Pragmatic Euphony  

Renowned Australian author and economist Stewart Klegg brings a new angle to the India and China debate. He is scathing in his criticism of the Chinese state apparatus while claiming that there are enormous distortions in the Indian growth model due to a small oligarchy atop the system.

India is often compared with China. But China is country with a highly repressive State apparatus. If you wanted to find historical precursors or parallels to China you’d probably would have to look at the Statist Corporatism of the fascist States that flourished in Europe between the first and second World Wars as well as in the case of Portugal and Spain after the war. Well, not really the case of Portugal and Spain, because they were rather backward, agrarian and clerical, but probably something more like German fascism where you have extremely strong State control of the economy and State control of labour.

Why are Chinese consumer goods flooding the world? For two reasons: one is that even though it’s ostensibly a workers State they can’t form unions; the exploitation is very systematic indeed and, of course, the currency markets are structured in such way as to make Chinese goods cheaper globally. India, by contrast, is a democracy. It’s a very imperfect democracy, but all democracies are. So, the State form is wildly, vastly different. The opportunities for getting wealthy in China through connections to the political elites are very, very deep. To the extent that there is a degree of functioning democracy in India, clearly, it’s oligarchy dominated; we can see this in the familiar dominance of some of the parties.

I think this is an interesting point of contrast with China. If you were to ask sophisticated observers of the business scene, people in business schools generally in Europe or Australasia to name at least one Chinese home-developed brand that was going global, they probably couldn’t do it. But you could do that for India. Corus and Tata are very well known, they are projecting modern India, globally. But I think the important difference is that when the Chinese try to develop own brand manufacturing or marketing they tend to buy up companies which have already got some brand recognition elsewhere. There isn’t a sense that the Chinese firms are going from their domestic place to a global positioning on the back of that domestic base, in India that is different. [Tehelka]

Note: I can’t help but point out the lack of editorial rigour at Tehelka. The gentleman referred to in the story is Stewart Clegg(not Klegg), Research Professor at the University of Technology Sydney, prolific author and public and private sector consultant with expertise in management and organisational learning. [Link]

Cross-posted at the Indian Economy Blog