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Tethering on the edge of philosophy, I wonder, ” why do we do all the things we do – business, education, entertainment, etc…?” At the end of the day, it boils down to one thing, we do all this to earn money so that we can fulfill our basic needs and sustain a decent lifestyle within our peer group/community. So, if there was no money, would we not be as productive and active as we are today? In today’s scenario of credit crunch and almost nil liquidity in the market, money and its movement affect us and our activities more than ever. People today are talking about the world paying the price for being over greedy in an open market; in other words people are saying that capitalist penchant for profits and greed will always eventually lead to such asset bubbles like the present one. Honestly, I am not yet inclined towards any economic paradigm to speak out in so definitive terms – I am as much a socialist as a capitalist. I have my reasons for that. I believe that the capitalist world breeds exploitation of one class by the other while socialism encourages equality amongst the classes in terms of economic power. On the other hand, it is predominantly the capitalist world that has taken mankind to this level of advancement in all spheres of life – medicine, science, technology etc. As I am still sitting over the wall, on my allegiance, I would rather think about a more fundamental thing than these philosophies – the thing these philosophies revolve around – money. What would happen if we were to abolish money one fine day? Can we ever do that? Or am I being just one crackpot with no knowledge of economics? Well, I concede that I have not much skill in economics but still the question fascinates me. Even before I set out to explore the pros and cons of such an action, a question nags me. Will we still transact, if there is no money? Well, I believe we will stop transacting, to be honest. The reason being this – let us look at money in another perspective – as an indicator of some skill that I have which satisfies somebody else’s need. So let’s say that if I am a cobbler, I have a skill to make shoes and people who need shoes will come to me and get their need for a shoe fulfilled. Will I make shoes for someone who doesn’t pay me? I will not, because what the money he pays me does is that it helps me fulfill my other needs for which I do not have skill sets, like say buy rice; I don’t know how to grow and process rice; the money which I get from selling shoes help me get rice. So, the basic tenet is that money gives everybody the assurance that they can sell something and buy other things. It helps by being ‘tool of trust’ , a guarantor. What if I just substitute the guarantor? What if the government acts as a guarantor for every transaction that everybody does. So in effect, it would mean this – I just make shoes and give away shoes from my shop without worrying about customers, price, marketing, bank loans, over head costs and a whole host of other things. The point being, I am good at making shoes and that’s what I will do. My other needs will be met and guaranteed by the government. So lets say that I go on a holiday, I wouldn’t pay anything to the hotel because the hotel guy knows that his other needs are not effected by how many rooms he is able to keep occupied. He will still have food on his plate irrespective of whether I make that holiday trip to his hotel or not. I can here you saying, “Nah! There is something amiss here! How can that be possible? This guys has gone nuts!” . I know that it all sounds so Utopian, may be it really is. But, I am just trying to figure out why government guarantee will not work or rather why it hasn’t till now. The question seems really saucier to me now when the world over governments are bailing out banks by nationalizing them – in effect acting as a guarantor! Okie, peace – I concede; this is naïve on my part! Just couldn’t help the thought train….:-)

A relatively novel (novel in the recent past) development in our country has been the peaceful march of around 25000 people belonging to certain tribes to Delhi. These people belong to the fringe of our society – marginalized. They are landless, unemployed, under nourished and uneducated. Landless because they were evicted by the government from their traditional forest land, unemployed because they are uneducated and most jobs are concentrated in urban clusters. Under nourished and uneducated because our social programs are appallingly under funded and terribly mismanaged. Corruption & nepotism rules the roost.Under the current economic boom the challenge is to make it inclusive. Like the PM said in his Independence Day speech, we should create more jobs & take them to where people live in order to bring all-round prosperity and ease the urban pressure. (National Rural Employment Guarantee Scheme)NREGS and (Right to Information) RTI act are some potent tools that have out of our legislative in recent times. A recent study by an NGO found that NREGS was headed towards a predictable failure in some northern states owing to siphoning of the funds by the middle men and babus.

This silent protest by 25,000 citizens hasn’t gone unnoticed in the political circles. What is strikingly different about this walk is that the driving principle of the protesters is ‘satyagraha’ – no burning of buses, no damaging public infrastructure, no rioters but strong resolve to make a point and seek justice. What ails the social development machinery in our country is the perpetual leakage in the system. This could be another wake up call to tighten controls, plug loopholes, improve successful implementation percentages and deliver what is needed.

(c) Suresh Damodaran,2007

IMF chief economist Raghuram Rajan feels that India can touch 10% growth rate provided it beefs up its infrastructure and builds labour intensive industries. “India, in its most advanced states, has the kinds of industries that you would see in advanced economies, not in an economy that has tremendous amounts of labor and should do low-skilled stuff,” Rajan said. There no shortcuts as they say; we definitely can’t beat the Chinese by jumping the value chain. The core sectors have to improve to take India to the next level.

(c) Suresh Damodaran,2007