Between the Ayn Rand discussion Manish’s post kicked off a few days ago and the fisking of Dr. Patnaik cited on IndianEconomy.org, I figured I oughta finally commit to a post that’s been rattling in my head for a few months - the startling parallels between the fictional, dystopian economic world Ayn Rand outlined in Atlas Shrugged and real life Indian history.

Now although I’m one of those Desi dudes who cites Atlas Shrugged as an all-time favorite, I’m far from a Randroid. I readily recognize that getting too literal runs headlong into a more, uh, empirical assessment of the human condition. But, I’m also more than willing to give Rand credit - especially writing in the 1940s and 1950s - for being more right than wrong about some of the biggest issues of the day. Doubly so because, given the intellectual zeitgeist of the time, Rand was decidedly a contrarian. The example of the License Raj - India’s economic regime “progressively” enacted a scant few years after Atlas Shrugged was published (1957), and to some degree of Intellectual fanfare, gives us the latest, almost depressing example of how Indian fact can be more extreme than Western fiction.

In the novel, a key milestone as the world plummets into dysfunction and chaos is the passage of the innocuously titled Directive 10-289 by the government. It opens with a rather lofty goal -

“In the name of the general welfare to protect the people’s security, to achieve full equality and total stability…

Almost from the outset, it’s hard not to observe the obvious parallels between Rand’s fictional preamble and the opening lines of Dr. Patnaik’s polemic about the need for guarantees for less privileged rural folk. A few specific excerpts from Directive 10-289 carry this outsized focus on stability to a certain logical end -

Point One: All workers, wage earners, and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail…

Point Two: All industrial, commercial, manufacturing, and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit, nor leave, nor retire, nor close, sell or transfer their business, under penalty of the nationalization of their establishment and of any or all their property.

Point Three: All patents and copyrights, pertaining to any devices, inventions, formulas, processes, and works of any nature whatsoever, shall be turned over to the nation … the Unification Board shall then license the use of such patents and copyrights to all applicants, equally and without discrimination, for the purpose of elimination monopolistic practices, discarding obsolete products and making the best available to the whole nation…

…Point Eight: All cases arising from and rules not specifically provided for in this directive, shall be settled and determined by the Unification Board, whose decisions shall be final.

Abit too extreme? Perhaps, but not entirely. Memories - particularly economic and legal ones, and particularly when dealing with intentions many on the Left find admirable - run hazy. Depressingly, we don’t even need to go back too far into Desi economic history to find a situation where 10-289 played out almost exactly. First, a little background on the License Raj -

…Nehru chose the goal of economic self-sufficiency with economic development to be achieved by central planning modeled on that of the Soviet Union. By cutting off imports India gave a protected market to domestic producers.

…The planning and adminstration of the economic did not emerge full blown. The first five year plan, 1951-55, called for the planned development of only a few industries, the one that private industry had not developed for one reason or another. In the first five year plan the other industries were left to the market.

It’s in the second 5-yr plan where you start retreading chunks of 10-289 almost word for word -

The second five year plan (1956-1961), the product of P.C. Mahalanobis’ work, was more inteventionist. It tried to implemented the terms of British socialism and combine them with the tenets of Mahatma Gandhi. It tried to eliminate the importation of consumer goods, particularly luxuries, by means of high tariffs and low quotas or banning some items altogether. The large enterprises in seventeen industries were nationalized. License were required for starting new companies, for producing new products or expanding production capacities. This is when India got its License Raj, the bureaucratic control over the economy. Not only did the Indian Government require businesses get bureaucratic approval for expanding productive capacity businesses had to have bureaucratic approval for laying off workings and for shutting down. When a business was loosing money the Government would prevent them from shutting down and to keep the business going would provide assistance and subsidies. When a business was hopeless an owner might take away, illegally, all the equipment that could be moved and disappear themselves. In such cases the Government would try to keep the business functioning by means of subsidies to the employees.
As the plot of Atlas Shrugged unfolds, the Unification Board runs amuck demonstrating chronic mismanagement and with intially focused quotas & set-asides ever-growing in scope. The Board’s wide discretion creates an environment where corruption runs rampant and allocations are subject to the “feel good” political winds of the day -
… The Indian Economic Plans had to be financed and this often meant taking resources away from agriculture and giving them to favored industries that were not viable on there own. Ultimately this meant starving agriculture to feed inefficient industries the Government favored. Such a program was not likely to alleviate poverty and so in 1971, under Nehru’s daughter, Indira Gandhi, the Government tried to eliminate poverty by promoting small, labor intensive enterprises.
Subsidies in one sector hurt folks in another who in turn start demanding their own subsidies. Soon everyone’s on the dole and the biggest moneymaker isn’t the productive individual but rather, the con-artist who knows how to channel the government’s & the electorate’s largess -
…The net effect of the Government programs was to take away resources from agriculture in the countryside to give it to favored businesses in the cities. When the effects on agriculture and the countryside became significant the plan added programs to help the countryside (labor intensive small businesses) and programs to aid agriculture such as a fertilizer subsidy.
Of course, if any of these “labor intensive small businesses” became too successful, it magically transformed into an evil, “dog-eat-dog”, “big business” eagerly looted by unions, rivals and 2 bit bureaucrats. Sigh. Now in case, you don’t think it can happen again, Sepia Mutiny covered a rather recent example. Eerily enough, we’re find our example in the Railroads - an industry that forms a central backdrop to Atlas Shrugged -
…In a nutshell, the Indian Railways Minister, a Mr Prasad, has refused permission to import railroad wheels into India, preferring to establish a factory in his home state of Bihar to make India self-sufficient in their production.

..Analysts predict that it will be many years before India can produce enough wheels to meet demand. The shortage has left 20,000 carriages awaiting wheels, and a similar number of old ones requiring replacements.
And so for the vanity of indigenously produced steel wheels, untold tons of cargo, agriculture, and high value goods will be forced to bounce along potmarked roads to reach consumers, if at all. And let’s just for a moment imagine the anonymous maintenance manager who’ll shake his head and say “it’s ok, yaar, just one more run” & release for service a car with wheels past their “use by” date. Afterall, at least statistically, it’s unlikely that a derailment-inducing cracked wheel will happen on this run in the remaining hours of his watch. And perhaps there’s some cover in the fact that the previous shift manager also coyly ducked the problem. By contrast, it’s a virtual certainty that holding a train for want of a wheel which may never come will raise the ire of some alpha bureaucrat. As Rand eloquently noted, it not uncommon in this strange, twisted world for the physical laws governing steel to so starkly conflict with the human laws governing bureaucracy - with tragic results.
Randian villains like Wesley Mouch would have been proud of Indian Railways Minister Mr. Prasad’s motive and equally as oblivious to the consequence.
The terminal event in Atlas Shrugged’s story arc is the mass defection of the most productive and able bodied to a mythical place called Galt’s Gulch. There, they live within a market, in a place where the individual is the ends to himself, and where productive mastery of nature was virtue. After enough of these men & women had “shrugged” off the contorted demands of the Olde World, their homeland finally hits the crisis point & the deepest ideals embodied within these individuals awaken a second Renaissance.
And the Randian Heroes of License-Raj India? Well, in the 60s, 70s, and 80s, for many Galt’s Gulch was a mysterious place called America.