People's Democracy

The Revolt against Redistribution

Prabhat Patnaik

THE proposed food security measure of the union government is not only anaemic, in so far as instead of providing universal food security, it confines the potential beneficiaries to a mere 67 percent of the population, but also discriminatory against states that actually do have universal food security. The earlier BPL-APL distinction had put great strain on the public distribution system of a state like Kerala which had been universal and had ranked among the finest in the world; the current food security measure will extend this damage to more states, like Tripura, where the PDS as of now also covers the entire population. In the process of apparently providing enhanced food security, the centre would actually dismantle the food security systems of states that already have universal or near universal coverage.

What is striking however is that even this anaemic, and in certain instances retrograde, measure is arousing opposition from a number of commentators on the grounds that it would cause an “exit” of the middle class from the State. This is an argument worth examining because one is likely to hear more of it in the days to come.

RESISTING

REDISTRIBUTIVE MEASURES

The argument goes as follows. Redistributive measures impinge on the middle class without bringing any gains to it. It finds the tax revenue it provides to the State being spent in ways that are of no use to it. It therefore begins to “exit” from the State: it finds ways of not paying taxes; and, to offset the taxes it does pay, it takes advantage of whatever loopholes it can find in the system to benefit itself. What is more, since it is dissatisfied with the quality of services provided by the State, it tries to arrange those  services for itself independently: it forms gated and more or less self-sufficient communities, like the many “colonies” in Delhi and Gurgaon, which have their own security arrangements, their own generators for ensuring continuous power supply etc; it withdraws from public healthcare facilities and turns to private providers; it withdraws its children from government schools and sends them to private schools; and, if it can, it sends its children abroad for study and for settling down. And every such move to insulate itself from the “poor quality”, and the vagaries, of the services provided by the State becomes an additional justification which it adduces for not paying taxes. Every few steps towards “exit” in short encourage further steps towards “exit”; and we have a cumulative tendency towards “secession”.

The argument against redistributive measures by the State says that this must be avoided, since it is the most educated and “talented” people who have a tendency to “exit” from such a State. The State therefore must avoid such redistributive measures as are likely to give rise to middle class opposition, which means in effect almost all redistributive measures.

The argument justifying this tendency towards “exit” and warning the State not to do anything that might aggravate such “exit” is usually further embellished by referring to “corruption”. Why should the middle class pay taxes, it is asked, if those taxes go to line the pockets of “corrupt politicians”? And why should the middle class be asked to pay for redistributive schemes, since such schemes will only give rise to even greater corruption, to money “going down the drain”? Redistributive measures in other words are sought to be scuttled by dragging in the “corruption” prevalent in the State machinery, because of which anything the State tries to do for the poor becomes suspect, and hence a legitimate target for middle class opposition to it.

Now, “corruption” of course must be tackled on its own. But it cannot be made an argument for preventing the State from intervening in favour of the poor. Indeed, since “corruption” itself can be construed as a form of “exit”, those lining their pockets having “mentally seceded” from the State and hence treating State resources as eminently stealable for effecting their private enrichment, justifying “exit” by some on the grounds of “corruption” by others becomes a mere self-serving argument. It becomes analogous to saying: “why I should I not line my pockets by withholding tax payment to the State, since someone else is doing so through “corruption””?

The tendency to evade taxes, to enrich oneself at the expense of the State exchequer, is to be expected under capitalism where maximising private gain is supposed to constitute “rational” behavior, and indeed the driving force of the system. If maximising private gain at the expense of others is what the system enjoins one to do, then there should be no cause for surprise if these “others” include the State as well. What is surprising however is such behaviour being justified by writers who claim to be “liberal”. Because the liberal defence of capitalism has always been that pursuit of private gain must be allowed, precisely because the State exists as a bulwark against any possible damage it can do to society, including damage in the form of acute deprivation for some members of society. If this bulwark does not exist then the liberal case for capitalism does not stand.

Those who argue against redistribution therefore are subscribing not to a liberal argument, but to a belief that no bulwark is needed against the untrammeled self-seeking that characterises capitalism, ie, that everybody in such a society gets what he or she deserves. This argument it should be noted is different from the one which says that such redistributive measures detract from “growth”, that it is better not to “fritter” away resources on “populist schemes” but to use them for investment which would enlarge the pie later; and that even if enlarging the pie itself does not improve the conditions of the poor, the State can always use taxes-cum-transfers to improve their conditions, since its ability for doing so increases with the size of the pie. The argument now being floated amounts to saying that the State should never undertake any redistributive measures, since that would simply make the middle classes “exit” the State.

STEADY SHIFT

IN THE DISCOURSE

We are thus seeing a steady shift in the discourse. First it was argued that State intervention for redistribution must be avoided because it detracts from growth, which per se would be quite adequate for improving the conditions of the poor through “trickle down”. Then it was argued, when “trickle down” turned out to be patently unreal, that the State should avoid redistribution because it detracts from growth, which by increasing the size of the pie, will increase the amount it can get tomorrow for improving the lot of the poor. And now it is argued that the State must avoid redistribution because the middle class does not like it, and, since it consists of “talented” people, ignoring their wishes will damage society (whence it follows that a society in which everybody is left with what he or she has got, without any redistribution by the State, must be an optimal one, where there is no difference between what a person gets and what he deserves).

This of course is a fundamentally anti-democratic argument, since it amounts to saying that society and the polity should be arranged according to the caprices of those who have the “exit” option, ie, the rich and the affluent (for whom the euphemism “middle class” is used). This view is being aired quite brazenly of late. The Times of India was recently asking its readers whether the tax payers should not have a say in how the tax proceeds are spent. Now, asking readers this question implicitly amounts to running a campaign for it (as it puts this suggestion into the minds of readers who come from the affluent set anyway, and gives respectability to such a view which might otherwise have been taboo). But tax payers deciding on how revenues are spent entails that the democratically elected government foregoes the right to do so. It means that the rich have institutionally a bigger say than others in the affairs of the State, which is violative of democracy. And what is to prevent their say from taking the form: “do not tax us unless we are the beneficiaries”, which is exactly what the “middle class exit” theories are advocating?

But these views are not just anti-democratic; they are also wrong, which is another way of saying that democracy is not just an arbitrary value judgment but an eminently realizable state of affairs. They are wrong because the distribution of incomes and assets in society are neither transcendentally given, nor in conformity with some unique optimal pattern. It is socially determined and hence capable of being shifted about in accordance with social priorities. And if there is resistance on the part of some to the realization of social priorities as determined by the bulk of the people, then taking their assets (and incomes) away from them remains a feasible option, since it will not cripple society; other arrangements can be put in place to replace them.

This elementary proposition, which constitutes the basis for socialism, had been put forward long before Marx. Hodgskin, an English socialist who had been a follower of Ricardo, had stated that while society could not do without means of production and subsistence, it did not need a group of people called capitalists to own them. It could very well do without capitalists by having these means of production and subsistence collectively owned.

Likewise if the rich in India today resist redistribution by threatening “exit” from the State, a democratic State should call their bluff. They cannot after all “exit” from society where the surplus on which they subsist gets generated; a democratic State therefore must not get deterred from enforcing the income distribution, through taxes-cum-transfers, that is in conformity with the social priorities as determined by the people. If they resist such redistribution by using the power that their property gives them, then a democratic State should not have any compunctions about socialising the ownership of the means of production.

The liberal case always was that this was not necessary, since taxes and transfers were quite adequate to bring about socially desirable income distributions. But if taxes and transfers are resisted, then this becomes necessary, which is exactly what the socialists have said all along.