Cut the nexus

Gurcharan Das’s IPL and capitalism

• …….markets are natural to human beings. Banias and bazaars have been with us for thousand of years, ever since Indians first engaged in agriculture and there was a surplus. Our first towns in the Indus valley emerged as centres of exchange. But markets are not the same thing as the market system, which requires that moneymaking be regarded as respectable. Historically, commerce has had a bad odour in all societies. In India, the merchant was third in the caste hierarchy. Even though we have the wondrous spectacle of thousands of young Indians starting business ventures today, the idea that their struggle for personal gain might actually promote the common is too bizarre. This is behind the animus against the big sums in IPL. Even sophisticated Indians distrust the market, perhaps because no one is in charge. No wonder Samuel Johnson said, “There is nothing which requires more to be illustrated by philosophy than trade does.”
• Modi’s entrepreneurship necessarily involved assuming risks and valuing novelty, characteristics that are not common in a stable society. He was a brash new kid around the block, and he will admit that entrepreneurial success does not lead to social acceptance. The economic historian, Jean Baechler, tells us that in 6th century BC, firms in Babylon took in money deposits, issued cheques, made loans at interest, and invested in agricultural and industrial enterprises. Yet they were looked down upon. All agrarian civilisations have looked down upon merchant capitalists and commercial activities have been universally held in low esteem.
• It was only in the High Middle Ages that this changed, and capitalists were finally given social acceptance and protection from the predation of the state, as Deepak Lal argues in Unintended Consequences. It was due to a legal revolution in the 11th century when Pope Gregory VII in 1075 put the church above the state. The resulting church-state created the whole legal and administrative infrastructure required by a full-fledged market economy. This led to the rise of the West and its divergence from the rest of the world.
• India after 1991 has joined in this capitalist adventure, and with vigour. Because India got democracy before capitalism, the critique of capitalism began in the 1950s even before full-blown capitalism arrived in 1990s. Hence, players in the capitalist game have a responsibility to behave with restraint until capitalism establishes a comfortable home. IPL’s irregularities have not helped. But having said that, it is impressive that the critique of IPL has been constructive by and large, and shows we have come a long way in our attitudes. The challenge before regulators remains how to bring transparency in the market without killing the animal spirits of the likes of Lalit Modi.