Socialist revolutionaries have always struck me as rather stereotypical. There is the enthusiasm for violence, which their devotees find rather thrilling. There is the rousing oratory. There is the preference for the simple life – prior to the revolution – followed by a taste for luxury once the revolution has taken place.
But what of our free market heroes? They offer rather more variety. There is the transatlantic double act of Ronald Reagan and Margaret Thatcher, of course. We had Sir John Cowperthwaite, who gave us the economic ‘miracle’ in Hong Kong. He warned that achieving laissez-faire was hard work. ‘Doing nothing is a full-time job,’ he warned – finding it necessary to be at his desk before the civil servants to thwart their schemes. Once the transformation was accomplished, he went back to St Andrews to play golf.
Don’t forget Ludwig Erhard, a plump economist with a deformity in his right foot, who brought about an earlier ‘miracle’ in West Germany by lifting price controls and rationing. The American occupying military authorities had been advised by John Kenneth Galbraith to thwart such sweeping changes – but they let Erhard get on with it.
The current star is, of course, Javier Milei, the Argentinian President – a flamboyant character whose bold reforms are already delivering results. But just after Christmas, the death of Manmohan Singh reminded us of another hero with a very different personality. He was the first Sikh Prime Minister of India. But to focus on his religion is like being preoccupied with Margaret Thatcher being the first woman Prime Minister of the UK. Far more significant were the changes they brought about to their countries. Though for Singh the key period was when he was Finance Minister from 1991 to 1996.
One similarity with Milei was that disaster had prompted a willingness to accept drastic remedies. India was broke. Foreign currency reserves were due to run out in two weeks. International banks were understandably reluctant to hand over more money to a government sliding into bankruptcy. Thus to his great surprise, this unassuming figure was brought in and given the latitude to take whatever measures were needed.
At first, Singh thought the call was a practical joke – resulting in an unfortunate delay before accepting. As an economist and a former governor of the Reserve Bank of India who had also worked at the IMF, he was not such an extraordinary choice. But perhaps his modesty reflected his humble upbringing. He grew up in a house without electricity or running water. A nerdy child, he had to study at night under the streetlights to have light to read.
Anyway, once installed at the Ministry he changed the course of his vast country and its billion people.
His obituary in The Times records:
The quiet man charged ahead to howls of protest as he dumped most of the socialist doctrines cherished by successive Congress governments for more than 40 years.
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Singh launched a radical privatisation programme based on Thatcherism, which he admired, enabling him to reduce state borrowing, cut taxes and spend more on infrastructure and social programmes. Foreign reserves rose to some $120 billion.
It adds:
Breaking the shackles of Soviet-style five-year plans, Singh aimed to release India’s stifled entrepreneurial spirit and innovation by destroying what had mockingly been called the Permit Raj, in which no big corporate decisions could be implemented without bureaucratic permission.
A tribute in The Economist says that Singh was ‘an economic freedom fighter’ who opened up the economy:
The rupee devaluation gave him cover to cut import tariffs and remove export subsidies. He also gave firms freedom to grow without a licence. The reforms reinforced each other, as Montek Singh Ahluwalia, his ally, has pointed out. India, for example, found it easier to attract investment from Japan when it became possible for Japanese expats to import food items from their home country.
He went on to serve as Prime Minister from 2004 until 2014. His successor Narendra Modi was a political opponent (Singh was in the Congress Party, Modi leads the Bharatiya Janata Party.) But the move away from socialism and towards the free market has continued.
So what an extraordinary legacy Singh has had. According to the World Bank, in 1990, around 431 million people in India were living in extreme poverty. Ten years later it was 260 million. It’s now estimated at 129 million. Some argue the reduction is even greater and that using comparable data extreme poverty has been practically eliminated. India is expected to see economic growth this year of over 6%.
A Lancet study concluded that life expectancy in India increased by around 11 years between 1990 and 2019 – from 60 to 71. The reduction in child mortality has been dramatic. For under-fives, deaths dropped from 12.7m per year in 1990 to 5.9m in 2015.
Such progress is always called a ‘miracle.’ But why are people surprised? How much more evidence is needed before people accept that free markets are more effective at reducing poverty than socialism is? How many examples from history and around the world are required? We have so many otherwise decent and intelligent people who persist in ignoring it.
‘The Black Book of Communism: Crimes, Terror, Repression’ is a book, originally published in France in 1997, which attempts to put a total on the death toll from Communism. It offers a minimum figure of 94m. There can be grim arguments about definitions. Do you just count deliberate famines or include ones brought about by accident? Mao comes out ahead of Stalin in absolute numbers. But as a ratio, the Pol Pot regime in Cambodia – with over 2m killed out of a population of 6m – probably came out on top of the grisly league table.
Perhaps a happier research project could be undertaken with estimates of the lives saved in countries that have embraced economic freedom. Surely it would be hard for anyone to beat Manmohan Singh in lives saved? He was the inversion of Mao.
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