Loss of the moral universe in a neoliberal order

The lack of humanity and morality is an acceptable aspect of the neoliberal world, and social and economic justice concepts, hence, do not arise among those who control the market. Those who receive the benefit of neoliberalism have a lot to lose if they challenge its externalities.

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THE literature on the neoliberal transformation of India since 1991 often undermines the foundation that the nation laid during its formative years through a systematic and visionary planning process. It was embedded with a universe which had humanitarian values and abiding social morality. In recent years, the economic transformation, however, has been taking place in an atmosphere of a depleting moral and humanitarian universe. This has an intimate relationship with the legitimising of ideas and philosophies of neoliberal transformation itself, which normalizes this new phenomenon of economic growth sans a moral universe.

Widening income gap and loss of moral values

In 1947, around 80 per cent of the Indian population lived in what could be defined as poverty-ridden conditions, and the resource base to address this crisis was almost non-existent. The first prime minister and the political leadership set India on a developmental path which also had its origin in the very idea of India evolving in the course of the anti-colonial movement for freedom. Due to the welfare-oriented redistributive programmes and the progressive taxation, the income gap between the various segments, except the top one per cent, was not that glaring till the 1980s.

Followed by the implementation of the neoliberal policies in 1991, the scenario has been rapidly changing. The national income, for example, reported notable growth across all income segments, but the growth of the bottom 50 per cent was slower than that of the middle 40 per cent. The top 10 per cent, on the other hand, grew at a faster rate than the total income growth. This has resulted in widening the income gap among the top 10 per cent, the middle 40 per cent and the bottom 50 per cent. The world inequality data, too, shows that the income gap has widened during the post-2000, when most of the sector of Indian economy had been neoliberalised.

Also read: Widening of inequality is a natural outcome of capitalist planning

Source for all graphs: Lucas Chancer and Thomas Piketty, Indian income inequality, 1922-2015: From British Raj to Billionaire Raj?, World Inequality Database.world Working Paper Series No. 2017/11, July 2017.

The lack of empathy towards the unorganized/ informal sector workers by their employers, the State and fellow beings indicate that no one cares about others in a market economy. It seems that there is a normalization process at work where the rich and poor begin to deal with each other without any empathy.

Though, scholars could statistically prove the stark divide in income between different segments of the society, the silence and inaction of those responsible for the desperate migration of migrant workers from cities to their native villages in India in the first phase of the COVID-19 pandemic outbreak reflected another major important facet associated with the neoliberalism, and its impact on the social and economic fabric of a neoliberal society. The society, the State and the employers stayed away from the plight of the migrants at this point of time. The workers were segregated and isolated in precisely those cities that were considered to be the centres of economic growth in India, constituting nearly 50 per cent of the total gross domestic product (GDP).

Also read: Migrants’ livelihoods during the pandemic: Challenges and opportunities

The lack of empathy towards the unorganized/informal sector workers by their employers, the State and fellow beings indicate that no one cares about others in a market economy. It seems that there is a normalization process at work where the rich and poor begin to deal with each other without any empathy. According to Scottish economist and philosopher Adam Smith, the ‘invisible hand’ is the balancing element of morality in the free market. This invisible hand has gone completely missing today in professional as well as personal associations.

Transition years and socio-economic mobility

The idea of neoliberalism and its benefits had been widely discussed since the 1960s. Many countries adopted neoliberal policies as a mechanism to address the problems of the public sector in delivering public services in the first instance. It was followed by opening up of trade and markets beyond the locality and nation, on a global scale. The golden period after the Second World War, now seems to be the golden era of capitalism, as through the form of liberal democracy, public services were provided by the State at a subsidized rate to a large population so as to make mass consumption a possibility. This was only to produce a mass market.

The divide between the rich and the poor during this period was reduced for the first time in history, and the aspiring lower and middle class had got opportunity to move up in the socio-economic ladder, as social justice and equality were adopted as a strategy for a more liberalized modern world.

However, in the course of time, with increasing deepening of the neoliberal policies in almost every other aspects of our economic life, our political, social and cultural life begin to be coloured. This is the process of normalization of the otherwise adverse effects of the neoliberal policies among the affected segments.

The size of the middle class in the global economy has risen from around 20 per cent of total population in 1950 to around 40 per cent of the population by 2010, almost doubling within 60 years. With the growth doubling up since 1970, as a study by American research group Brookings indicates, the elevation of a significant section of the population from the conditions of abject poverty to a better condition, enjoying a better standard of living, too, has happened.

It will be wrong to concede that all of these have taken place due to the neoliberal economic policies, as scholars and policy makers underplay the role of planning and social welfare policies followed by various States, including the western countries till the proliferation of neoliberalism. There is a shying away by scholars from highlighting the role played by the planning process in countries, especially India, which laid the needed foundation for a market system to function, that is, the development of critical infrastructure, including scientific and technical infrastructure and human resource planning to provide sufficient skilled people. Using this foundation, the market economy could flourish across the globe, adding more people into the middle class segment and also adding new classes to the rich.

There is a shying away by scholars from highlighting the role played by the planning process in countries, especially India, which laid the needed foundation for a market system to function, that is, the development of critical infrastructure, including scientific and technical infrastructure and human resource planning to provide sufficient skilled people.

The role of education in triggering the aspiration of the masses is pertinent as during the post-World War-II period, since the formation of the United Nations Educational, Scientific and Cultural Organization, there was a continuous global effort to universalize education, focusing on the education of the masses. As a result, by the end of 1980s, enrolment in schools in the developing and under-developed nations increased manifold, which provided a much-needed skilled labour force for the new economy enterprises which mushroomed due to the privatization policies. After a long period of policies and programmes, by the end of 1980s, the enrolment of girls in primary level increased, as did of children from the marginalized communities. Though this has led to rise in literacy rates, the infrastructure to cater to their educational aspirations were mostly at the basic level; a good number of them were taught by untrained teachers and without basic infrastructure.

In fact, when the neoliberal policies were implemented in 1991, India could handle the sudden jump in the human resource requirement. The initial jump in the employment and income of households worked as a big push and brought significant impact on the consumption pattern as well as the standard of living of the people. One major argument that favoured the proliferation of neoliberal policies was that one per cent rise in GDP would bring 2.5 per cent rise in employment, and it was used to argue that GDP growth would bring development due to the trickle-down effect.

Also read: Privatisation as an affront to the Indian Constitution: How a recent people’s report shatters several myths about India’s neoliberal State

The rise in the per capita income was noticeable, making English economist J.M. Keynes’s prediction about the future real to some extent. (In 1930, Keynes wrote, “I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-day. There would be nothing surprising in this even in the light of our present knowledge.”) The per capita income of most of the countries grew even more than four times across the globe. For example, the per capita income of Great Britain grew from GBP 5,436 in 1930 to GBP 34,285 in 2022, more than six times what it was in 1930. Whereas per capita income of India in 1960 was USD 302 and then USD 527.5 in 1991, and rose up to USD 1,811 in 2020, nearly six times within sixty years. This has brought significant improvement in the standard of living among a large section of population.

However, Keynes was also proved wrong in most of the economies: while the per capita income grew as predicted, his prediction on the fall in the weekly working hours to 15 hours to maintain a decent standard of living remained a distant dream. Only a few progressive societies thought of reducing working hours to 30 hours in a week or four days in a week. In most places, however, working hours and the burden of the workers have increased over the period, so as to maintain the level of standard of living that they enjoyed a decade or more back.

In addition to this, labour laws have been diluted in India, favouring private industry. Many states like Uttar Pradesh, Rajasthan, Haryana, Madhya Pradesh and Gujarat relaxed labour protection laws, minimum wage laws and minimum working hour’s laws during the COVID pandemic to support entrepreneurs, aggravating the hardship of the labour class in India. Such non- humanitarian acts of the state governments were welcomed by the industry and businesses in India, leaving no room for empathy towards those who toil to create income. It also indicates that the rise in GDP growth is an outcome of the rising hardship of the working class.

Also read: Corona and the tragic dynamics of labour economics in India

Basic minimum needs-based and rights-based policies – a question of humanity and morality

While glorifying the benefits of neoliberalism, its grey areas, that is, the stark divide between the rich and poor, and the informalisation of employment demand wider discussion. When an owner becomes the worker, along with the family members or close associates, their negotiation power to get a decent wage is limited due to competition from their peers from the homogenous background. They are completely fragmented and disintegrated in the market economy, and consequently, there is hardly any scope for collective negotiation and bargaining for decent pay and work conditions.

The rise in GDP growth is an outcome of the rising hardship of the working class.

Even in the organised sector, the right of the workers to mobilise and organise collective engagements are increasingly restricted through policies. The liberalised labour laws in this sense are a euphemism for vulnerable workers all round as they deprive them of their individual and collective bargaining power in the new labour market. The replacement of permanent tenure contracts of the workers with short-term contracts based on the terms of the employer weakened them further.

It is important to note in this regard that the basic minimum needs policies promoted by the International Labour Organisation in 1972 provided the comfortable launching for the liberalisation of labour policies. Instead of offering the best work conditions and the payment, it allowed the firms to maintain a minimum basic pay and labour conditions. Interestingly, those who argued for the minimum basic needs, demanded marketised pay and other benefits for themselves. Besides, within one structure, there are various kinds of employment terms that operate, where only a few are in permanent tenure and rest in contractual, some even working for daily wages without any kind of social security and employment security – this has become a new normal.

This contradiction is the core of neoliberalism – those who devise policies based on basic minimum needs are not the ones who are affected by them. The language of the right to education policy, for example, offers only the basic minimum infrastructure which brings in a host of untrained teachers to the system. However, those who are making such policies, for example, in India, do not send their wards to these schools and have created islands of excellence which are not based on the language of right to education or minimum infrastructure. The per child expenditure of the government schools of different kinds where children of the common man go do reflect the differentiated policy behaviour.

This contradiction is the core of neoliberalism – those who devise policies based on basic minimum needs are not the ones who are affected by them.

Similarly, when the government introduces universalisation of health insurance schemes which offers basic minimum health services for the common people, the section of policy makers or the rich receive either reimbursement of their health spending or fully covered State sponsored health schemes where they can access best quality health services.

Even though there is an awareness about this widening divide within the system, it hardly receives any challenge. As noted earlier, it can be argued that the systematic weakening of the labour organisations through relaxation of labour protection policies paved the way for this new normal in the neoliberal world. In other words, those who receive the benefit of neoliberalism have a lot to lose if they challenge its externalities.

Also read: Limitations of general strike in the neo-liberal era

Humanitarian values prevail in the individual and public life that make people stand for social and economic justice, which is often negated in the neoliberal world. The morality of the market is also associated with humanitarian values. In this context, it can be argued that the lack of humanity and morality is an acceptable aspect of the neoliberal world, and social and economic justice concepts, hence, do not arise among those who control the market. The plight of the migrant labourers in 2020 is a glaring example of this.

The years of social engineering towards upholding individual and community identities since the 1970s paradoxically facilitated a new socio-cultural fabric suited to the proliferation of individualism, which in many ways also helped the deepening of neoliberalism and the lack of a moral universe. The emergence of self-help groups and the microfinance movement in the 1980s in those regions that eventually adapted the neoliberal approach in their economic front were not just an organic outcome of people’s desire to get out from the poverty trap using their personal capacities. An inquiry into the background and the proliferation of the microfinance movement make it clear that it is an outcome of the conscious planning to act against the sudden realisation of the pains and stress of the marginalisation of the people due to neoliberal policies.

The years of social engineering towards upholding individual and community identities since the 1970s paradoxically facilitated a new socio-cultural fabric suited to the proliferation of individualism, which in many ways also helped the deepening of neoliberalism and the lack of a moral universe.

The engagements towards minimum wages and decent work conditions under the aegis of non-governmental organisations in the last two decades incidentally proves that rather raising pertinent questions towards the neoliberal policies, these acclimatise marginalised groups with minimum basic needs. The celebration of a few individual successes to rise from their poverty have been exhibited to make one believe that the responsibility for the economic divide rests with individuals as opportunities are provided to everyone.

In this process, the final element of humanity and morality that rests with the society is also getting washed away. The rich do not care about their underpaid staff; the poor and the thriving lower middle class, on other hand, neither care about the rich nor about their peers. A stark socio-economic divide exists not just in terms of humane ideals, but also the moral values it needs to uphold to facilitate a free market.

In this context, even the proponents of neoliberalism need to take lessons from the theory of moral sentiments by Smith if they truly care about the fair functioning of the market. While we struggle for a free and just world, we need also to show the mirror to those who appropriate the voice of fairness and justice.