Institutions are in need of a reboot to serve people

Arun Maira

IMAGINE you are flying in an old propeller airplane with 100 passengers and crew. The ride has become bumpy. Worse weather ahead. The plane must fly faster and higher for safety. You wish the aircraft would somehow transform, midair, into a sleek jet so that all aboard could reach their destination safely. 

Institutions are vehicles designed to carry humans on a journey to their aspirational goals. Institutions of democratic governance, such as elected assemblies and courts of justice, have evolved to improve governance of societies; and institutions such as corporations and stock markets have evolved to increase economic growth.

An airplane requires several complex systems — engines, navigation systems, an aerodynamic body, and wings — working in harmony to make it fly. Human societies need many institutions working together for a well-governed economy and society. These also include a variety of civil society institutions.

When a plane is to fly faster, higher, and safely too, it is not sufficient to change only one system, such as the engines to give more power. The design of the fuselage must be changed too, as well as cabin systems for passenger safety. 

Independent India set out to its tryst with destiny in 1947. A Constitution was formed in 1951, delineating the principal institutions for governance at the national and state levels. Other institutions were also formed: some with constitutionally defined roles such as an independent Election Commission; and others by executive orders such as a Planning Commission. Whereas the designs of institutions of business and civil society were not specified, they were expected to conform to the Constitution’s guiding principles.

Two overall principles were to guide all institutions. Indian society would be “secular”, and the Indian economy would be “socialist”. However, the meaning of “secularism” continues to be contested and “socialism” is disputed too.

 

SOCIALISM AND CAPITALISM

By 1991, there was increasing concern about the health of the Indian economy. Its critics said it was too “socialist”, not sufficiently “capitalist”. The Soviet Union had lost the Cold War and collapsed: US ideologies spread around the world. India needed a bailout from the IMF, which compelled India to join the Washington Consensus of global, free market capitalism. In this ideology, “private” is good and “public” is bad. Government must be curtailed, and the business of business must be only business.

Oddly, even though top-down planning, with five-year plans and sectoral allocations of budgets, was considered a Soviet, and socialist, idea, India’s Planning Commission remained, an anachronism, in place from 1991 until 2013. 

The private sector added more power to the economy. Growth rates climbed higher. By 1999, when the BJP formed its first government (in a National Democratic Alliance with other parties), it celebrated “India Shining”. However, common citizens were not benefitting from GDP growth sufficiently. The United Progressive Alliance of the Congress with its communist partners won the election in 2004 on a “socialist” platform. Nevertheless, the basic structure of economic policies was not changed. The Congress’ economic advisors continued to celebrate India’s growth trajectory, this time with the slogan, “the world’s fastest growing, free market, democracy”. This distinguished India from China, whose GDP was growing much faster, and who attracted more investments from the US and other Western countries.

Dr Manmohan Singh, the prime minister from 2004, who was India’s finance minister in 1991, was recognized by business leaders as the champion of the economy’s liberalization.

However, it was clear to Dr Singh and other Congress leaders that the pattern of India’s growth was neither inclusive, nor sustainable. It was not bringing all citizens along equitably. Not enough opportunities were being generated for the millions of young people wanting to earn sustainable incomes. Also, the pattern of growth was harming the environment.

A survey by the international Sustainable Economic Development Assessment (SEDA) framework revealed that, with each percent of GDP growth, the Indian economy was generating the least numbers of jobs compared to all BRICS countries and its sub-continental neighbours also. Each percent of GDP growth was also harming the country’s natural environment more than all other countries. Groundwater tables were falling alarmingly, and India’s cities were becoming the most polluted. Therefore, Dr Singh charged the Planning Commission with developing the 12th Five Year Plan, to commence in 2012, to achieve not only faster, but also inclusive and sustainable growth.

 

CHANGING COMPLEX SYSTEMS

Dr Singh also took this opportunity to examine the utility of the anachronistic Planning Commission, the hangover from the pre-1991 “socialist” era. He invited me to join the Planning Commission, and since I was not a qualified economist, and had no previous experience in government, he expected me to bring a fresh perspective. The Planning Commission gave me a perch in India’s cockpit from which I could see the breadth of the country’s challenges and the performance of its institutions. He asked me to recommend suitable reforms of the planning process.

A process of “systems’ thinking-based scenario planning” was applied to understand the interplays of the internal and external forces impacting India’s growth trajectory and institutions. The analysis revealed growing misalignments between the purposes and designs of institutions and the needs of the country. It explained why, while the airplane had new economic engines to take GDP higher, citizens in the back were being deprived of sufficient oxygen for sustaining their lives, and also how emissions from the engines were harming the environment.

Policy planners were not measuring what matters:

There was an obsession with measuring GDP to decimal points every quarter; but few accurate measurements of inclusion and sustainability even every five years. Globally, GDP was the only measure of the health of an economy. The belief was that growth will lift all boats; and people below will benefit from a “trickle down” from above. Inequalities were increasing around the world. India was most vulnerable because the Indian economy needed to create more good jobs to carry along its large number of aspirational youth (its “demographic dividend”). It had to do this much faster than other countries to avoid social and economic turbulence. 

The capitalist ideology of privatizing the economy to boost growth required the government to ease regulations, so that businesses could use more land, exploit forests, and consume more fresh water (while discharging wastes into rivers), to expand their business operations. Regulations of employment were also eased to enable businesses to reduce their costs. India began to climb the World Bank’s global “ease of doing business” rankings: socialist concerns of common citizens’ “ease of living” were put on the backburner.

Planning was top-down:

The widely applied theory for planning, when resources are scarce and outcomes must be produced efficiently, is top-down management. Experts determine the allocation of resources. They measure progress, and coordinate activities, to ensure the machine produces the expected outcomes. Top-down management of complex systems is common practice in the corporate sector, governments, and international development programmes. It is not a Soviet invention: it is a universal management practice.

Wherever “one size solutions fit all”, this way of management can work. Corporations reduce complexity to develop specialized solutions (implementable on scale) by focusing only on one segment of the economy. They reduce complexity further by pushing out messy environmental and social realities from their business models as “externalities”. Similarly, macro economists are guilty of over-simplifying socio-economic-political systems when they focus only on managing GDP, which is a measure of the size of the economy, not its internal shape. They also set aside complex environmental and social forces as externalities to their mathematical models.

Economists were not listening to the people:

India’s plans were being built upon the economists’ statistics. Economists were not listening to the people. Lives of people were numbers in their equations. Their statistics were not measuring what really matters to people. Therefore, their decimal point estimations of GDP did not matter much to the people.

 

CORPORATIZED CIVIL SOCIETY

All governments, especially democratic ones, must serve citizens. Corporations must serve their investors: it is the purpose for their existence, codified in corporate law. Corporations lobby for policies that protect their private property rights (over land, money, and intellectual property) and policies to increase their profits. When democratically elected governments, swayed by powerful corporate lobbies, put the interests of powerful and wealthy corporations above the needs of common citizens, they become out of touch with common citizens.

Civil society must be a check on the power of corporations and governments. Civil society must represent and serve common citizens: it is the purpose for its existence. Civil society organizations also serve society by providing last mile connectivity to those citizens that governments and large businesses do not reach. Civil society organizations perform in several ways:

1. As “activists” standing up for the rights of common citizens against the power of governments and corporates. (Telling truth to power)

2. As extensions of government programmes, philanthropy, and CSR reaching into communities. (Giving fish)

3. As facilitators of local “development”, by enabling communities to build their own capabilities. (Learning to fish)

4. A fourth role some civil society (i.e., not for profit and non-governmental) organizations perform is as Thought Leaders. They research and present insights from the points-of-view of those left behind.  

With the ideological swing from “socialism” to “capitalism” in the 1990s, governments began to leave citizen welfare to the private sector. Governments were short of resources; also accused of incompetence. Philanthropy and CSR expanded, bringing more money from the business sector to support civil society organizations delivering on the ground (Giving fish). Activists against capitalism’s excesses (Truth to power) were, of course, not supported. The roles of think tanks (Thought Leaders) became muddied. Whose side were they on? Were they socialist (on the ‘Left’)? Or capitalist (saying the ‘Right’ things from the Establishment’s perspective)?

With philanthropy and corporate money came corporate ideas of organization, and management consultants to help civil society organizations improve efficiencies and expand their scales. With this help, chemistries of civil society organizations began to change. They became more “professional” (in a corporate way), and more entangled in accounting to their donors. Their spirit of service to citizens began to be dulled by the corporatization of their organizations and processes.

Concepts of “development” were also distorted — towards more efficient delivery, on larger scales, of whatever the donors focused on: delivering healthcare services, or building schools, or providing new energy solutions, etc. — rather than building the capacities of communities. Giving them more fish; not helping them to fish for themselves.

 

REDESIGNING CIVIL SOCIETY

With their desire for support from those with money, civil society organizations began to adopt the ways of business. They compete amongst themselves for recognition; they promote their brands; they professionalize their human resource management. They are coopted into the paradigm of competition for growth, rather than cooperation for a common cause.

Many institutions need reform simultaneously to enable humanity to reach its aspirational goals: institutions of government and business, and civil society too. The G20 has admitted that, midway on our journey, we have covered only 12 percent of the distance to reach the SDG goals. Time is running out. We cannot carry on with the ways of thinking and working that have created this existential problem.

Reform of civil society institutions is most urgent. Because they must compel the others to reform to serve common citizens. Civil society organizations must reform themselves to empower citizens to help themselves, and not remain dependent on their charity. Civil society organizations, including the media, must reconnect with their existential purpose in society, from which they have drifted. Too many have become business-like and have lost the genuine spirit of service to the people. 

 

Arun Maira is the author of Shaping the Future: How to Be, Think, and Act in the New World.