SUMMARY
The dynamics of a free economic system should normally follow a demand-supply equation. However, even after most of the Indian economic system is liberalized, the equations being executed here seem to very different from what was originally expected. What exactly is the difference between the (general) economic equations in India and the first world economies? This article tries to build a model of the Indian and first world systems in order to bring out the essential differences.
There have been a number of different kinds of qualitative changes in the average Indian life styles during the past eight years (at the time this article was written). The opening up of a basically conservative lifestyle, has resulted in a number of curious new life styles.
On the one hand, there seems to be a large spurt in the choices of consumer durables. We seem to have a number of new cars, new refrigirators, new washing machines, new TVs, new TV channels, affordable internet, etc. The average lifestyle of Indian urban middle class families also seem to have a lot more choices than earlier. Now it is almost ubiquitious for most middle class professionals in urban areas to trot around the globe-- something which was formidably expensive even a few years ago.
It all seems very well that there are so many available options. However, the average Indian life style is comparably different from its counterparts of the first world. This is not the differences in cultures that we are interested in, rather economic differences in terms of available value and affordability. The essential questions that we are asking are-- Does the average Indian citizen have a greater choice and quality in all aspects of life? If that is not the case, then how can the skew (a quality increase in some aspects and no change, or even deterioriation of quality of some other aspects of lifestyles) be explained? What can be the fallouts of such a skew?
In about mid-1997 some of us had conducted an informal experiment to comprehend the above situation better. We identified a set of questions to two groups of participants. The question to be addressed by the first group was to list out some of the basic problems that were faced by India before 1990. The question provided to the second group was to list out some of the most basic problems in present day India. The questions also involved to depict how each problem influences the other, but that would not be of interest here. The list prepared by the first group looked somewhat as follows--
The list prepared by the second group looked somewhat as follows--
(At this juncture, I would like to request the reader not to summarily decide that I am suggesting some sort of a socialism as a solution, and to read the entire article).
In short, most of the basic and pertinent problems remained as they were. Perhaps unemployment was no longer considered a major issue because of the growth in the number of choices. However, the other problems remained as they were, and new issues like pollution and stressful lives have manifested themselves as problems. A recent survey published in the environment journal Down to Earth noted that while the Indian GDP has increased by a factor of two over the decade from 1989 to 1999, vehicular pollution alone has increased by a factor of eight! And this is not taking into account other kinds of pollution or any other way in which we are paying for the new life style. We also can identify many other issues that have deteriorated over these years-- traffic, waste management, education (we still have very few world class educational institutions), etc.
In fact, there seems to be a definite pattern of gains and losses about the new Indian lifestyle-- we seem to be growing individually rich, and collectively poor.
Almost all of the artifacts which have remained the same or have deterioriated in quality in the post liberalization phase seems to be artifacts of collective use like roads, air, social system (crimes, stress...), electricity, public hygiene, etc.
In this article we develop a hypothesis to help explain the above pattern. By this we would be able to build a model explaining how the Indian context differs from other free systems of the first world, and possibly open up previously unknown directions for progress.
In order to model the present situation, we need to first consider the notion of a system. An economy, a country, a community, etc., are all systems and in fact are parts of a single global system which would contain all of them. By definitions from general systems theory (an introduction to systems theory can be found at the Outsights site), a system is defined as an entity which maintains its existence due to the mutual interaction of its parts.
From the above definition, we can identify two distinct constitutients of a system-- parts or subsystems; and interactions among the parts. It is the interactions which keep the system existent, and even bring emergent properties for the system, which cannot be attributed to any of its parts.
Hence when a system becomes unhealthy, or has a threat to its existence, the source or the threat would lie in one of these constitutients. That is, the source of the threat could either be faulty parts, or faulty interactions. However, when encountered with a threat to the smooth functioning of a system, we normally corner out only faulty parts as part of root cause analyses, and rarely do we corner faulty interactions. For example, while addressing the problem of corruption, a lot of debates are made into what kinds of actions should be taken against corrupt personnel-- but rarely into the question of what would be the causes for the corrupt behavior. If the Theorem of Corruption being debated at the India Policy Institute is anything to go by, corruption is a necessary behavior for politicians, and it would not be possible for a non corrupt person to become a politician!
In this article, we address the problem of faulty interactions in a system and how they could affect system health. In order to address the problem of faulty interactions, we have to first model a system and interactions in the system.
Mathematically, we consider a system to be a tuple of two entities-- parts and interactions. Hence a system S = <P,I>; where P = {p1, p2, ..., pn} is the set of "parts" or subsystems of S, and I = {<pi, C, pj> | pi, pj in P; C in set of subsets of P} is the set of interactions among the players. We model each interaction as a set of three entities-- the "interactor" (pi), the "interactee" (pj), and the channel used for interaction (C). The channel used for interaction is assumed to be made of one or more parts of the concerned system. According to theories which study interaction-- like linguistics-- there are other attributes of an interaction like the message and the message contents. However, since we are concerned with the interaction factors affecting the system health, we shall not be considering the message and message contents.
Given the above model of a system, we can now identify three different kinds of disparities that could occur in the interactions among system parts--
In a very fundamental sense, discrepancies 2 and 3 above would manifest themselves as discrepancies in demand and supply and the system evolves to satisfy the discrepancy. However, in a practical sense, this would be a very slow process and the system would witness a number of unnecessary fallouts and sufferings before this equilibrium comes about. Also powerful external influences may cause discrepancies from spurious or missing tuples to occur at a much greater rate than the rate at which the system can translate them into demand-supply discrepancies and evolve itself to rectify them.
The next section argues that the skew in the Indian system results from type 2 and type 3 discrepancies. We develop a model of civilization which we call the "3-storey model" and elucidate how these discrepancies get introduced in the system.
The first insight into the notion that Indian systems differ in a fundamental manner from the first world came when I first travelled out of India. The differences in lifestyles were apparent. Initially, one would attribute the differences to the disparity in population, the diversity of the Indian populace, an apparently ineffective state, etc.
While the above factors might be true, it is not difficult to see that these are actually symptomatic artifacts of an underlying system. We need to be asking the reasons why India is inherently so diverse; the reasons for such a large population and growth rate; the reasons for the apparent ineffectiveness of the state; etc. And these pertinent differences have to be searched for at the level of the system. The questions that are being asked include-- Are there any differences in the systemic equations between the first world and the Indian system, which we could use as a general framework for explaining the differences and in looking for solutions?
In order to build such a model, we need to first generate a general model of human civilization. There have been many researchers and historians who have studied world histories. However, in terms of building a general model which explains the civilizational changes, futurist Alvin Toffler has some interesting models to offer. In his three books "Future Shock", "The Third Wave" and "Powershift", Toffler analyzes the changes happening on a global scale due to the paradigm shift resulting from the onset of the computer and the information age.
According to Toffler, world civilization can be categorized into three main "eras" or "ages"-- the agrarian era, the industrial era and the information era. The agrarian era was characterized by nomadic tribes settling down to cultivate crops for their livelihood. The industrial era saw the onset of the rational age, the renaissance and the reformation movement, and the main emphasis in this era was towards the development of large industrial bases. The information era, on the other hand shifted the emphasis towards information.
In the book "The Third Wave", Toffler analyzes how these paradigm shifts affected almost every aspect of human civilization. Organizations, government priorities, families, business equations, wars, social justice, communities, religion, etc., have all been affected by the paradigm shifts. For example, some of the artifacts of the industrial era of civilization included centralized organizational structures, mass production, standardization, nuclear families etc.; while artifacts of the presently evolving information era include agile organizational structures, customization, cult cultures, proxy wars, etc. Indeed many of the equations of the present age are still being uncovered. Goldhaber, for example, observes that internet based commerce follows a fundamentally different set of equations than conventional commerce. Internet based economies are named "attention economy", where the commodity at stake is user attention, which is further used to convert to money and value by different ways.
In the first world, the three eras evolved from equations resembling demand-supply equilibria. The unfriendly climatic conditions towards cultivation and the apparent prosperity of the Asian subcontinent led many European countries to reach out to these lands and establish colonies. The colonies now faced a challenge of managing people and material movement between the colonies and the host countries. Which perhaps could have been some of the roots of the onset of large industrial ventures and subsequently the industrial era. And computers were initially invented to solve large unweildy problems of the industrial era. Some of the first applications of the computer were in management of very large centralized organizations. Indeed when computers started getting popular, there were many "visionary" ideas of a few large centralized computers catering to the world's computational needs-- which further substantiates the industrial era roots for the computer.
India (and perhaps other third world countries), however are different. The agrarian era was executed quite well; indeed very well enough to attract civilizations from all over the world. However, the industrial era was almost completely missed. India either did not have the demand which spawned the development of large industrial establishments, or its demands if any, were supressed. Now that the information era has again broken national barriers, we see an influx of so many information era artifacts entering the Indian system. However, these artifacts have fundamentally evolved from requirements which have underpinnings of a mature industrial era and have hence been designed appropriately.
Each era, due to its different paradigms, can essentially be characterized by different sets of interaction tuples. For example, the strict adherence to timings of factories in the industrial era would have a different set of interaction tuples than the flexible timings of today's organizations. However, most of the interaction tuples, and the artifacts that are designed, utilize a set of infrastructures from the yesterera. For instance, Japan pioneered in the paradigm of customized bicycle manufacture, where a user can present a set of requirements customized to his/her needs and a bicycle is designed by computer and assembled accordingly in three hours time. Such a kind of service requires mature manufacturing processes-- an artifact of the industrial era-- to be already in place. Similarly the present day lifestyles of an average US citizen relies much more on the car compared to their counterparts in India. And car manufacturing is a legacy that has evolved and matured through the industrial era. The essential point is that the lifestyles during the three eras in the first world were designed and executed upon the legacy left behind by the earlier era. And since, the three eras evolved from first principles-- by matching demand and supply, the equilibrium reached was based on whatever legacy had been left behind.
If we consider the three eras to be the first, second and third storeys of a building respectively, then the first world would symbolize a building where each storey is based on whatever the lower storey has to offer.
In the Indian case, however, it is only the first storey that has been developed from first principles. While post independence industries have addressed many requirements from the first principles, most artifacts from the information era have been more or less copied verbatim into the Indian system. This presents a scenario where we have a strong first storey, a weak second storey, and a third storey which is growing stronger without recourse to what the second storey has to offer!
The following table shows a few observations from the Indian life style and provides explanations for them from the 3-storey perspective--
| Observation | Explanation |
| Bullock carts and hand carts vying with cars on city roads. | A weak second storey and a strong first storey has resulted in artifacts of the first storey being retained and promoted onto the third storey life style. |
| A sudden increase in the number of vehicles, vehicular pollution and traffic related accidents. | Artifacts of the information age have not evolved from first principles-- they have rather been copied verbatim from the first world systems. The increase in automobile usage may perhaps be explained as an attempt to mirror the automotive life style of the US. However, the difference is that US has a large road network and pollution control infrastructure which are results of a mature industrial era. These missing artifacts of the second storey in India, have resulted in traffic jams, polluted air, unsafe driving conditions,... |
| Characteristic differences between Bollywood and Hollywood movies. It is not difficult to see that most popular Indian movies are fundamentally different from Hollywood movies. In Indian movies, the main story revolves around the family. A career is seen as a sidelined entity that supports the family. On the other hand, in most popular Hollywood movies, the theme is the project-- be it defending earth from aliens, recreating dinosaurs or fighting terrorism. In fact, Hollywood and Bollywood movies have both addressed the issue of terrorism in very differnet ways. In Hollywood movies, the main issue was to fight terrorism and avert terrorist attacks (example movies are "Executive Decision", "True Lies", "Broken Arrow",...); while Indian movies dealing with terrorism addressed their impact on families (examples are "Roja", "Bombay", "Dil Se", "Maachis",...) | This probably can be explained by the fact that the family (a big, strong, joint family) is a characteristic artifact of the agrarian era. In the industrial era, the changing paradigms also brought in a number of changes in the family system. During this time, the primary emphasis-- the center of one's world-- would also have shifted from the family to the project. However, a weak industrial era in India has caused many artifacts from the agrarian era to be retained intact-- and the primary focus towards families could well be one of them. |
From the earlier section it is evident that most of the skew in the Indian system has resulted from the imposition of lifestyles and business practices without recourse to the ground realities of demand and supply. One of the darker sides of such a skewed system is that the demand for essential interactions in the system is supressed (often too implicitly to be noticed), and the demand surfaces in many different forms. Most cases of bigotry, communal clashes, urban stress, accidents, etc., can be traced to roots which depict necessities like food, shelter, education, infrastructure, security, etc., that have been supressed or ignored.
However, more importantly, there is no single adversary which is the cause of the skew. This fact gaines even more importance in the light of the recent series of crises India has seen, where adversaries were pointed out in an almost random fashion-- from casteism to religion to language to foreign hand.
After having identified differences at deep systemic levels and concluding that the Indian system has not grown in a natural way, which might perhaps be the cause of so many crises, the pertinent question would be how to address this skew. It is tempting to suggest a rollback of the information era in India or get more conservative; but it is easy to see that is it not a viable alternative. Setting the clock of civilization back by about three hundred years and hoping for a natural evolution is nothing less than disasterous.
A better, in fact, a very lucrative alternative would be to encourage innovative solutions to this problem of the skew. Essentially the task is to research the different ways by which the weak second storey can be augmented by paradigms from the first and the third storey. The research can also concentrate on circumventing the classic problems of the industrial era-- that of massive resource requirements, environmental pollution, etc. Essentially, we need interdisciplinary research of a fundamental kind.
The above inference is nothing new. In fact, to quote Toffler-- "with such prescience; tomorrow's development strategies will not come from Washington or Paris, but will come from Latin America or deep in Africa. They will be indigenous, matched to actual local needs. They will not stress economics at the expense of ecology, culture and other dimensions of existence. They will, yet, reduce infant mortality, increase lifespan, nutrition, and the general quality of life without giving up their core social values or religion and without necessarily taking to Pepsi and Pizzas that is part of the industrial civilisation that is just 200 years old and has yet managed to wreck havoc on a scale that has threatened the earth's vitals that has survived 60,000 years or 800 generations of the human species".
The major hurdle towards this end is the beginning. It is very difficult to motivate bright young professionals to identify and carry out fundamental interdisciplinary research when there are lucrative opportunities for earning fat salaries and trotting around the globe, that is right within their reach. In addition to that, most of these research problems would likely be of no relevance to the first world, and hence may not interest major journals and societies. The practice of benchmarking research quality by the number of publications in these journals and societies would be a further hindrance to motivate the above kind of fundamental research.
Furthermore, India does not enjoy the benefits of welfare and social security that is ubiquitious in most first world countries. This necessitates the minimization of risk, and hence the reluctance towards implementing new paradigms. Given these constraints, the only viable alternative seems to be to encourage collaborative research efforts among the export houses, multinationals and just about any well-to-do organization. Collaboration may first be motivated by identifying opportunities for cutting costs and increasing profits by symbiotic activities. For instance, while it may be individually infeasible for companies A, B and C to provide company bus services for their employees (and hence have the employees invest in their own vehicles, adding to the daily vehicular congestion and pollution), it might well be possible to create a combined service for employees of companies A, B and C put together. Identifying opportunities for such symbiotic collaboration may motivate the exploration of further opportunities and the development of new paradigms.
In conclusion, the Indian system seems to be skewed in its dynamics which hampers its evolution in its natural way. It is imperative to identify this skew for bringing about any lasting improvements in the life styles; and the keywords towards this end include-- research, interdisciplinary and collaboration.