The Princeton don Dani Rodrik is one of the world’s
leading economists. He is a firm believer in and supporter of
globalisation. However, he has also posed a famous “globalisation
trilemma.” A trilemma describes a situation where only two of three
things can hold true at the same time. If any two out of three
conditions prevail, the third cannot. Thus, according to Rodrik,
“economic globalisation, political democracy, and national determination
are mutually irreconcilable. We can have at most two at one time.
Democracy is compatible with national sovereignty only if we restrict
globalisation. If we push for globalisation while retaining the nation
state, we must jettison democracy. And if we want democracy along with
globalisation, we must shove the nation state aside and strive for
greater international governance.”
As Rodrik argues,
if we want to deepen both economic globalisation and political
democracy, we would require global institutions that are truly
democratic, which respond to legitimate demands, the very basic needs of
world citizens — that is governance at a global level. Since such a
global political community is as yet a distant, quite unrealisable
dream, we have to accept the sovereignty of nation states responding to
the demands of their citizens. That is if we respect the democratic
ideal.
Prioritising food security
What the
government has shown is that it is unwilling to sacrifice the basic
requirements for food security of the Indian people at the altar of what
Rodrik terms “hyperglobalisation.” The needs and rights of the Indian
people must always come first for a democratically elected regime and
the Modi government is to be congratulated for affirming its commitment
in this regard, despite the humongous pressure it was placed under, both
by lobbies within India and powers abroad. Sacrificing the national
agenda of food security for the sake of an even deeper globalisation is
not an option for a sovereign government of India.
But
Rodrik actually demonstrates something even more important. He suggests
that re-empowering national democracies places the world economy on a
stronger footing. Developing strong markets and open economies requires
more government, not less. He says, “Markets need to be embedded in
institutions of collective deliberation and social choice. Weakening
democracy in the quest for deeper globalisation is one of the worst
bargains we could strike.” Building on the work of David Cameron (the
Yale political scientist, not to be confused with the British Prime
Minister), Rodrik shows that contrary to popular expectation,
governments have grown the largest in those economies that are the most
exposed to international markets. And after testing out a number of
possible alternative explanations for this counter-intuitive result,
Rodrik finally concludes that this is because in highly globalised
nations, citizens demand that their governments compensate them against
the risk that international economic forces expose them to.
I
would suggest that there is no better way to understand India’s
position at the WTO negotiations. Let us first highlight two outstanding
facts about the situation regarding food subsidies and the WTO. One,
that the U.S. and the European Union currently provide four to ten times
the agricultural subsidy per person compared to that provided by India.
And two, that India faces a real crisis of hunger and malnutrition
among a very large number of its people. In such a situation, it is only
natural that a sovereign democratically elected government will seek to
protect the interests of its citizens, rather than be subject to
palpably unfair trade agreements.
Unfair agreements
Let
me explain why I call the agreements unfair. There are two decisions
that have proved contentious here: the Ministerial Decision for an
agreement on trade facilitation (TFA) and the Ministerial Decision on
public stockholding for food security purposes. India has refused to
sign the TFA in the absence of a “permanent solution” on subsidies on
account of public stockholding for food security purposes. This is at
the heart of India’s entire architecture of food security built up over
the last four decades, which includes the system of procurement from and
assurance of minimum support prices (MSP) to its farmers and the public
distribution system (PDS), culminating in the recently passed Food
Security Act.
The present WTO ceiling on domestic
support is pegged at a mere 10 per cent of the value of production,
which is itself calculated at fixed reference prices of the 1986-88
period. This is ridiculously low, and unrealistic and unfair, not just
to India but to many other nations with a large farm sector. It may be
useful here to remember that despite all the efforts to move people to
urban areas and away from agriculture, the latest United Nations
population estimates show that even in the year 2050, around 800 million
Indians will continue to live in rural areas. No democratically elected
and accountable government of India can afford to ignore the interests
of these people, especially given the vulnerability of farming, deeply
aggravated by the newly emerging context of climate change. More than 80
per cent of India’s cultivators are small and marginal farmers, who
grow crops on less than 5 acres of land. They face increasing challenges
of water and livelihood security and need continued government support
to enable them to earn a sustainable income. This support that we need
to provide our farmers cannot be given within the limits set by the WTO
agreements.
Paragraph 47 of the Doha Ministerial
Declaration is abundantly clear on a “single undertaking,” which means
that all agreements come into force — together as a package. Thus, India
is absolutely right in insisting that the TFA can be agreed to — if and
only if there is an agreement on subsidies on account of public
stockholding for food security purposes. Apart from the massive support
the government has received from farmers’ organisations and civil
society groups within India, it has also secured the support of
countries such as South Africa, Bolivia, Cuba, Venezuela and the tacit
support of the G-33, except Pakistan.
What is much
more surprising is the kind of media furore that the Indian government’s
position has evoked. This can only be seen as a reflection of the way
in which the discourse on “free market fundamentalism” has acquired a
dominant position over the last 20 years. A deeper reflection on
Rodrik’s trilemma would hopefully disabuse many people, who assume that
any and all steps towards the free market are an unmixed blessing in
themselves, forgetting that robust structures of governance are
essential to the functioning and legitimacy of the market mechanism in
all capitalist democracies, including the most advanced among them.
It
is to be very much hoped that Prime Minister Modi will continue to
stand firm on India’s position, even during and after his forthcoming
visit to the U.S.
(Mihir Shah is former member, Planning Commission, Govt. of India.)
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