Growth of the cooperative movement demands of its members a special discipline and readiness for fairplay. The public sector has often proved inefficient and the private sector has not delivered an economy of scale at par with US corporations
On September 30, 2018, when Prime Minister Narendra Modi visited Anand, he not only praised the achievements of Amul, but also called its cooperative system a third alternative — a third option of enterprise over and above the private and the public sectors. He was fully justified in saying so as Gujarat, especially in milk, and Maharashtra with its sugar cooperatives, have seen redoubtable successes. To an extent, Karnataka has also been shown some achievements in the cooperative sector. Elsewhere in the country it is like searching in the darkness with a burning torch for cooperative examples.
To run this avatar of enterprise first demands of its members a special ongoing discipline and a readiness for fair play. Every social ethos is not gifted with these particular virtues. Yet an option to the current public and private sectors is necessary. The former has often proved inefficient while the latter sometimes does not return its debts nor has it delivered to the economy on the scale of American corporations.
To go back to the beginning of the industrial revolution, capitalism gathered the reputation of being exploitative of the workers. In the years of the 18th and early 19th century, many a factory in Europe appeared like a sweat shop. Neither were working conditions congenial nor were the working hours much less than 16 hours a day; the wages were minimal. The labourer suffered all this because he owned no land and there was no employment for him in his village.
In agriculture, there was also exploitation of the serf by his landlord. Even after serfs were liberated, they did not have many options for more remunerative employment. But for visitors or other observers, the factory was readily visible. The farms were away in rural upcountry and, therefore, not readily seen; often the farms were away from one another. The factory, on the other hand, was a sitting duck for a trade union leader.
Capitalism of those early days was thus caught out as exploitation of the working classes or the proletariat. Fortunately for the latter, Karl Marx descended on the scene as a prophet of class exploitation. He depicted human history as an epic of class conflict. Marxism, communism and socialism grew together as siblings of this conflict.
Vladimir Ulyanov or Lenin lent the pen of Marx a long sword. He used the volumes of Marx as bricks to build the State of the Soviet Union. In the process, his eloquent message to the world was that the poor man, the working man also mattered, not merely the gentry whose pockets jingled with wealth. The well-off in the Western world were so shaken by the Russian revolution that they reacted in two rather different ways. The US remained staunchly capitalist but became considerate as well as generous towards its poorer classes.
Some countries, especially the Scandinavian, of western Europe turned to social democracy or welfarism while others like Italy and Germany turned to class collaboration whose ideological label came to be known as fascism. They replied to the revolutionary class struggle with class collaboration. Incidentally, both Adolf Hitler and Benito Mussolini deviated from the path of governance to that of war and conquest and the former also added mass murder to his quiver. A potentially sensible ideology was vitiated to the extent of being evil.
In Asia, the virus of Lenin’s communism spread to China led by Mao Zedong. After some three decades of experimentalism, Deng Xiaoping brought back China from the disease of class struggle to the health of all classes.
By 1991, the Soviet Union died and scattered into 16 separate republics. With the death of the USSR, also soon saw the demise of all communist Governments. Before long all champions of class struggle disappeared from the world stage. The capitalist exploiters of the peasants and proletariat had long ceased to exploit after the advent of Vladimir Lenin in 1917. Adolf Hitler had denigrated fascism by his own policies and actions; he thus killed an ideology which could have been a balm on the wounds of class clashes.
Over the last two millennia, Europe has seen more warmongering than any other continent; the two world wars being so far the peak of all fighting. Could the root of this disease be the belief that God made men equal but society makes them unequal? Beginning with Plato and The Republic, could all the ideologies as well as the wars be attempts to atone for the sins of society? Why has there been no comparable scale of fighting in Asia? Is it because of, for example, the Hindu faith in karma? Which in turn leads to the Hindu desire, for, what Prof MS Srinivas has called, Sanskritisation whereby we seldom have violent class clashes, not to speak of revolution.
Each caste strives for its elevation to a higher status in preference to bring down the caste above. Each group of people desires to go up the ladder of classes rather then, say, the working class uniting to bringing down or expel the richer business class. The faith in karma possibly induces each person to self-actualise himself/herself rather than unite with his peers to topple any other group including conquering another country. Imperialism or colonialism has never been a Hindu inclination.
Proprietorship suits the Indian best. Traditionally, when the proprietor could not cope by himself, either monetarily or managerially, he took on partners. When a partnership could not cope, they went out to gather capital from the public through the medium of a limited company. Nevertheless, the attitude of the founder of the enterprise remains that of a proprietor. He may employ highly paid executives but he is seldom prepared to be the first amongst equals. He much prefers the image of the monarch and all the rest of his colleagues as the subjects. This Indian trait would prevent unlimited corporate growth on the American scale.
Even if an entrepreneur manages to make his company to grow as large as, say, Procter & Gamble, he would still insist on remaining the monarch, unlike Mr Proctor or Mr Gamble who strutted across the stage in their life time and are heard no more.
For this Indian psyche, the limited liability partnership (LLP), which is already in vogue, is an answer with one provison. And that essential is the need for banks and financial institutions to be prepared to lend money to LLPs freely. To make sure that they do not gather bad debts, they must insist on marketable collateral securities. The senior partner would then enjoy his de facto as well as de jure recognition as the first owner. His juniors would also know that they should succeed to the top in due course without any employee executive remaining under the illusion of a professional succession.
Today, banks and institutions have been lending freely, if not also recklessly, to limited companies, and hence, possibly the current mountains of non-performing assets (NPA). I doubt if such large loans would have been advanced to the same companies had they been LLPs.
There is another facet of the Indian psyche that is worth noting. A loan taken by an individual from an individual, with or without security, is generally repaid; of all the under-the-table transactions that one has socially heard about, there is hardly ever a mention of short payments or even jhali or fake notes being given. Yet the same people do not harbour the same conscience with regard to money borrowed from a faceless State-owned organisation no matter how many papers have been signed and how many times.
If LLPs are financed as suggested above, one big benefit would accrue regardless. A large number of medium to big-medium enterprises should come up. Whether any of them could grow into a mammoth corporate or not is at present only a hope. This should be a popular third alternative. Wherever cooperative societies, as in Anand, can come up, they should certainly be encouraged.
(The writer is a well-known columnist and an author)
