Interview: Lord Meghnad Desai, Professor emeritus, LSE
“Mauritius will never be able to relax”
* “If Mauritius wants to stay rich and prosperous, it will have to go on working hard much like Singapore, which does not rest for a minute”
* No single community, large or small, marginalized or not, should feel permanently left out of power
Born in Baroda, India, Lord Meghnad Desai, is a British economist. He was a Labour politician at one time and was made a life peer as Baron Desai of St Clement Danes in the City of Westminster in April 1991. He is a professor emeritus at the London School of Economics, which he directed in past years, and is the author of a number of books including Marx’s Revenge: The Resurgence of Capitalism and the Death of Statist Socialism, a book that predicts that globalization will lead to the revival of socialism.
Lord Desai was guest speaker at the Mauritius International Investment Forum, a two-day high profile conference hosted by the Board of Investment. The conference targeted executives from leading corporates locally and internationally, and was meant to showcase the various investment opportunities that Mauritius and regional economies offer to the global investment community. We spoke to him about Mauritius, events unfolding in India and on capitalism…
Mauritius Times: Please tell us what have you been telling to the people assembled here this morning at this International Investment Forum.
Lord Desai: First of all, I have pointed out that since the time that I have been coming to Mauritius, so many years now, Mauritius has been, in my view, very successful at re-inventing itself from the status of a Third World country depending on one crop, sugar, to diversifying, every five years or so, into other growth areas. There is no doubt that a lot of strategic thinking has gone into making this happen. Luckily for Mauritius, the really rapid-growth regions are now coming nearer to this country than it had been the case earlier: Africa is now going to be a high-growth region; we have seen Africa, especially over the last five years, overcoming the obstacles in its way to high growth. There is also Asia across the ocean which is growing at a very rapid pace. Twenty years ago Mauritius was always looking towards Europe all the time for its trade and exports. The old continent is currently stagnating, and what you will have is Africa, Asia, Latin America as the emerging growth regions, with Mauritius well placed to service them.
Mauritius will have to keep in mind that it will have to keep re-inventing itself all the time. It’s a very competitive world, but luckily for a small island economy like Mauritius, you have a small but highly skilled population. Mauritius will have to use its highly skilled population creatively in order to be able to maintain a growing income level. Mauritius’ per capita income has probably trebled since the time I have been coming here, which would indicate that it has made the right strategic choices without doing any major mistake… But you can always do better.
* Mauritius has indeed been too Euro-centric over centuries for our trade and international diplomacy, and we are now increasingly turning towards India and China for trade, tourism, market diversification. But wouldn’t this require a period of transition? Have these emerging markets come all along to such a point that we can afford to shift our focus from Europe to Asia, Africa, etc., without a pause?
I think that Europe will not be a growing economy during the next ten years… at least. Now what the Asian market will need is financial expertise, for example, in areas like offshore banking, etc. You have already started providing such services thanks to your highly skilled labour force. Asia will also need those consultancy services in Finance, IT and so on, and Mauritius will have to learn how to provide them. It is then that you will be able to switch from one market (Europe) to the other (Africa, Asia, etc). Such services and capability may be available in these regions themselves, but very often they do not have the flexibility that you have. For example, India does have IT capability, but as far as the financial market is concerned they do not have the flexibility that you have. So India comes here partly for that flexibility. Singapore and Dubai, both of which you are competing with, have the kind of infrastructure and expertise that have enabled them to build a big market in the Asian economy. The competition is a good thing anyway, there will always be competition and Mauritius will always have to work hard and run as fast as it can, as they say, to stay in the same place. That’s life… So far Mauritius has managed successfully to do that thanks to its small but smart policy making elite.
What I also find is that there was a time in the earlier 1990s when you had more political conflicts than there is right now. I remember the days when Ramgoolam and Jugnauth were opposed to each other… This may be a superficial observation, but I would think that the fact that Jugnauth is the Vice PM and Ramgoolam the Prime Minister would indicate that they have invested their energies in building coalitions that, to my mind, is a good sign. In a small place like Mauritius you can’t succeed with too much conflict.
* Would you say therefore that coalition building is going to one of the keys to Mauritius’ success?
Certainly, and that should touch upon political and racial harmony. The whole country has to march together.
* There are social factors which operate in a multicultural and multiethnic society like Mauritius which hinder the best representation in Parliament. Based on your experience at the House of Lords, would you say that the bicameral system, with a Second Chamber accommodating non-elected but inherently capable members of society, is the solution for obtaining optimal guidance in the affairs of the country?
I do not know enough about it to say aye or nay, but I would say in a context with a diverse cultural, communal, ethnic content, you need to ensure that everybody gets the feeling that they are not going to remain out of power forever. It is very important that no single community, large or small, marginalized or not, should feel permanently left out of power. One should actually have an inclusive strategy to take everybody onboard… because at the end of the day that costs less than having a majority-dominating-minority or minority-dominating-majority strategy at work.
I do not know very much about Mauritius and in detail, but it seems to me that the kind of angst that prevailed earlier has gone out. I also think that higher income for everybody helps in this respect; if there is higher income everybody gets something out of it. True, you are competing with the rest of the world, but you are not that much competing against each other for resources, and that always helps.
* If Mauritius has done quite well compared with the rest of most of Africa, this may not necessarily be true if we go by other benchmarks, Singapore’s for example?
Singapore is probably the most successful country in the whole world, nobody has done as well as Singapore. Mauritius should always keep Singapore as an ideal in front of it, because there are similarities between the two countries — in terms of small island economies, etc. No doubt Mauritius has been a success story, but I always see Mauritius as a country that will never be able to relax. It will have to always go on innovating, finding new things if it wants to stay rich. If Mauritius wants to stay rich and prosperous, it will have to go on working hard much like Singapore, which does not rest for a minute. It has an amazing vibrant economy, and there is no reason why Mauritius should not be able to do that.
* Do you mean to say that the achievements of Singapore can be emulated no matter the circumstances we find ourselves in and irrespective of this country’s history and background?
* What about the political ideology in place? Singapore is built on a platform grounded in some kind of totalitarianism, isn’t it?
I do not think that there is much political suppression here that you obtain in Singapore… I was asking somebody who was trying to relocate from San Francisco to Singapore: ‘Are you sure you want to live in Singapore?’ – the reason being that one is used to certain kinds of freedom that American society offers. Singapore has got that sort of problem; they have chosen not to correct that and they have chosen the model they want to follow. Mauritius has chosen early on a much more democratic and a much more open path. There is also the fact that in Singapore there is a dominant community – the Chinese. Such is not the case here, and I think it will not be good to have any kind of domination. You need racial harmony, you need political peace, and Mauritius has that capacity for political harmony. And you should not be emulating Singapore in all respects. That will be a mistake. You can always use Singapore as a benchmark for other things; that will be good for competition and for strategic thinking.
* Having straddled both worlds, born and educated in the East and worked for long years in the West, would you have been comfortable living and working in a place like Singapore?
No, I would prefer working in India or Britain. My first preference will go to Britain; India has some degree of corruption, even in day-to-day life, which I find unacceptable. But I can certainly live in Mauritius, in India or in Britain because I really have to live in societies where I can express myself openly. I do know that my views can land me into controversies, but I do not want to end up in jail! I could not live in China ever… no way! The thing with India is that there is a lot of corruption which hinges upon your daily life. Sometime you have to know your MP to get something done. I think this is a bad idea, because you should be able to get what you reasonably want without having to go to your MP. I think Mauritius has to have that sort of ideal, like the British, so that citizens can get what they are entitled to without having a go at corruption.
* Isn’t true that the more or less homogenous construct of Singaporean society has made it easier for the country’s leadership to implement the kind of reforms they have introduced?
You can put politics on hold and improve the financial infrastructure and give people security in terms of pensions, houses, etc… all these you can do, but eventually over time new generations require new things to be supplied to them. There were things that the leaders like Lee Kwan Yew, you know the very highly respected leadership that steered Singapore into the First World as a rich and efficient country, could get away with, but that kind of leadership does not come every thirty years…
* You stated in a press interview that “the very aim of ranking a university is to evaluate its quality. An institution must be judged by its eventual output; not by the input or by the process.” How about ranking governments?
The same thing should apply to governments as well. Inputs don’t matter, outcomes matter. Governments very often boast about the size of their investments, what projects they have initiated. The questions should be: have the citizens benefited from such government initiatives? Have their lives improved? For a long time when we started on the path of development, governments all over the world have focused on per capita income, GDP growth, the volume of steel output… very little attention was paid to health, malnutrition, maternal mortality, education, etc. Now we are learning what development should be all about; it has to actually improve the quality of people in their daily lives. Cement or steel production is far removed from the well-being of the people.
* Do you have some sort of Happiness Index in mind to gauge the performance of governments?
Not really so. I am not a Happiness Index man; I am a Human Development Index man, having done a lot of work and research on this aspect of development. There are measurable data on, for example, maternal/infant mortality, child malnutrition, education, etc., which allows for a better appreciation of the effectiveness of policies in terms of progress achieved, inclusiveness across populations, etc. For example, India has a very good growth rate, but it may be way below Mauritius, Singapore or Malaysia in terms of human development indices… there is something missing given that India has not been able to solve a number of human problems, child malnutrition, for example, despite the number of millionaires and even billionaires in the Subcontinent.
* What’s your reading of what’s happening in India presently?
India is running through a lot of short-run crises. There is the big thing about corruption right now; the government is engaged in fighting corruption, but the public is dissatisfied with the pace at which the government is fighting this scourge – thus the trust deficit between the government and the people on this score. I think it’s quite clear that the problem of corruption, which everybody knew was prevalent but nobody did anything about, can no longer suffer any postponement because there is so much information both inside the country as well as abroad about the extent of corruption in the country. India has to improve its image on this score if it is to increase FDI inflows into the country… FDI is presently way down because people are worried about the hassles they have to go through in a corrupt environment.
* Would you say that these are crucial times indeed as people take to candle light vigils and swamis and yogis try to tie the Indian government in knots?
I think it is a good thing that there is civil society awareness and it is applying pressure on the government. Where I think civil society is failing is in its attempt to get the opposition parties engaged in this tussle; that in itself allows the government to be able to always somehow neutralize civil society very cleverly. I have been observing this battle between Anna Hazare and Swami Ramdev, and again and again I have seen the government successfully shifting the blame on the opposition. It’s not clear to me that the civil society agitation has yet been effective in fighting corruption. So far the initiative has been with the judiciary, especially with the Supreme Court which has been haranguing the government to correct certain decisions. The media has been able to do much better work than civil society in exposing and fighting corruption. They have been able to unearth a number of scandals, and there are now a lot of stories floating around thanks to the social networking media. That’s a good sign… Now if the Executive does not do something, the judiciary has to step in but it cannot go on fighting against this scourge as it is always under-resourced…
* Hasn’t judicial activism become excessive with the judiciary over-stepping its boundaries?
No. The judiciary is only doing the things which the executive has failed to do.
* Do you expect to see the same kind of civil disobedience that we have seen in the Arab world lately, with people taking to the streets to shoot down the things or systems they are unhappy with? Can this happen in India?
No, the context and the circumstances are different. Democracy is very deeply embedded in India, and the government can always say, in fact it is already saying that it has been elected by the people, whilst nobody elected civil society nor Baba Ramdev to power. I think there is a feeling of deep legitimacy to the Government of India, whatever its quality. You are not going to get a Tahir Square in India, because there is a perfectly legitimate government elected by the people only two years ago. This said, there is a very interesting development in individual states in India, with high quality governance emerging. This is why I think that it is possible that the real change in India will come from the bottom (at the state level) rather than from the top – at the federal level. It is really interesting to watch how the quality of governance in individual states is improving remarkably.
* In other words, what you are saying is that India will hold on to democracy whatever happens… India has been there before and it’s not going to break up?
India will always remain a democratic country, and democracy is also the key to holding India together. I have written a book with the title: ‘The Rediscovery of India’, which has now been published in the UK as well as in India, in which I point out India became a single country after independence – it had never been a single country before that — and will be kept together by democracy. It’s like a social contract for all parts of India to stay together despite all the tensions present in the country. Democracy gives deep legitimacy to the government.
* There is no place for a benevolent dictator in India, like the one you had in Singapore at one time?
No, never. There is not that much of benevolent dictators around anyway… In any case you cannot be assured that the dictator is going to be benevolent, because dictators are what they are: dictators… However India is too large a country for a dictatorship to last.
* In your book ‘Marx’s Revenge: The Resurgence of Capitalism and the Death of Statist Socialism’ you say that globalization (which you had earlier argued as having been the best thing that has happened to India and China) will lead to the revival of socialism. How come?
I did not actually say that, people interpreted it that way. What I said is that socialism cannot come till after capitalism has matured. It is a very different proposition — this is what I would call a classical Marx proposition. That’s what Marx believed, that is it’s only when capitalism will have exhausted its potential for further progress that socialism will come forward. You can’t have premature socialism as it happened in the Soviet Union. Right now there is a lot of energy left in capitalism to continue contributing to the growth of the world. Look at Africa: this continent was not growing, and lots of people thought that capitalism will never help Africa grow… But Africa is growing. The same goes for Asia and the BRIC countries. I still think that there is a lot of energy left in capitalism and globalization to spread growth to new regions, to new countries.
* Capitalism has equally not yet exhausted its potential for creating pain and destruction, hasn’t it?
True, but destruction forms part of capitalism. Capitalism always goes through cycles, and the fact that there has been a recession does not mean the end of capitalism. It works through ups and downs; it creates wealth in some places and poverty in other regions. It redistributes wealth in an arbitrary way, but along the way, more people feel that they have a stake in the system and they thus prefer to take a gamble with capitalism than with socialism.
* Having straddled both worlds, East and West, and having taught and written books on econometrics and Marx but also on Bollywood yesteryears’ stars Dilip Kumar, Nargis and Sunil Dutt, how would you say one should accommodate oneself to get the best of both worlds for one’s own positive evolution?
Follow your desire. Don’t worry… just follow your instincts. I have been very independent, very controversial, and people have been telling me that had I behaved, I would have been a Minister. I have not been a Minister, and it doesn’t matter. I did things my own way, and I have been myself. No regrets!