Socialism doesn't deliver prosperity or produce equality. Does it give freedom? Of course not

The Print

26-07-2025

Now, Gandhi taught us two things, basically. One was that ends and means are interlinked, that you cannot produce a better society by methods that are not clean and decent, that the end does not justify the means. By the time your means, which are dubious, are practised, your end gets vitiated. In other words, to cite the Soviet Union, by liquidations and butchery, by distortion and lying, you cannot produce a more fraternal society.
Our great leader, Mahatma Gandhi, used to say that consistency in political affairs is 'the virtue of an ass.' He was himself a very inconsistent person, who moved from position to position as he developed and the world developed. The point I am making is that it would be very stupid for anyone to hold on to a point of view or a dogma, disregarding what is happening around him.
There is an idea afoot that liberalism came before socialism and therefore must fade out before socialism. I would like to examine that assumption and, looking fifty or a hundred years ahead, to consider which is more likely to survive, and which is getting outdated today.
The other thing Gandhiji taught us was that the State in the 20th century is no longer a great friend of freedom and progress, that perhaps the biggest threat to human freedom comes from the State. This Gandhi repeated a hundred times in different ways, by saying that there is no violence as evil as the violence of the Government. All other violence can be forgiven, understood or controlled, but when the Government becomes violent and dominates and oppresses the people, that is the most foul kind of violence.
Socialism does not deliver prosperity. It does not produce equality. Does it give freedom? Of course not. The loss of liberty is the most obvious thing in the socialist countries. Lenin was a great man. He was an idealist gone wrong. He imagined that, after a short period of dictatorship, liberty would be restored by the benign Communist Party to the people. The State would 'wither away.' Now, some of us have been waiting patiently for this process to start. There are no signs of it yet, either in the Soviet Union or in any other communist country. The State keeps its monopoly of power very securely in its hands.
Now, all this had been foreseen by a very wise Italian philosopher, Benedetto Croce, who said that in any country where there were no 'autonomous social forces,' liberty was bound to disappear. By 'autonomous social force' he meant people who own their factories, people who own their shops, people who own their land, people who practise independent professions like lawyers, doctors, engineers and accountants. In other words, when everyone is an employee of the Government, you cannot have freedom or democracy because there is no one to oppose or criticize the Government. It is only when a peasant can say: 'This land is mine,' that he can stand up to the official. But when you have no peasant proprietors, no businessmen, no free professional people, it becomes a slave State.
Also read: Socialism hinders India's industrial growth. We need free enterprise first
Now, let us consider what has been happening in a semi socialist society like India. We have been practising, or trying to practise, socialist methods for the last 15 years. Is there more prosperity? Are we better off than we were in 1947? The answer is 'No.' Living standards have been stagnant since the British left in 1947. Some classes have benefited, some are worse off.
The Government admits that the real income of the agricultural labourer, the landless labourer in the village, has gone down in the last fifteen years. He does not take home as much as he could in the old days under the British. The real income of the industrial labourer is more or less stagnant, thanks to dearness allowances. Anyone who knows anything about the middle class knows that its standards have gone down shockingly in the last fifteen years. In fact, the middle class is being ground out of existence today in India. The biggest victim of socialism is the lower middle class, the educated man with a small income, the clerk, the schoolmaster, the shopkeeper.
Then, who has benefited? If the middle class, the working class and the landless labourer are all worse off, who has benefited? The answer is a small number of people have benefited. Because we have a mixed economy, we have a mixed 'New Class.' They are not all commissars. Some of them are commissars and some are businessmen. What they do is that by means of a controlled so-called socialist economy, where more or less sheltered conditions are created, they share the profit. If I am in power and I give a licence to somebody to produce something with a protected market, he gives me back 10 per cent or 20 per cent of what he makes. So political patronage, operated by dishonest politicians, officials and businessmen, creates a new ring of exploiters which replaces the old system.
Equality? Even the advocates of socialism themselves complain that every time a Five Year Plan is put across, it creates more inequalities, for the reason I have just explained.
Now I come to the alternative, the Liberal path. If socialism does not serve the purposes for which it was intended, that is, moving towards a freer and more equal society, is liberalism the alternative?
What is liberalism? Liberalism, according to Hobhouse, the great British liberal, in his book on Liberalism, which is a classic, is 'a belief that society can safely be founded on the self-directing power of personality, that it is only on this foundation that the true community can be built. Liberty then becomes not so much a right of the individual, as a necessity of society.' Professor Parkinson said in an article recently published in England: 'The word Liberal means generous or open-handed. Be generous with what? With freedom and political responsibility.'
Now, these are two quite good definitions of liberalism. How do we apply them to the problems of social welfare or social justice with which we are concerned? Their application to the economy means a free economy. What is a free economy? There are many variations of the free economy in different parts of the world, but one thing is common to all of them—the Government plays a limited and restricted part. Liberal economics are the economics of limited government. Social controls and regulations are necessary, but must be restricted to the minimum. That is one aspect.
The other aspect of a free economy is that 'the consumer must be king.' What does this mean? Who is the consumer? All of us are consumers. We all buy something or other. Therefore, the whole country is made up of consumers. What does it mean that the consumer must be king? This means that what is produced in a country should be what the people want, should be something for which the people are prepared to pay a price in the market. The pattern of production must be dictated, not by Government, not by a Planning Commission, not by the dictates of anyone, but by the collective will of the people, as expressed in the market place. This has been well described as 'the ballot of the market place.' The ballot of the market place is superior to the ballot of the political election. You can shift your choice from hour to hour and day to day. You can buy one brand of soap one day, change over to another brand the next day, if you do not find it good. You can change your perfume, your shoes, your clothes—everything.
How does this choice of the small man—it does not matter whether he has ten rupees in his pocket or a thousand rupees—affect the pattern of production? It affects it through the profit motive, through what is called the law of the market, which is the only sane economic law—the law of supply and demand. The industrialist or the businessman does not produce for fun or for love. He produces for a profit. He produces what will get him a profit in the market. A profit is made when the demand exceeds the supply because when the demand exceeds the supply, then prices go up. But where the supply exceeds the demand, prices drop.
The biggest capitalist has thus to consider what the smallest man in the market wants. This is how the consumer is king and this is what is called a free market economy. This is the liberal economy, as opposed to the socialist.
What are the results? One is prosperity. The buying power of the man in these countries is out of all proportion to what it is in the socialist countries. Even the Indian worker, under so-called capitalism is better off than Russia under socialism, since he does not have to work as long as a Russian worker, to get a pair of shoes or some cloth.
Liberal methods, which are economic freedom or economic democracy, lead to social justice, equality, prosperity and freedom much quicker than the methods of State Capitalism or State-ism, which in France is called Etatisme. That is a much more accurate name than socialism, which may mean anything or nothing.
It is interesting that most of the world is beginning to see this. The world trend is away from communism and socialism and towards liberal democracy. This is not surprising because, after all, human intelligence wins in the end.
This essay is part of a series from the Indian Liberals archive, a project of the Centre for Civil Society. It is excerpted from Minoo Masani's essay in the book Congress Misrule and the Swatantra Alternative, published in November 1966. The original version can be accessed here.