos: The Law of Liberty”. You can buy the book from Amazon by clicking on the icon alongside. I recommend it highly.]

Only A Constitution of Liberty Can Save India

The Anna Hazare-led "movement" to battle corruption is fading out - as I had predicted - and, in the meanwhile, here is a fresh report of massive corruption from today's news, pertaining to Air India's purchase of airplanes. This time, an entire "Group of Ministers" are involved, including Praful Patel (civil aviation minister) and P. Chidambaram (police minister).

What is the solution? Anna Hazare's Jan Lokpal (ombudsman)? Or a New Constitution that severely restricts this overweening Socialist State - and delivers freedom from State interference to the citizenry? 

I would insist on the latter: that only a Constitution of Liberty can save India. Thus, if the New Constitution debars the State from running businesses of its own, and all PSUs are privatised, a whole lot of political and administrative corruption will be ended for ever. Similarly, if the New Constitution guarantees Economic Freedom to us all, and this State is dethroned from the "commanding heights of the economy." Ditto if Private Property is made inviolable by the State. If Liberty prevails, then only will corruption cease.

So we do not need to draft a Lokpal Bill. We need to draft a New Constitution - which should be short and crisp. This should guarantee Liberty, Property and the Pursuit of Happiness to us all. Power - that too, very limited power - should be decentralised to the level of city and town: subsidiarity. The Centre must fold. Powers to tax should be strictly limited. Powers to inflate should be taken away - by mandating Private Money: gold. Powers to engage in "social justice" should also be done away with - no more MGNREGA, which funnels loose money to the officialdom. Instead of "fundamental duties for the citizen" there should be fundamental duties for the personnel of the State. Freedom to trade by land and sea should be guaranteed - and customs duties disallowed by law. Also, most importantly, the State should have no role in education.

Anna Hazare seems to be quite a monster, actually. According to Amit Verma:

He [Anna Hazare] runs a village in rural Maharashtra as if it is his personal fiefdom, like an authoritarian feudal lord. He is a fan of Shivaji, and admires him for once chopping off the hands of a man who committed a crime. In that vein, he passes an order that anyone found drinking alcohol will be tied to a pole in front of the village temple and publicly flogged. Several men undergo this, one of whom, a vice sarpanch of the village, says: “I was drinking. I was ... tied to the pole and flogged two-three times. It is normal. [He] will try to make you understand once or twice and thereafter, he will beat you badly.” He believes in “rigid implementation” of family planning, including forced vasectomies.

Doesn't sound much like a "freedom man," does he? More like a tin-pot dictator, if you ask me.

It is an old adage that power corrupts. Our present Constitution gives the State huge powers - while giving no guarantees of either Liberty or Property to the citizenry. Nandigram, Singur, Meerut, Jaitapur - these are all because of excesses of State power, because they have the power to take our Property away. Surely, ours cannot be called a "constitution of liberty."

A wise man once said:

The original idea behind constitutions is that of limiting government and of requiring those who govern to conform to laws and rules.

 So I shall stick to my earlier suggestion: We need to "seize Liberty and end Tyranny" through a New Magna Carta of our own.

Nothing less will do.

Ganja-Charas, Alcohol, Tobacco - And Public Health

In my post of yesterday, I republished a 1998 newspaper debate I had conducted on cannabis legalisation between the head of the department of psychiatry in India's top teaching hospital and the chief of the narcotics bureau. The cop was just hot air and bluster so, today, let me begin with something the professor of psychiatry wrote - "it [cannabis] is a poor man’s intoxicant and by prohibiting it, we are inviting him to shift to alcohol."

Allow me to present some anecdotal evidence in support of this good doctor.

A year or so ago, while in Nude Elly, I was smoking a chillum with some friends when we were joined by a young lad of about 16. The smoke, of course, was no good - and so I launched into a bitter diatribe on the tyranny of cannabis prohibition. This young lad then spoke out - as follows:

Sir: I work as a labourer for daily wages of 140 rupees ($3). Every day, I spend 40 rupees on a packet of ganja. It makes just two chillums. I smoke those two chillums - but don't get any buzz at all.

What will this poor lad do other than switch to a "quarter" of some harsh IMFL liquor - which also costs 40 rupees? Remember, beer and wine are expensive in India because of taxation - and almost everyone in our country drinks hard liquor, especially the poor.

Doesn't hard liquor present our society with a bigger public health problem than ganja-charas? After all, alcohol is a systemic poison - and is closely associated with quite a few mental and physical diseases. The good doctor writes:

From the health angle, there is not even a single case of cannabis overdose death. Also, it does not cause any irreversible organ damage.... No plant product has been researched so thoroughly for its adverse impact than cannabis, with disappointing results.

The good doctor cites the Royal Hemp Commission of 1895 which came to India to study the reported "widespread use of cannabis" and "concluded that the drug was a mild euphoriant, had no addictive properties and posed no public health damage."

Now, contrast this harmless and useful herb with tobacco and hard liquor - that is, as a "public health issue." Think of the "masses" who smoke bidis and chew gutka - and drink their harsh "quarter bottles" of IMFL every evening.

Thus, this debate must no longer be a "freedom issue"; rather, it must be looked at as a "public health issue" - the point being that current policies are harming public health while legalising cannabis and removing all taxation on beer and wine (and toddy) would be in the best interests of all Indians.

At this point, let me turn to something the bad cop wrote:

...the underworld in the developed countries, notably in the US and the Netherlands, have been scientifically developing far more potent types of cannabis plants, often with more than 20 times the THC content than the traditional Indian hemp plant.... With these developments, can there be any standardization for regulated non-medical use, as it has been possible for alcohol?

As far as alcohol is concerned, it is clear, our The State prefers that we drink very hard stuff. What is wrong if we smoke very strong grass? On this point, let us refer to something the good doctor testified:

The difference between cannabis and other addictive drugs is that apart from being in the bloodstream, the excess is also absorbed and stored in body fat. Hence if consumed in excess, it is excreted slowly from the fatty tissues into the blood and out of the body. 

Thus, super-strong ganja-charas, with very high THC content, is nothing to fear. Let it roll. All that will happen is we will smoke less to get high - and thereby preserve our health. Nowadays, with the bull that is being sold, even 5 or 6 chillums a day do not deliver any buzz - and we must drink alcohol afterwards. Smoke some tobacco too. With super-strong ganja-charas, one small smoke will be enough. Nothing more will we need. Super-strong cannabis will improve our health.

Finally, since the good doctor talked about selling cannabis via "excise vends," let me say something about what I found in Orissa recently, where ganja is freely sold via such excise vends. Orissa is the only state in India where ganja is legal - because here The Masses are all smokers. Here, it is common to find grandfather, son and grandson smoking a chillum together. On a trip to a village outside Cuttack, I found 20-30 men seated around a big banyan tree, smoking chillums - and joined in the celebrations. There were 3 or 4 chaps among them who were selling the stuff - illegally, because the license to sell legally costs too much, and they prefer to pay bribes instead. And as for the excise vends:

Immediately upon arrival at Bhubaneshwar airport, I instructed my taxi driver to take me to the nearest excise vend for ganja. I bought some ganja and took it to my room to smoke - but it was terrible! I then went out and asked an auto-rickshaw driver where I could get some decent stuff - and he bought great ganja for me from an illegal dealer!

No, siree! Let us not have our The State selling ganja-charas. And let us go beyond Amsterdam, where branded products do not exist, and everything is under tight State control. In India, the home of the cannabliss indica, let there be Big Companies floated on the stock exchange - and let brands compete. Let brands guarantee quality. So, just as in tobacco or alcohol, the market is completely free. And we, the customers, are finally happy.

Oh! Cannabliss! 


Last point: The good doctor, while saying that The State can collect a lot of revenue from taxing cannabis (as the Brits did) also refers to this herb as "a worthless weed." Scientifically grown cannabis with super-high THC content will be THE CROP! - as I have argued elsewhere. A great CASH CROP! Let us celebrate cannabliss indica - and maybe then, instead of the tulsi, all homes will have a "holy" cannabis plant occupying pride of place in the centre of the courtyard.


BOOM SHANKAR!  

From the Archives: The Cannabis Debate

While I was an editor with The Economic Times, I conducted a debate on cannabis legalisation in which I pitted the Narcotics Bureau chief against a professor of psychiatry (who was also an expert on de-addiction). Today, I am re-publishing that debate, dated 5 May, 1998. First, the professor of psychiatry:

Professor Davinder Mohan,

Head of the Department of Psychiatry,

All-India Institute of Medical Sciences, New Delhi.

From a drug which was distributed by the government, to one that can now invite a death sentence, cannabis – marijuana or charas – has come a long way. Even today, it remains caught in a controversy as the government decides whether it will ever attain the status of an over-the-counter drug.

While the arbitrary imposition and lifting of prohibition of alcohol sends the media and politicians into self-congratulatory trips,  the prohibition of cannabis, which was and is the poor man’s intoxicant hardly causes a ripple. Cannabis and its products, including bhang, charas and ganja, have been traditionally used all over south Asia and especially in India from time immemorial.

The question whether marijuana should be legalized in India actually arises in the context of the Narcotic Drugs & Psychotropic Substances Act (1985), which introduced stringent penalties for its possession and sale and prohibited personal use (except in “small quantities”) for currently addicted individuals.

In fact up to 1959 not only was it legal, but its sale was regulated by the Narcotics Commissioner, ministry of finance, through excise vends. In 1965, after the ratification of the Single Geneva Convention (1961), the government of India formally closed legal collaboration and the sale of marijuana through excise vends. However, in the subsequent period (till 1985) nothing really happened, as neither the government at the Centre nor the states were really bothered about its use/abuse.

Whether marijuana or cannabis products are harmful to individual health, or even in the public health perspective, is an issue which has been the subject of debate and research since 1895, when the Royal Hemp Commission report was first submitted. After extensive field visits and whatever laboratory tests could be done with the technology then available, it concluded that the drug was a mild euphoriant, had no addictive properties and posed no public health damage.

The British government then undertook its cultivation and sale through the same excise vends through which opium was sold to the registered addicts – a practice which India discontinued in 1959.

It is relevant to mention that cannabis intoxication or consumption never leads to adverse social consequences. From the health angle, there is not even a single case of cannabis overdose death. Also, it does not cause any irreversible organ damage.

After consuming cannabis, the individual experiences a mild sense of relaxation and euphoria, and if intoxicated, time and space distortions. The difference between cannabis and other addictive drugs is that apart from being in the bloodstream, the excess is also absorbed and stored in body fat. Hence if consumed in excess, it is excreted slowly from the fatty tissues into the blood and out of the body. 

No plant product has been researched so thoroughly for its adverse impact than cannabis, with disappointing results. In the US, cannabis derivatives are prescribed in tablet form for terminal cancer patients.

Why then should India legalise cannabis? Firstly, it grows wild. While that maybe good news for the flourishing market, a lot of manpower and funds are spent in burning the crop every year.

Secondly, it is a poor man’s intoxicant and by prohibiting it, we are inviting him to shift to alcohol or get imprisoned or hanged. This has happened in Punjab and Haryana, where even before the NDPS Act of 1985, with economic prosperity, the population shifted from cannabis to alcohol.

Thirdly, it was a potent source of revenue in pre-Independent India, like alcohol is today in the states. After Independence, we decided to forego this source of revenue which accrued to the central exchequer.

Fourthly, it is not a problem in India, but of the developed world, especially the Americas. India can honour its treaty obligations by keeping a cheque on export to other countries.

Then, it diverts the energy of enforcement agencies from combating heroin trafficking to destroying a worthless weed. Further, it prevents research into its therapeutic applications as the existing international treaties will not let any new drug development from cannabis take place.

It is not generally known, but there is a group now in existence which is reviewing the single Geneva Convention and other treaties. The war on drugs has been going on since 1925 and every battle has been won by the opponents. It would be worth pondering if the traditional thandai [a cannabis drink] should not be patented by Indian herbal manufacturers and marketed as an alternative to alcohol.

And now, the narco cop:

C. Chakrabarty,

Former Director-General,

Narcotics Control Bureau,

Government of India.

Cannabis is the most prevalent drug of abuse the world over, both in quantity consumed and in the number of illicit consumers. Apart from larger dose-size, easier availability, lower price and safer mode of intake, a significant contributory factor behind this development has been the attitude of leniency, if not respectability, extended to cannabis use by some elite groups in different world communities.

A current myth favouring leniency is cannabis use being a part of Indian culture. Illustrations are galore, and these are culled and conveniently used without objective analysis and test of validity in the appropriate context. The instances cited are those of isolated rituals of insignificant sects, occasional ceremonial or social consumption under community discipline, indulgence allowed to peripheral elements, and proven medical usage in the indigenous system. The tolerance is misinterpreted as cultural acceptance, and the strength and efficacy of the social defence mechanism, that had remained intact till the middle of the century, is overlooked. That the community had effectively restricted, marginalized and discouraged cannabis use can be convincingly established by a single illustration: in every Indian language, there are derisive and crisp idiomatic expressions about cannabis users, attributing all sorts of absurdities to the effects of cannabis, the consumption of which makes one unreliable and untrustworthy.

Drugs are regulated, controlled or prohibited on the advice of healthcare experts, that is, the medical fraternity. The experts do often hold different views, and hence the legislators can only go on the predominant view, if an expert consensus is not available. The predominant medical opinion has not changed in the 37 years since the 1961 Single Convention on Narcotic Drugs was adopted. The World Health Organisation and most of the national expert groups including those in India, continue to hold forth to the view that cannabis consumption is harmful. Some top experts of India, however, are of the view that cannabis consumption does not cause permanent and irreversible brain damage. But it is harmful nonetheless. In a seminar at the AIIMS in August 1996, these experts, while recommending intensive research in the medical potential of the different cannabinoids, suggested only regulated availability for non-medical, that is, recreational, personal consumption. But this is not as easy now, as it was till the early ‘60s.

Funding and encouragement of research is certainly advisable, and this is also permissible under the Indian as well as international law, but till fresh research findings alter the current state of knowledge, cannabis has to be considered as harmful, with its non-medical consumption banned for some years to come. It cannot be ruled out either that further research may bring out hitherto unknown harmful properties in cannabis.

One should also not miss the grave danger signals emanating from the other direction. While there is sustained pressure for relaxation from some elite groups, the underworld in the developed countries, notably in the US and the Netherlands, have been scientifically developing far more potent types of cannabis plants, often with more than 20 times the THC content than the traditional Indian hemp plant. The leaves (and seeds) of the cannabis plant, which are still outside the purview of the 1961 Convention or of most national legislation including Indian law, are now found to be having much more THC than the “flowering and fruiting” tops, that is, the traditionally controlled ganja or cannabis. With these developments, can there be any standardization for regulated non-medical use, as it has been possible for alcohol.

Any talk of relaxation or legislation would only boost the aforesaid pernicious developments. Prohibition of cannabis would hence be more necessary now than it was in 1961. And it has to be effective, and not as haphazard and half-hearted as it has been during the last 37 years. No additional resources would either be necessary singly for cannabis, if there I a common, adequately strong and integrated infrastructure for the various other harmful drugs under the international control system.

However, informed debate may continue among experts who have different points of view. It should not be allowed to degenerate to populist political or ill-informed generalistic levels.

My question to the cop: Are our cops reliable and trustworthy?


And, are the worshippers of Shiva an "isolated sect"?


BOOM SHANKAR!


Legalise it! I'll advertise it!


My detailed take on this debate is posted here.

Conversation With A Young German

Hearing that I propagated "radical capitalism," a young German tourist entered into a debate with me. He said he stood for "social market economy," and when I inquired as to what kind of interventionism he desired, he said German farmers needed protection. Free trade would hurt them, he said. The German State must impose high tariffs on tomato imports, he argued. I replied as follows:

If this tariff is imposed, and Germans pay more to consume locally-grown tomatoes, they will have less to spend on other goods - like beer. Thus, the move will backfire. The farmer's gain will be the brewer's loss. Consumers will lose, too.

I added that the "international division of labour" means specialisation among all nations. Thus, if Germans import tomatoes from, say, Indian farmers, and specialise in engineering, they will benefit. But if they protect inefficient tomato farmers, then Indian farmers will lose - and they will be unable to buy BMWs from Germany. Protectionism is a Lose-Lose proposition, I told him. The whole world loses. The world would be a much better place if tariffs were abolished altogether.

He hemmed-and-hawed awhile, and then took the tack that my "radicalism" was something new - a belief in a "pure capitalism" that had never been articulated before. I advised him to read Ludwig von Mises' Liberalismus - the original German edition of his Liberalism: The Classical Tradition dating back to the 1920s (which you can buy here; the PDF file of the English version is available here).

I also told him about Adam Smith's "Three Duties of the Sovereign" dated 1776, and how these duties excluded the production of money, poor relief and even the making of law. The sovereign only had to defend his subjects from internal and external foes - and undertake "certain public works" that neither businessmen nor charities would invest in, like roads. Rather than making law, the sovereign had to establish an "exact administration of justice." In Smith's immortal words:

According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings:

first, the duty of protecting the society from violence and invasion of other independent societies; 

secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice;

and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.

Thus, these views are neither radical, nor new. And Smith's use of the expression "Great Society" is also noteworthy. This Great Society is not a nation-state; rather, it is internationalist and world-embracing. Smith's Great Society is exactly what Sir Karl Popper meant by "Open Society." I have myself written a recent column on Open Society, which you can read here. This open or great society has nothing to do with "narrow domestic walls." Classical liberalism was about all of humanity. Smith dreamt of "universal opulence."

The young German said he was planning to pursue an MBA programme in the USSA. I advised him against it, asking him to study Economics instead - at home.

Why are Germans so sceptical of the Free Market when they have seen the failure of East Germany? The answer probably lies in the fact that their schooling is provided by their State. It is in Germany that the Welfare State was born - under Bismarck. It is in Germany that "bureaucrat-professors" proclaimed themselves to be "intellectual bodyguards of the House of Hohenzollern."

But there is hope. The Euro will fail, soon, only because of Socialism - the "social market" my young friend so stoutly defended. "Social welfare" has failed in four EU nations: Portugal, Ireland, Greece and Spain (PIGS). Soon, all of Europe will learn that welfarism is not "economically sustainable." We in India must learn this too.

To Each According To His Accomplishments

The Marxist slogan - "to each according to his needs" - is pure nonsense. What it really means is that a State must be set up to take over the "means of production" and thereafter "distribute" all that is produced fairly to "the people" - who are all "workers." This ought to be called Statism - not socialism or communism. Their Great God is The State.

The Market operates on a different principle - to each according to his accomplishments. Thus, none are dependent on The State for supplying their needs. Instead, everyone goes to market with his accomplishments, earns his rewards - and then provides for his needs himself, via the Market.

For the Market to work Private Property is essential. All the means of production are privately owned. Thereafter, all that is required is Liberty - so that none interfere with anyone's efforts to satisfy his customers.

One further point must be noted about the difference between these two ideologies: when the principle "each according to his accomplishments" prevails, everyone "works" to improve himself. People strive to be better. Firms try and improve their products. And there is Competition. All this results in a "work ethic."

Under socialism / communism, no one works. Everything is run at a loss. There are no incentives to perform better. Everything produced is shoddy. The workers lose as consumers.

Some people say that Competition means "dog-eat-dog capitalism" - but that is really not true. Market Competition is not the "survival of the fittest." Rather, all accomplishments are "graded" and rewarded accordingly. The great singer becomes a star. The lesser singer croons away in a small bar. The great whisky sells alongside the lesser whisky... and so on. All survive, not just the fittest and the best.

We in India must now choose between these rival ideologies. 

Enough of Marxist nonsense!

Enough of socialism and communism - and their statism.

Enough!

Let there be Property and Liberty - and free markets.

To each according to his accomplishments.