India´s Mahatma Gandhi National Rural Employment Guarantee Act


Howard Richards – TRANSCEND Media Service

Fourth Chapter of the Book Economic Theory and Community Development: An Exercise in Applied Philosophy

Chapter Overview

  1. Governability
  2. Mahatma Gandhi´s Attempt to Relieve Poverty by Promoting Hand Spinning of Cloth
  3. The Rationale for India´s Employment Guarantee
  4. Rights Talk
  5. What NREGA Does
  6. Criticisms from the Left: Failure to Achieve Economic Democracy
  7. An Unbounded Alternative: Six Steps
  8. Reconsidering Employment as a Human Right
  9. Objections to NREGA: Corruption
  10. A Brief Digression on the Philosophy of Social Science
  11. Objections to NREGA: Crowding Out “Stifling Private Enterprise”
  12. The Suicide of Tapas Soren
  13. Common Complaints Against NREGA “In Principle”
  14. Another Digression on the Philosophy of Social Science

1. Governability

In choosing to employ the word “governability” we resend messages we have already been sending.   Now we code them a little differently. We draw inspiration from the later Wittgenstein’s practice of seeking clarity by traversing the same ground over and over again looking at it from different perspectives. [i]   We are still talking about cultural structures, about staggering facts, and about constitutive rules.   We are still attributing to economics a limited “bounded” viewpoint trapped within an institutional frame; we are still saying solutions to the world’s principal social and ecological problems require an Aufhebung of economic theory embracing community –suitably named as unbounded organization.

Now we choose to employ the word “governability.” It is formed from “govern” and “ability.”   The etymology of the word “govern” can be traced back to the Greek kybernân “to steer” the predecessor of the Latin gubernāre .   Plato uses the term in comparing the pilot who steers a ship to a safe harbour with an archon who steers an ideal polis.   “Ability” goes back to the Latin habilitas, “aptitude.”   It can be regarded as a synonym for the notorious word “power” concerning whose meaning so much ink has been spilled to so little avail. [ii]   To have the ability to do something is to have the power to do it.   To have the ability to steer is to have the power to steer.

Today “governability” is standardly defined as the overall capacity for governance of any societal entity or system. [iii]   This definition has the defect of being somewhat circular since it uses the word “governance” to define the word “governability.”   But before busying ourselves with improving the definition of the word, let us instead look at some of the important issues at stake in governability-talk.   What H.L.A. Hart said of law — that what might appear at first as a request for the definition of a word proves on examination to be a request for a theory that resolves the principal issues that recur in the use of a concept—can also be said of governability.[iv]

The search for the principal issues that recur in the use of the concept of governability is a short search.   It quickly appears that the meaning and the significance of the term are very different when it is used in the context of a liberal worldview and when it used in the context of a Marxist worldview. This is not news.   “Liberalism vs. Marxism” is still the simplest, the most common, and still the most unavoidable (albeit the most boring) summary of the ideological fault lines of our times.   “Governability” is not the first and it will not be the last word to mean different things for liberals and for Marxists. First: the liberals.   In the case of liberal (often confusingly called “conservative”) writers on governability it has not been the mainstream liberal economists who have in recent years made “governability” a recurring buzz word.   It has been the mainstream liberal political scientists who have erected imposing political theories and influential political worldviews on the on the weak and shaky cracked foundations of mainstream liberal economics.

“Governability” and its twin “ungovernability” took centre stage in the theatre of liberal politics in 1975 in a book whose central message was preceded by and has been followed by similar messages in many books and articles: The Crisis of Democracy: Report on the Governability of Democracies by Michael Crozier, Samuel P. Huntington, and Joji Watanuki .[v]   The main ideas are familiar. We saw them in chapter one when we dissected   “populism.”   Too much public participation in decision-making leads to the state taking on commitments it cannot fulfil. An example would be promising higher pensions than can be paid for.   Markets are necessarily distorted as governments desperately try to do what they cannot do.   The inevitable consequences include popular discontent triggered by broken promises and fuelled by economic malaise.   As a vicious circle of decline spirals downward, economic liberties and with them all other liberties are threatened.   If the ship of state does not reverse engines and change course soon enough under a Thatcher or a Reagan, the eventual result must be economic collapse (due usually to the failure of government to guarantee the security needed for investor confidence, and sometimes also due to tax takes or wage hikes that make business unprofitable), accompanied by a breakdown in public order (due to crime and/or political violence.)[vi]

The picture looks different, as a duck looks different from a rabbit, when the looker looking at the picture is a Marxist like Argentina’s Atilio Boron: “ It makes little sense to speak of democracy abstractly when in reality the relevant point is to examine the form, conditions, and scope of democratization in societies that, because they are capitalist, are established with constitutive principles that are irreconcilably antagonistic.”[vii] Although Fareed Zakaria is not a Marxist, he agrees with Marxists when he writes that for almost a century democracy has meant liberal democracy. [viii] Locking liberalism and democracy into a logical embrace so tight that by definition democracy cannot exist without liberalism (although as Chile’s General Pinochet and many others have demonstrated with proofs soaked in blood liberalism can exist without democracy) might be all to the good in the mind of Fareed Zakaria.   But it implies the consequence that the institutional frame remains just the same whoever triumphs at the polls.   It confirms the oft-repeated statement of Salvador Allende during the brief three years (1970-73) when he was President of Chile: “We have the government, but we do not have the power.” [ix]

Drawing on its etymology and on current formal definitions of it[x] and expressing our realist worldview, we define governability as a culture’s capacity to discipline itself to do what must be done to adjust to physical reality in ways that meet the needs of all the people without damage to the environment. [xi]   In this chapter we will draw on evidence from India to illustrate our claim that governability in this sense cannot be achieved within the institutional frame of mainstream liberal economics.

Harbeesport Dam is a crucial source of drinking water for Johannesburg and much of the province of Gauteng. In a pilot programme 2,326 CWP participants delivered watershed services removing litter along the four rivers in the Harbeesport catchment area. A purpose of the pilot was to test whether the resulting savings in water purification costs would be sufficient to pay for this kind of clean-up work in the future out of the water company’s budget. COGTA

In its origins South Africa’s Community Work Programme was seen as an adaptation to South Africa of India’s Mahatma Gandhi National Rural Employment Guarantee Act. (MGNREGA or NREGA).   CWP was not to be an employment guarantee. However, it was to lay infrastructure for a hoped-for future employment guarantee. We consider it important to consider the main arguments for and against NREGA that have appeared in India. [xii]  The critiques made in India will show some ways issues in economic theory have played out in practice.   But before evaluating the philosophy behind NREGA and what Indian sceptics have found objectionable in it, let us try to learn some lessons from an attempt to combat poverty that Mahatma Gandhi himself threw his heart and soul into.

  1. Mahatma Gandhi’s Attempt to Relieve Poverty by Promoting Hand-Spinning of Cloth

Gandhi expected wonderful results from the humble activities of cleaning, carding, and combing cotton; spinning it into yarn; and weaving the yarn into cloth.   Making khadi –traditional Indian homespun—would provide cash income for the destitute.   It would fill with wholesome activity the idle hours of the seasons when little labour was required by agriculture. It would instil self-discipline. It would revive the virtue, the dharma, that had governed life for centuries in traditional Indian villages until by force of arms the British imposed modernity. [xiii] With modernity the British imposed machine-made textiles.   Cheap imports from the satanic mills of Birmingham and Manchester had destroyed half the livelihood of Indian peasants who had formerly spun for a living when not tilling the soil for a living.   When India would become once again capable of meeting its own basic needs, and when Indians would live by the principles of swadeshi refusing to buy imported goods, then it would no longer be profitable for the British to stay in India and they would leave.   Gandhi himself made it a practice to find time in every day to sit down and spin. He called on his middle class and upper class followers to do the same.   Even though they did not need the money, they should spin to purify their souls and to set a good example for the poor.[xiv]   Still in our twenty first century times the symbol on the flag of the party Gandhi led –the Indian National Congress—is a spinning-wheel.

Gandhi’s passion for khadi began in 1918 not long after he returned to India from South Africa.[xv] It steadily grew. But by 1928 evidence was accumulating that something was amiss.   Gandhi had reasoned that if the villagers were unemployed and facing starvation, then putting idle hands to work must be a blessing and not a curse, because no matter how little they produce they will produce something instead of nothing. No matter how little they earn they will be able to buy something to eat instead of eating nothing.   Nevertheless, something was wrong. To make ten yards of shirting 45 inches wide, it was necessary first to acquire the cotton at a cost of nearly 3 rupees. For their many days of labour it would be unjust for the spinners to earn less than a rupee and a half, or for the weavers to earn less than two rupees.   These costs totalled 6 and one half rupees.   Adding in the cost of moving the khadi from the village where it was spun to the shop where it was to be sold, and adding a pittance for unavoidable costs of sale even when the khadi shops are staffed by volunteers, it was really impossible to sell ten yards of khadi shirting for much under 7 rupees. [xvi] But at that price sales were low.   Khadi was priced out of the market. It could only be sold to buyers who for humanitarian reasons were motivated to support the cause.

Agnes Sithole is a CWP   co-ordinator at Bokfontein. “There was a lot of unemployment before, but now there is dignity in the area because people are working. You find people under the bridge but they have dignity and humanity because they aren’t struggling anymore.”          CDI

Gandhi’s initial reaction to such difficulties was to call on his followers to keep the faith with redoubled effort and commitment. He wrote, “The tendency however is to bring down the prices as efficiency and production grow. Meanwhile, appeal must be made to the philanthropy and patriotism of the people to take up this khadi and thus help the paupers of Orissa.”[xvii]

Nevertheless, in spite of Gandhi’s stiff upper lip, the khadi movement had to cope with growing surplus stocks of products that could not be sold at prices that would cover the costs of production.   In 1929, Gandhi called for volunteer workers to staff a great all-India khadi sales exhibition every year, writing: “…if we can get sufficient workers for the purpose, it can become a striking demonstration. It can draw large crowds and it can be a means of selling off all the surplus stock of khadi without any difficulty.”[xviii]   Later in the same year he proposed to lower the costs that drove up the sales price (in the above example three rupees to buy the cotton and two rupees to pay the weaver) by urging villagers to carry out themselves in their own homes every step of the production process from sowing the cotton seeds to weaving.[xix]

Nevertheless, six years later, in 1935, while surpluses of unsold khadi continued to mount, benefits to the poor continued to lag.   The “Weekly Letter” of Mahadev Desai reported that in Bihar something like 5,000 poor women were walking ten miles a day to receive for their spinning a payment too scanty to survive on.   In some parts of Guntur District people were turning to rice-pounding because it paid more than spinning.   For what they were paid spinners could not be induced to conform to the standards required: yarn of a particular count, of a certain evenness, and a certain strength.[xx] Gandhi had already concluded that the wages of the khadi spinners needed to be raised.   He had written, “In trying to commercialize khadi, the Association has been hitherto dominated by the ruling prices. Thus the spinnings wage has been the worst of all the wages for any form of labour.”[xxi]

Gandhi never abandoned his efforts to relieve poverty by promoting the production and sale of homespun cloth.   But he never found a way to make his scheme work on the scale he desired with the results he desired. Nevertheless the Mahatma must be smiling down from heaven today because today (2015) there is an important revival of khadi in India.   His granddaughter Ela Gandhi, formerly an MP in the South African Parliament and now head of the Gandhi Development Trust, reports to us:

“I have just returned from a long journey to India and met many people working in rural areas as well as some who run various NGOs.    Yes khadi has had many problems over the years both in terms of cost of the product as well as in terms of the amount given to the people who produce it.  Problems were also experienced in the sale of the product.  But from what I was told the industry is now flourishing with sales going up.  More products on the market.  They have improved their skills at spinning as they now have a new better performing spinning wheel. The cloth is therefore of much better quality and they are also modernising their design and colours. Millions are able to earn a livelihood and a unique feature is that even Bollywood stars are now promoting the product.   According to the people I interacted with, this was the one strong factor which was able to mobilize people across India.”[xxii]

Some 90 years after the idea had taken shape in Gandhi’s mind that India could be saved by spinning, the government rechristened its National Rural Employment Guarantee Act to add his name.[xxiii]

Noma Indiya Nqolo is a co-coordinator at Randfontein.   “Most of the participants have changed. What they did mostly was to drink, steal, and all of those things. Now most of the people have joined this project that keeps them busy. The crime rate has decreased.”       CDI

3. The Rationale for India’s Rural Employment Guarantee

India’s employment guarantee rejects (or at least relaxes) its namesake’s implicit yet decisive assumption that the poor can work their way out of poverty (or at least up from the lowest rungs of poverty) by working in the production of merchandise that can be sold at cost-covering prices.

In the idiom of much of contemporary economics and management science, the MGNREGA rejects (or at least relaxes) the assumption that poverty (or the worst of it) can be ended by “creating value.”   “Value” is often operationally defined as the amount of money customers are willing[xxiv] to pay for the product.[xxv]   It is impossible to “create value” in this sense without customers to buy one’s products.   Hence fighting poverty is one thing if there will always be customers. But fighting poverty is quite another thing if there is a deep-seated and chronic weakness of effective demand.[xxvi] (Staggering Fact two.)

In NREGA customers are not needed. The poor perform public works.   The public pays for them.

NREGA has a strong ecological component.[xxvii]   The unemployed are employed to build tanks for harvesting rainwater, to change the contours and textures of land so water will sink in instead of evaporating or running right off, to reforest areas that deforestation has made prone to drought, and to do the grunt work for small dams and feeder canals so that communities of smallholders can make rational use of what little water there is.[xxviii]

The emphasis on greening squares with the rationale of doing public works to benefit the public.   India is a drought-prone nation threatened by global warming. Arguably what the Indian public most needs is to make its environment sustainable. Its most immediate need is to make water supplies larger while making optimal use of existing water supplies. Notice that now we are talking about producing use value in senses firmly grounded in physical reality; we are jettisoning the conceptual baggage that has accompanied the concepts of “production” and “value” in economic science ever since Adam Smith argued that all production was production for sale and fell into the habit of writing simply “value” when he meant “exchange value.”

  1. Rights-Talk

Although NREGA can be seen as solving problems the Mahatma could not solve by deleting the requirement that the products of the labour of the poor must be saleable at cost-covering prices; and although NREGA can be seen as a fair bargain because the ecological services of the poor are worth every rupee the public pays to obtain them; the arguments in its favour have featured rights. The activists who prepared the early drafts of what would become the National Rural Employment Guarantee Act of 2005 were human rights activists.[xxix]

In international human rights law, and in the Constitution of India´s Directive Principles of State Policy, there is a “… right to an adequate means of livelihood.” [xxx]   Almost equivalently there is a right to food and experience has provided evidence that public employment with cash wages is superior to other methods of delivering food to the mouths and stomachs of the hungry.[xxxi]

The rights-talk that propelled the enactment of the law found a home in the operative principles of the law itself. Any adult living in a rural area who is willing to do unskilled manual work has a right to be employed at minimum wage on public works.   There is a limitation intended to be transitory that only 100 days of work per year per household are guaranteed.   Applicants not given work within 15 days of demanding it are entitled to a cash unemployment allowance.

At this point we need to say more about the uses and limitations of rights talk. In Chapter One we saw a down-side of rights-talk. It may lead to absolute conflict. In Chapter Two we drew the conclusion that an economy that honours human rights will not be a pure market economy (because although there can be a duty to work there can be no duty to sell, and therefore a putative right to livelihood is false if it requires selling). A rights-honouring economy will establish the material basis for a decent life in those cases where there is little or no market demand for what a person has to sell. In Chapter Three we saw one way to do that, South Africa’s Community Work Programme, and also an approach to thinking about how to do it more psychological than economic called Cultural Historical Activity Theory. In Chapter Three we also claimed that the full flowering of economic and social human rights made in principle possible by new psychologies and new technologies[xxxii] faces “structural” constraints.   We advocated unbounded organization (echoing Popper’s open society and Dewey’s experimental society) to free humanity from those constraints.

The fledgling efforts of CWP and NREGA to turn legal guarantees of economic and social rights into physical realities must be seen in the context of efforts by lawyers and activists to make them legally binding. They have usually been unsuccessful. Here are a few examples. In 1997 lawyers petitioned South Africa’s Constitutional Court to make real the right to emergency medical treatment. They represented Thiagraj Subramoney who was about to die because it had been deemed too expensive to continue his renal dialysis. Chief Justice Arthur Chaskalson ruled that “The obligations imposed on the state by sections 26 and 27 in regard to access to housing, health care, food, water, and social security are dependent on the resources available for such purposes, and that the corresponding rights themselves are limited by reason of lack of resources.” After the ruling Subramoney´s dialysis was discontinued and he died.   In 2000 human rights lawyers brought to the Constitutional Court the case of Irene Grootboom to try to enforce her constitutional right to housing.   Although the Court found that the then existing housing policy did not meet constitutional standards it awarded nothing to Grootboom.   She died homeless in 2008.[xxxiii]   The pattern has been similar in India.   A right to food is guaranteed by Article 47 of the Indian Constitution, but it is not a right a court will enforce.[xxxiv]

We feel driven to ask in what sense the human rights lawyers themselves believe in rights.[xxxv]   Perhaps they invoke the words without believing what has been historically their root content: that human rights are natural and imprescriptible, that constitutions, customs and laws acknowledge them but do not create them. Perhaps they would in private or even in public agree that Jeremy Bentham had a point when he wrote that natural rights were merely imaginary,[xxxvi] and that more recently Alasdair Macintyre had a point when he said we do not believe in natural rights for the same reason we do not believe in witches.[xxxvii]   Perhaps they or many of them are pro-poor first, or pro-human first, or pro-worthy-cause first and then only secondly human rights activists.   One might ask whether they take advantage of rights clauses in constitutions without giving any credence to their natural law rationale and perhaps without attributing to them any rational basis at all.   They may invoke them only because they express a high degree of ethical consensus at the international and national levels that can be employed to achieve goals which they are already convinced –on other grounds—ought to be achieved. If that is their view we agree.   From a realist perspective there are no absolute rights, but there are cultures.   Cultures have cultural resources, which like natural resources can be mobilized to meet human needs.

If we ask such questions about the ethical consensus that led to rights language in the Constitution of India we will get a solid answer from the man who is regarded more than any other as its author.   Jean Dreze writes, “The Directive Principles are chiefly due to B.R. Ambedkar, and they build on his visionary conception of democracy.”[xxxviii] The Directive Principles are the part of the Constitution where the principal rights language is found, including the right to an adequate livelihood that NREGA at long last strives to move from paper to reality.   Dreze quotes Ambedkar:

“Our object in framing the Constitution is really two-fold: (i) To lay down the form of political democracy, and (ii) To lay down that our ideal is economic democracy and also to prescribe that every government whatever is in power shall strive to bring about economic democracy. The Directive Principles have a great value, for they lay down that our ideal is economic democracy.”

The point of enshrining rights-talk in the Constitution of India was to propel India forward from political democracy to economic democracy! The framers must have realized that the entitlement guarantees stated in the Constitution could not possibly be funded without constructing a governable economy.

  1. What NREGA Does

         Before continuing our theoretical argument we repeat and augment our account of MRNREGA: The Mahatma Gandhi National Rural Employment Guarantee Act aims at enhancing the livelihood security of people in rural areas by guaranteeing one hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.[xxxix]   It was designed to provide on demand 100 days of employment each year for every rural household that asks for it at minimum wage.[xl]   The programme is nationally funded and nationally mandated but State administered.     NREGA is expected to protect rural households from hunger, to reduce rural-urban migration, to increase employment opportunities for rural women, to move India toward environmental sustainability and generally to create useful assets, and to increase participation in the local level institutions known in India as Panchayati Raj and Gram Sabha. [xli]

Lizzie Mankwe is a participant in the Alexandria neighbourhood of Johannesburg. “Having gotten used to the kind of work we do in the community, I was no longer ashamed to do similar work for money.   On the three days of the week when I’m not with the CWP, a friend and I recycle bottles, plastic, paper and so forth. We wheel our dustbins all over Alex. The exercise is good for me, the money pays my bills. I have no shame in doing what I thought were menial tasks.”   CDI

Now we will try to sketch a typical experience of one of NREGA´S millions[xlii] of participants:   First the participant has to learn somehow that she or he now has a right to demand employment from the State government at minimum wage. The “minimum wage” clause is important because typically India’s rural poor are employed at “market wages” lower than the statutory minimum. Because wages are so low malnutrition and other measures of poverty are higher than would be expected given that most of the year the rate of unemployment tends to hover around a low (by South African standards) seven percent.[xliii]   Many potential participants do know that households have a right to demand minimum wage work for one adult (over 18) household member, but do not know of related benefits to which they are entitled.   The related benefits include the right to be reimbursed for transportation costs if the work site is more than 5 kilometres from their home; the right to drinking water, rest, and when necessary shade, the right to unemployment payments if work is not provided within 15 days; and the right to medical attention in case of a work-related injury.   Once the would-be participant knows of the programme, he or she must apply to the local government (the Gram Panchayat) for a Job Card with an identification number and her or his photograph.   Getting the Job Card is by law free, but it is not uncommon to have to pay a bribe to get it.   With card in hand the participant can then demand work. The letter of the law says the State must provide it within 15 days.   However, it is common practice to favour and facilitate MGNREGA work only in agricultural off-seasons.   That is when unemployment is worst, and it is when farmers cannot complain that the government is stealing their workforce.   The actual work when it is not ecosystem services as described above is likely to be building rural roads and paths.   It is usually heavy work, digging and lifting earth. Not everyone can stand it.   Often the men do the heavier part, the digging, while the women do the relatively lighter part, the lifting. The law requires that at least a third of the jobs in MGNREGA must go to women. At some times and places women are the majority. Sometimes the work is scheduled to avoid the midday heat.   Sometimes shelter from the heat is provided by canopies.   It is very important to sign the register testifying that you were really present doing the work, albeit only with an X. If you do not register you will not be paid. If you are paid, the pay may be delayed, sometimes for months, and may be below the promised statutory minimum.   Sometimes there have been fictitious registers testifying to the presence of workers who were not really present, in order illicitly to siphon public funds into a private purse.[xliv]

It should be clear that MGNREGA is not lifting anyone out of poverty.[xlv] Neither is South Africa’s Community Work Programme. They relieve some of the worst of it.   They can be regarded as pioneering the principle (capable of further extension) that when one institution (in this case the market) does not succeed in making real a human right (in this case the right to a livelihood) then another institution (in this case the government) should swing into action.   Answering Arundathi Roy’s complaint that MGNREGA pays poor people merely about 8,000 rupees (about USD 170) per family per year, Harsh Mander replied: “I have observed how much NREGA, again with all its flaws, has meant for millions of India’s poorest people.   Many live on less than one dollar per day, therefore 170 dollars is not a trifle for them. It has enabled them to survive, and that too without doles but instead with the dignity of (admittedly hard) labour.   It has reduced distress migration and debts, brought more food to their plates and those of their children, and has raised agricultural wages.[xlvi] It is likely that this partly influenced the emphatic vote for the UPA government that had passed the act, in 2009.”[xlvii]   NREGA has even had unanticipated desirable results in increasing primary school enrolment and regarding gender equality.[xlviii]   It has demonstrated that it is possible to administer an employment guarantee not just under conditions like those of Sweden (which will be considered in the next chapter) but also under conditions like those of India.[xlix]

India’s rights-based employment guarantee escapes some main troubles of market-based anti-poverty schemes only to land in troubles of its own. It collides with the political power and the intellectual weight of those who oppose on principle employing the unemployed on public work at public expense. It collides with the entrenched power-structures of Indian villages.

“I am happy for Seriti work. It found me when I was frustrated and it took away that frustration.   I used to drink a lot. But after joining Seriti I realised that God is good and he is alive and he loves me.   This is the beginning.”CWP Participant,   Randfontein   CDI


Lizzie Mankwe is a participant in the Alexandria neighbourhood of Johannesburg. “Having gotten used to the kind of work we do in the community, I was no longer ashamed to do similar work for money. On the three days of the week when I’m not with the CWP, a friend and I recycle bottles, plastic, paper and so forth. We wheel our dustbins all over Alex. The exercise is good for me, the money pays my bills. I have no shame in doing what I thought were menial tasks.”     CDI


  1. Criticisms from the Left: Failure to Achieve Economic Democracy

Arundathi Roy´s complaint is poignant.   It is true that NREGA pays only about 8,000 rupees a year.   Working for NREGA is a form of misery that is desirable only because the alternative of working in rural India without NREGA is worse. It is a far cry from the Keynesian full employment that was envisioned when most nations made full employment a stated objective of public policy after World War II.

To put rights-talk and talk of economic democracy in context it must be remembered that when the right to an adequate livelihood was included as an inalienable human right belonging to all people everywhere –in the forties, fifties, and sixties of the twentieth century– the dominant economic theories were Keynesian.[l]   It then made sense to require governments to guarantee employment for every citizen –as was required in the then new Constitution of Italy and in a weaker form in the Constitution of India, by Act of Parliament in the UK, and by Act of Congress in the United States—because economists then believed that it was possible for public policies to create full employment.   Keynes himself believed it.[li]     The full employment that was envisioned and largely achieved in social democracies after World War II consisted of “real” jobs (jobs producing products which could then be profitably sold).   The “real” jobs yielded for the workers “real” pay (pay raised above market rates by minimum wage laws and collective bargaining with strong unions).

We put the word “real” in scare quotes because as good social scientists we believe in the social construction of reality.   We do not believe that any one socially constructed reality is intrinsically any more “real” than any other. We also note that while today´s dominant ideology counts markets as “real” and government programmes as “artificial,”   with all its faults NREGA often pays wages higher than the “market wages” its participants would earn working for private farmers.[lii]

In 1943 Michael Kalecki could write that “..a solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme …” The reasons why full employment did not happen were according to Kalecki political and not economic. As a matter of politics, the moneyed classes that held all or most political power threw their weight against full employment because it was not to their interest. As things stood it was they, the employers, who decided how much employment there would be. Control over employment gave them, “… a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.  But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness.” [liii]   On such reasoning, winning the human right to an adequate livelihood becomes a political problem.   The task for the Left is to take power.

Today most economists do not believe the teachings of Keynes or Kalecki. In the light of the ongoing crisis that began in 2008, now many agree with Paul Krugman that Keynes was right to say that market economies suffer from a chronic weakness of effective demand. But that does not mean they believe that government policies can create full employment, much less sustainable full employment at high wages without inflation. The majority advocate wage flexibility downward, not strong unions and collective bargaining to raise wages.

Thus as in Justice Chaskalson´s decision to pull the plug on Thiagraj Subramoney because the South African state could not afford to pay for renal dialysis, questions about human rights turn into questions about economic theory. Ought implies can.   What is not possible cannot be a moral obligation. What is possible can be a moral obligation.

Our reply to those who fault NREGA and CWP because they do so little and divert attention from bigger issues, is not to say that cushioning poverty with minimal poorly paid employment at public expense is the best that can be done in today´s circumstances.   Our reply is to propose an unbounded approach in which public employment is part of the mix. The overall approach will make it real that all “…citizens, men and women equally, have the right to an adequate means of livelihood.” [liv] As we will make clearer in the next chapter on Sweden, we think a comeback of social democracy in a new and improved version requires a new and improved theory.

  1. An Unbounded Alternative: Six Steps

We will outline six steps toward zero-people-without-employment-or-some-other-adequate-livelihood that are suggested by our new and improved theory. [lv] In doing so we run a risk. The risk is that someone who disagrees with part or all of one of the steps might come away with a sour impression of our general approach. We respond to this risk by pleading that being wrong some of the time does not invalidate our general approach; rather it confirms it.   An unbounded approach is Popperian in the sense that every proposal is a conjecture to be examined in unimpeded debate and tested by experiences that might falsify it.[lvi]

Step One discourages unproductive speculation. This will tend to channel resources toward the physical production[lvii] of goods and services, which will in turn tend to generate employment.   Foreign Direct Investment (FDI) should not be encouraged when it is portfolio acquisition substituting a new owner for an old owner of existing assets, without bringing investment in new productive assets. We say yes to the Tobin tax.[lviii] In general short term capital flows (as distinct from capital that comes intending to stay and to contribute to the real economy) should be discouraged. There should be a bias toward low interest rates and in general toward inexpensive and widely available credit (This point overlaps with Step Two). Holding land, patents, or anything without using them, or in order to prevent others from using them, while waiting for their prices to rise should be discouraged.

At this point in history Step One is difficult for India and for South Africa. Like many other nations they have surrendered much of their power to rein in speculation.   They have signed treaties that oblige them to refrain from restricting capital flows. These and other undercuttings of sovereignty have been greased by a world-wide bewitching of intelligence by neoliberal economics.

To whatever extent it is possible to do so jurisdiction over capital flows should be reclaimed.

In any case it should be remembered that our approach is not only about what the state can do. People and organizations can refrain from unproductive speculation and devote their assets to socially useful missions including employment creation even if the state will not or cannot compel them to do so.   Unbounded organization is about aligning all persons and all institutions with the societal enterprise.   We are advocating responsible stewardship of capital by its owners in addition to responsible regulation and prudent redistribution through democratic politics.

Step Two directly encourages production. This can be done in many ways. In Asset Based Community Development (ABCD) the resources of a community are mapped and people brainstorm on how they could be combined to meet needs. Entrepreneurs combine the factors of production in new ways to create enterprises. Entrepreneurs can be motivated by many aims: to enjoy the independence of being one´s own boss, to create jobs for family members, to combine business with meeting a social need (as in “social entrepreneurship” –a misnomer because all entrepreneurship is social[lix]), to exploit an invention, to create jobs in a poverty-stricken area,[lx] to facilitate professional practice, to do the same things others do more efficiently,[lxi] to fulfil dreams of glory, [lxii]and many others. Government agencies incubate enterprises and orchestrate joint ventures.   When there is market demand, a valid business plan, and a credible business team, capital (if it is needed at all) can almost always be raised in capital markets, by local subscription, or from public or quasi-public development banks and agencies.[lxiii]

Step Three supports the people´s economy. In most African and Latin American countries the people´s economy provides more employment than any other sector. José Luis Coraggio defines it as that economy whose objective is not profit but simply making a living and whose main resource is not capital but labour.[lxiv] Supporting it means enrolling so-called “informal” workers for health and pension benefits. It means making discrete transfer payments that make it possible for them to make a good living while maintaining their dignity.   An example is urban agriculture in Rosario, Argentina, where behind-the-scenes private and public subsidies make it possible for a family to make a living growing food and elaborating and selling products like herbs, jam, and fruity cookies in the city.

Step Four reinvents the public sector, and not only the civil service and the state-owned enterprises but also the very concepts of the state and of democratic politics.[lxv]   In an open society the people as a whole (with the indispensable collaboration of academic researchers) constantly improve all institutions and the overall functioning of the ensemble in the light of never-ending-learning from experience and from ongoing conversations. When this never-ending-learning acknowledges that Say´s Law[lxvi] is at most half right, and that Keynes´ principle of insufficient effective demand is not only right but more right than Keynes himself knew, it must also acknowledge that Steps One to Three above will never provide an adequate living for all citizens, for the simple reason that there are not enough buyers. Public employment is a necessary part of the mix even now, even before the full impact of the technologies of the Age of Information. It becomes a task of the state (but not only of the state for it is also a task of philanthropy) to transfer resources from where they are less needed or not needed at all to where they are sorely needed.[lxvii] It becomes a role of the state to act as a supportive partner of local communities and of private industry in order to mobilize resources to meet needs on a scale that neither the state, nor the local communities, nor private industry can achieve alone.[lxviii]

Step Five funds human development.

No matter how creative entrepreneurs may be in orchestrating factors to birth enterprises and no matter how effective states may be in capturing rents to fund public employment, there comes a time when labour is not needed to make things.   Then if we are not careful we will be reduced to paying people to make things not because anybody needs what they make, but because society needs a pretext for paying them a wage.   Then it is time to take Amartya Sen, Jean Dreze, and Martha Nussbaum seriously when they tell us that the emperor has no clothes.   Mainstream economics has everything completely backwards when it treats people as human resources whose function in the cosmos is to create value demonstrated by selling something in a market. People should instead be treated as ends-in-themselves.   An example: a visitor to an old church in Alex, a poor district of Johannesburg, can observe young participants in CWP practising their song-and-dance routines. This is officially justified as “useful work” under the guidelines in the CWP Implementation Manual[lxix] because they put on shows in schools. The official justification is that schoolchildren who see healthy young people on the stage who have the self-discipline to learn to dance and to sing, and who stay off drugs, will be inspired to practice self-discipline themselves and to stay off drugs too. The deeper justification is that dancing and singing, like astronomy and rugby, are intrinsically worth doing. They should be funded.

Step Six calls for community development in neighbourhoods. A neighbourhood is a privileged space for implementing Ubuntu, Swaraj, or the fraternity part of the Enlightenment ideals of liberty, equality, and fraternity. In a neighbourhood it is possible to go door to door to be sure there is nobody old, sick and alone.   It is possible to check to be sure there are no orphans living without adults because both parents left or died. Neighbours can protect each other against crime, especially when they are well organised and their organization works closely with the public authorities. For many people in many neighbourhoods crime is a bigger issue than food. Local resources can be mobilized to complement what can be done within the limits of government budgets.   When neighbourhoods are well organized, anybody whose vital needs are not met is not alone and unknown.   Somebody knows and somebody cares. If the problem cannot be solved in the neighbourhood it can be brought to attention at a higher level.

  1. Reconsidering Employment as a Human Right

Unbounded organization leads to a reconsideration of human rights. Employment was first declared a human right in the Age of Keynes. Then it was considered a realizable right because the reigning economic theory then held that through fiscal and monetary policies governments could achieve full employment. During the Age of Milton Friedman[lxx] employment for all ceased to be a human right because it ceased to be regarded as possible. Now that we may be entering the Age of Amartya Sen or the Age of Unbounded Organization, we can again say that an adequate livelihood is a human right. The resources exist.   In theory it is possible.

One might object that our unbounded approach is leading away from governability rather than toward it. By distributing responsibility among many actors instead of centralizing it we might be said to be making it harder rather than easier to synchronize systematic measures to save the biosphere, create abundance, and transfer rents to meet social needs.

Our argument to the contrary rests on the premise that the principal obstacle to governability today is the staggering fact that to the extent that pure capitalism prevails nothing moves without profitability. There is too much dependence on a single dynamic of a single institution.   The result is a systemic imperative to make business profitable come what may.   It overrides ecology, justice, and everything else. The imperative is especially strong when a business or a financial institution is so powerful that one phone call can torpedo economic stability and bring a nation to its knees. The systemic imperative to put profit ahead of everything else is especially strong when business can punish a nation by moving its money and its operations elsewhere.[lxxi]   By making the economy more plural we make it more governable, not less governable.

Pluralism means redundancy and redundancy means resilience. Redundancy is a principle ecologists find at work in nature.   In a healthy ecosystem when one way to accomplish a function fails, another takes up the slack. We can similarly speak –following Amartya Sen– of complementarity. Complementarity is a principle behind our six steps: when one institution does not provide an adequate livelihood for everybody, complement it with another, and keep complementing until the problem is solved. We share the dream of Enrique Martinez, the head of Argentina´s National Institute of Industrial Technology that in every neighbourhood people will have housing, food security, and primary health care whatever may be the phase of the business cycle or whatever crisis may occur in the global economy.

Having considered the rights rationale of NREGA, we turn now to objections raised in India against NREGA. We arrange the complaints in three categories: (1) Corruption; (2) Crowding Out, of which the complaints of farmers that MGNREGA is stifling private enterprise by raising wages to a level farmers cannot afford to pay can be taken as an example[lxxii] (3) Complaints that a programme like MGNREGA is not according to mainstream or nearly mainstream economic principles the best way to spend money to help the poor.

  1. Objections to NREGA: Corruption

“Public programmes in most developing countries are notorious for being ineffective due to rampant corruption.”[lxxiii]   K.S. Gopal provides a table showing NREGA funds stolen by fraud in just one district, Ananthapur (a pilot district where NREGA was launched in 2006), and just for times prior to January of 2009 when Gopal’s table was published.   The table identifies fifteen villages within Ananthapur District.   For each village it gives the number of rupees stolen denounced in public meetings.   The public meetings were “social audits” mandated in the NREGA law, where ordinary citizens in village communities stand up and speak to control and monitor the expenditures of their local governments.   In a third column Gopal states how much of the stolen funds were recovered.[lxxiv]

Village Fraud Identified                         In Public Meetings Amount Recovered
Chilamathur 3,50,000 20,000
Tanakal 5,00,000 2,00,000
Nalichenuvu 11,27,000 none
Gandlapenta 27,56,000 23.000
Puttaparthi 2,00,000 12,000
Gutti 17,00,000 1,60,000
         Kanganapalli 6,00,000 6,500
Battalapalli 2,21,900 7,500
Tadimarri 2,00,000 45,000
Dharmavaram 1,50,000 50.000
Midapanakalu 80,000 30,000
Univakonda 50,000 15,000
Raigiri 3,00,000 25,000
Kadiri 2,00,000 20,000
Kalyandung 3,88,200 None

Although we know of no in-depth quantitative study attempting to assess what proportion of funds spent nation-wide on NREGA are being lost to corruption, there is general agreement that the proportion is large.[lxxv]

Already back in 1995-2004 before the NREGA legislation was passed by Parliament in 2005, sceptics were saying that it was inevitable that any such ship would sink, brought down to the bottom of the ocean by the pervasive corruption that had doomed any such good intentions in the past.   In 1996 two authors wrote of an earlier smaller scheme in the state of Maharashtra, “Finally, by far the greatest problem which plagues the Employment Guarantee Scheme is corruption and leakages at all levels.”[lxxvi] In February of 2005, before the NREGA law was passed, Mihir Shah wrote, “The major ground for scepticism regarding state-led programmes flows from many years of experience of this money going down the drain.”[lxxvii]   Shah continues, “So what do we do? We certainly cannot take the view that since the attempt has failed in the past, we should not make the attempt again.” [lxxviii]   Shah suggests that corruption under the legislation about to be enacted just might fall to tolerable levels.   In the past employment guarantees had been top-down doles delivered by a welfare state to the people. In contrast, NREGA enshrines work as a right of the people. Priorities are set and projects are planned in local assemblies of villagers, the gram sabhas.   Government responds to the people’s demands, and if the people do not prioritize, plan, and make demands nothing happens. “This is no passivity-inducing dole of a moodily munificent welfare state.”[lxxix]   Shah maintains that the only check to corruption in government is a vigilant people. When work starts in response to the people’s demands, chances are that the people will be more vigilant.

“It depends whether you have contacts or not.   Sometimes you have to bribe. If you don’t have contacts or money you can forget it, you won’t get a job..”CWP Participant, uMthwalume “The other thing is that if you are not an ANC member they won’t hire you.” CWP Participant, Bushbuckridge. CDI

Reasoning like that of Shah led to clauses in the NREGA legislation favouring people-power in every possible way, from project inception to monitoring to evaluation; and to a complementary Right to Information Act providing transparency to empower grassroots vigilance. [lxxx]   Basic data on who is working for what pay and on where and why money is moving are available to all on the Internet.   Nevertheless, sceptics replied, caste loyalties rule the roost in Indian villages and dominant castes will appropriate the gains.   The transmission of resources from the centre to the lowest institutional layer, the local panchayat, is leaky due to weak governance all along the way.[lxxxi]

Before concluding that the sequel has proven the hopeful entirely wrong and the sceptics entirely right, it must be taken into account that studies of NREGA have shown that grassroots vigilance has more positive effects rooting out corruption under some circumstances than under others.[lxxxii]     One favourable circumstances favouring citizen participation to check corruption has been the presence of NGOs accompanying the poor and supporting them in asserting their rights.[lxxxiii]

In any event, one should not count NREGA as proof that corruption cannot be checked by empowering ordinary citizens to be watchdogs at the grassroots level.   Such a pessimistic conclusion would be inappropriate in the light of reports that the features of the act (such as social audits) that were designed to encourage the growth of a vigilant public have not been properly implemented.[lxxxiv]   What has not been properly implemented cannot be properly evaluated.[lxxxv]   Citizen watchdogs have been thwarted. The murder in the State of Jharkand of indigenous activist Lalit Mehta dramatized the intense conflict that has been occurring throughout India as NREGA’s call for the democratization of the countryside collides with vested interests.[lxxxvi]   Mehta had been pushing to realize in practice the social audits the law requires in principle and it cost him his life. Those of us who still believe that part of the answer to corruption is people-power because if there were more people-power there would be less corruption need not concede that the data from NREGA refute us.[lxxxvii]

As previously mentioned, transparency has been increased by putting data about who is working, when, and where on-line. By 2007 several places in India had adopted the practice of paying NREGA wages directly into bank accounts—which is always done in CWP.   After direct deposits to bank accounts was implemented in a few place, there followed a national directive requiring that workers everywhere be paid through bank or post office accounts. This directive (to the extent that it is implemented) separates the payment agency from the implementing agency.   It is supposed to ensure that the money can be paid only to the labourer.   Then there is then supposed to be little incentive to fudge work registers, since at the end of the day the fudger is not supposed to be able to get the money. [lxxxviii]

The importance of corruption is augmented by its rhetorical role in attacks on MGNREGA and on employment guarantees generally.   Those who condemn employment guarantees in principle on general economic grounds tend to foreground corruption by featuring stories about scams that arouse moral outrage and by citing shocking statistics.[lxxxix]

  1. A Brief Digression on the Philosophy of Social Science

The hypotheses that grassroots people-power, transparent records on the Internet, and direct deposits to bank accounts will tend to diminish corruption can properly be regarded as not yet disproven.   Nevertheless, even if these three hypotheses are true, nobody believes them to constitute a satisfactory solution to the frustrating problematique of Indian rural poverty, of which corruption is an integral part inseparable from its other parts. The absence of any clear and convincing theory linking causes to effects and prescribing corrective actions brings us face to face with the impotence of social science.[xc]   What is certain is that NREGA has precipitated conflict in the countryside by encouraging the most oppressed to stand up for their rights.

Diangubo in the South African province of Kwa-Zulu-Natal has been ravaged by an HIV-AIDS epidemic that has orphaned many children.   The children either live with gogos –grandmothers– or on their own with siblings in child-headed households.     CWP built, for example, rondavels for seven orphans. Before CWP these children did not have a place to sleep. They were all sleeping in one mud house battling the rain and cold.                       TIPS

The burden of our argument –or at least a main burden of one of our main arguments—is that making the economy work for the poor requires seeing the economy differently.     We cannot prove our case with simple logic like modus ponens (if A then B; A; therefore B) or modus tollens (if A then B; not B; therefore not A) because simple logic requires starting from premises shared by the parties to the conversation. Our task is harder.   Our task is to contribute to persuading the mainstream –both in its academic elaboration and in its person-in-the-street every-day forms– to see the world differently.   We hope and expect to have some readers who will hear in our words songs they have already been singing themselves.   If we can strengthen the arguments of those who already tend to agree with us, we may have some indirect influence on the mainstream even if nobody in it ever reads us.

To make our case we need to de-stabilize some ideas often taken for granted and to motivate people to re-read the world, to re-interpret it.   To destabilize we are counting on anomalies arising from the consequences of two general and pervasive principles. The first, which we took from Marx but could have taken from any of many other economists, was the principle that production depends on profit-making.[xci] When there is no profit-making, then (in pure capitalism) there is no production.   When there is no production, there is nothing: no employment, no consumer goods, no tax-base, nothing.   The second general and pervasive principle we took from Keynes.   There is a chronic deficit of aggregate effective demand. In Keynes’ own words, “…an intermediate situation which is neither desperate nor satisfactory is our normal lot.”[xcii]   A key aspect of the point we have drawn from Keynes[xciii] can be rephrased in a more contemporary idiom as: Creating value depends on sales.   No sales, no value.

When the full significance of these two general and pervasive principles sinks in, we hold, it will be seen that the real world is not the world of today’s common sense.   It is not the world protected by the intellectual fortresses at Chicago and other universities where the economics departments are neoliberal.   To solve humanity’s problems –to adjust human behaviour to reality—we must liberate common sense from the vice-like grip of liberal economics.[xciv]

  1. Objections to NREGA Crowding Out –“Stifling Private Enterprise”

The doctrine of crowding out –i.e. the doctrine that public employment often creates little or no new employment but only or mostly crowds out employment that the private sector would have created on its own if only it had been left alone[xcv]—builds a sophisticated theory on data “seen” by common sense. Although we will indicate below in general terms where our analysis is going, we will reserve until Chapter Six a theoretical examination of crowding out.   Here we will consider one phenomenon we allege to be a practical result of thinking dominated by such ideas: wages in NREGA.   The brutal cruel facts about wages in NREGA hopefully will show that “something is rotten in the state of Denmark.”   We will then express our views on what rots and why briefly in this chapter, and then in more detail later.

Reddy, Sharma, Tankha and Upendranadh of the Institute of Human Development at New Delhi conducted field surveys and focus group discussions to determine how much NREGA workers were being paid on randomly selected worksites on certain dates in 2008, 2009 and 2010 in selected villages in six districts,   two in each of the three states of Andra Pradesh, Bihar and Rajasthan.   Part of what they found was:

Range and Averages of Daily Wages Paid under NREGA in Rupees (Combining field survey findings at various dates in 2008, 9 and 10)[xcvi]

Andra Pradesh   State Bijar State Rajasthan State
Maximum forMale workers 125 114 100
Maximum forFemale workers 125 114 100
Minimum forMale workers 80 60 20
Minimum forFemale workers 80 68 20
Average forMale workers 103 104 72
Average forFemale workers 102 105 72
Daily Wages Translated to US Dollars at 50 Rupees per Dollar
Maximum forMale workers 2.50 2.28 2.00
Maximum forFemale workers 2.50 2.28 2.00
Minimum forMale workers 1.60 1.20 .40
Minimum forMale workers 1.60 1.36 .40
Average forMale workers 2.06 2.08 1.44
Average forFemale workers 2.04 2.10 1.44
Daily Wages Translated to South African Rands at 9 Rands per Dollar
Maximum forMale workers R23 R21 R18
Maximum forFemale workers R14 R11 R4
Minimum forMale workers R14 R11 R4
Minimum forFemale workers R14 R11 R4
Average forMale workers R19 R19 R13
Average forFemale workers R18 R19 R13

The minimum wage standards applicable to this study varied from time to time and from state to state.   Suffice it to say here that the study showed that often workers in NREGA received less than minimum wage.   (For example, at a time when the minimum wage in Bihar was 89 rupees, some workers claimed to have been paid 60 and threatened with dismissal if they asked for more.)

Part of the discrepancy between the minimum wage and the wage actually paid is accounted for by effects of piece rates.   Almost always NREGA workers are not paid by the day or by the hour but according to how much work they get done; or, to be more precise according to how much work a supervisor certifies that they got done.   The piece rate is supposed to be calibrated so that a normal worker working a normal day will earn at least the minimum wage. But often there are bugs in measurement.   The supervisor may make mistakes or be on a power-trip of one kind or another or he might be engaged in one or another corrupt scheme.[xcvii] It may be hard to tell who is working and who is shirking when a group of workers is digging a well. Sometimes a worker does not get enough done to earn a minimum wage because she or he is weak or impaired or lacks motivation.

Interviews with workers suggest that sometimes there is an explanation for lack of motivation that is not immediately obvious.   It is that there is resentment against being compelled to earn their wage by using heavy manual labour to do work that could be more effectively and economically be done with machines. The same inefficiency cited by critics of the programme who complain that the government is not getting value for its money, translate into feelings among the workers that while they are not getting much money they are not getting much dignity either.[xcviii]

The parliamentary majority[xcix] that eventually enacted NREGA in 2005 after a long gestation period did not deliberately intend to demean India’s rural poor by assigning them irrational tasks invented to provide something to do for those who have no skills, and then to make them suffer enough to justify paying them. It did deliberately intend to give them hard work at low pay.   The depth of the hard-work-low-pay intention can be plumbed by reading between the lines of an argument made by T.S. Papola shortly before NREGA was enacted. One of the debates around the successive drafts of the bill that eventually became law pitted those who wanted to restrict eligibility to households below the poverty line against those who wanted something more similar to what the Constitution of India calls for: a right to demand work possessed by every citizen.[c] Papola entered the debate on the side of the latter cause. He advocated a right to demand employment with no means test.   In doing so he revealed much about the frame of mind of the framers of NREGA.[ci]

Papola observes that in rural areas only about 2% of the workforce falls in the category of “principal status” unemployed all year.   On a typical given day about 7% are unemployed.   He cites evidence that in the earlier (starting in 1977) Maharashtra state programme self-selection limited the numbers of participants to levels the government could afford to pay. There was no need to assume the gigantic administrative task of determining who was and who was not eligible. There was no need to invite corruption by giving officials power to determine who could participate.   There were in Maharashtra a few “leakages” where non-poor workers did public work for pay, but these were “leakages” to people not much above the poverty line.

“I sometimes also help out; especially those who are sickly with all these diseases that are now all over the place. I am able to start the process that leads to a person being put on a treatment program.   I have already done this for a number of people.”                                                   —CWP Participant, uMthwalume   CDI

Wages, Papola continues, ought to be fixed so that only the really needy will be interested in NREGA, and so that there will be no diversion of labour from other productive activities, particularly agricultural work. He assumes that India’s growing numbers of educated poor people will not participate in NREGA because they would rather remain poor while waiting for employment commensurate with their skills than do unskilled manual labour.   He uses a standard “crowding out” argument: if workers choose NREGA over private employment because it pays more, then NREGA “…will only be replacing the existing and not creating additional employment. At the same time it will interrupt agricultural operations due to the likely shortage of labour.” [cii]   Papola then faces the inevitable conundrum: It is known that farmers customarily (illegally) pay less than minimum wage. Hence on theoretical grounds it would seem that any public programme paying minimum wage and available on demand will crowd out private sector labour in agriculture.   To this theoretical argument he offers a two-pronged response: first the empirical evidence shows that while there may have been some tendency in Maharashtra for a public employment guarantee to raise wages, it was not a large tendency.   Whether and how much NREGA will prejudice agriculture by creating a shortage of labour should be monitored empirically and not just assumed on theoretical grounds. Second, if NREGA succeeds in raising agricultural wages that should be regarded as a positive impact, not a danger.

A participant in the CWP at Randfontein, South Africa said in an interview with researchers: “It is good to have a job. It protects one from having anger in her heart and they start thinking bad things like if I can rob someone, yet when you are working you become loving, even at home you can support the kids at home.” CDI

Papola then recounts a bit of history: The state of Maharashtra employment guarantee programme had attempted to accommodate the interests of agriculture by itself paying less than minimum wage (and less than farmers were paying) at certain times and places. Workers and their activist supporters objected. They sued Maharashtra in court.   Maharashtra´s lawyers made the somewhat contorted argument that the minimum wage law applied only to private employment (where, admittedly, it was not enforced) while the state as sovereign had the privilege of electing to pay less than minimum wages.   The case went all the way to the Supreme Court of India.   The workers won. It was one thing for a State to be lax in enforcing labour laws, turning a blind eye to employers who were violating them. It was quite another for the state itself to violate both its own state of Maharashtra laws and national laws.

Papola straddles the fence by both agreeing in principle that NREGA should never take workers away from private sector employment and also agreeing in principle that it would be a good thing to raise wages. He then makes quantitative projections seeking to show that even without a means test, NREGA will be so unattractive that only comparatively small numbers of desperately poor people will volunteer for it.   It will attract so few participants that in practice it will not threaten farmers with a shortage of workers willing to work for “market wages.” It will not threaten the government with a wage bill beyond what the public purse can afford.

We should not make the mistake of reading these facts as another episode in the eternal drama of Good vs. Bad; where the part of Good is played by the landless labourer toiling day after day in the hot sun to earn enough rupees to put a little rice and a little dal[ciii] on her children’s plates; while the part of Evil is played by the indolent landlord wallowing in murgh tikka,[civ] rogan josh, [cv] and ginga masala.[cvi] Nor should we read India as a backward country compelled by technical necessity to exact endless hours of underpaid labour from its semi-starved peasantry in order to feed the teeming millions of its cities.[cvii]   India is a nation blessed with world-class agricultural scientists.   It is dotted with nuclear plants that generate energy used to fix nitrogen from the air for fertilizer.   In recent years the Government of India has filled warehouses with food-grains deliberately withheld from the market lest a decline in food prices drive already economically-distressed farmers to the wall.[cviii] There are recurrent waves of suicides of small farmers unable to pay their debts.[cix] And if today many farmers cannot sell their harvests at cost-covering prices leaving a decent margin for themselves, what would happen if tomorrow the Government changed its policy, letting food prices fall instead of propping them up? What would happen if farmers were forced to pay minimum wages, and if the minimum wages were raised high enough to lift rural workers out of poverty? How many farmer suicides would there be then? These questions point to anomalies that call for a paradigm shift.

Papola defends NREGA arguing that it is not going to threaten private enterprise. Other proponents of NREGA –also under the influence of the doctrine of crowding out, but influenced by it in a different way—advocated NREGA arguing that it would stimulate private enterprise. It would “crowd in.” Any number of private sector jobs that public employment under NREGA might crowd out,   would be dwarfed by a larger number of better paying private jobs NREGA would crowd in. It would put more money in the pockets of the rural poor. This would have a multiplier effect.[cx]   They would spend their new money.   The owners of the shops where the rural poor make purchases (for example) would then have more money.   They in turn would spend it (for example) by buying more from their suppliers, and so on.[cxi]   NREGA would build feeder roads.   The new roads will connect isolated villages to markets.   Most importantly, NREGA will contribute to reversing desertification and amplifying supplies of water.

Although its advocates did not mention it, NREGA could also have been expected to have a multiplier effect in the villages by greasing the palms of the throngs of petty officials who upgrade their standards of living by corrupt practices.     Michel Foucault famously said that whatever economics textbooks may say or silence, the illegal sectors are integral parts of every really existing economy.[cxii] With NREGA those for whom “leakages” are “leaks in” rather than “leaks out,” those who are accustomed to garnering a bribe for every electricity consumer hooked up to the grid, and those who siphon off a toll from every fertilizer subsidy, would have a new cow to milk.

Foucault’s insight reminds us that making a living by crime is not a violation of Adam Smith’s principle that humans are driven by self-interest but an application of it. Crime often pays.   Corruption pays.   Illegal profits provide further illustration, if further illustration be needed, of the staggering fact that if one’s moral criterion is to maximize profits disregarding the requirements of social responsibility then one’s moral criterion is –immoral.   Once again community is required to complement economy. Even markets, not to mention other institutions, only work when people are law-abiding.   People are law-abiding not because (to employ a phrase from Kant) the maxim of their action is always to maximize personal gain, but rather (as Durkheim would say) because they are socialized to respect the norms of the community. From a psychological perspective, they follow conventional norms because their moral development is normal, not pathological.   Following Kant again, humanity has a dignity that is beyond price. It is a requirement of human dignity to respect the moral laws that preserve the delicate fabric of (as Kant would not say but Searle would) socially constructed reality.

“The following week the thieves come to your house and steal everything. They took 10 chickens when I was selling them. These dangerous boys come and rob you. You are at risk of losing your life and there is nobody to help you.”CWP Participant, uMthwalume CDI

Our theoretical perspective on issues raised by crowding out arguments is in line with Sen and Dreze.       We showed in Chapter Two that wages set in pure markets are too low, and that to be made to work for the poor an economy must be in Gunnar Myrdal´s phrase a “created harmony.”   Sen and Dreze add, and we of course agree, that markets are not always the best way to organize human activity and the prices set by markets are not always the best prices. From our unbounded perspective it makes no sense to talk, think, and act as if market prices were a priori the right prices, and to talk, think, and act as if other institutions become relevant only in cases of “market failure.”   We find a different mentality at work in the public debates culminated in the approval of NREGA.   Private farming tends to have absolute priority not because of the facts but because of an ideological haze.   India´s mini-farms are in most cases beastly inefficient. To achieve the objective of producing food efficiently India should eliminate the work done by many landless labourers and also eliminate the mini-farms of their dirt-poor employers.   It should rely on its high-tech highly capitalized world-class farmers and on future technologies now at the laboratory stage like artificial photosynthesis. But of course in market terms there is no need to produce more food.   India already has more food than can be sold without depressing farm prices.   It is stored in government warehouses even while the poor go hungry. Here it is appropriate to mention another opinion attributed to Michel Foucault — the opinion that the greatest contemporary political problem is lack of imagination.

Real solutions would require unbounded thinking. The thinking that actually went into crafting NREGA was stuck in a worldview in which private mini-farmers must be protected not because they are efficient and not because they make themselves or anybody else happy but simply because they are private.   Those who defended NREGA because it would “crowd in” were more enlightened. However even they can be faulted for appearing to concede that the ultimate litmus test for a government programme is what it does to promote private business, instead of adopting the Weberian zweckrationalität criterion of choosing the best among the available options.[cxiii]

As a result NREGA carries within its own constitutive rules the scars of an approval process that deliberately designed it to be unattractive and inefficient.   Standard arguments against “crowding out” are partly to blame for this result.

  1. The Suicide of Tapas Soren

The case of Tapas Soren provides a window on practical realities that illustrate what we have in mind when we attribute to the economic theory of crowding out part of the blame for misery that could have been avoided. [cxiv]

Tapas Soren was a farmer.   His was a private enterprise that might have been stimulated by the “crowding in” benefits of infrastructure constructed under NREGA. He lived in the village of Birakhap in the state of Jharkand. Birakhap had no road. Soren´s business and those of his neighbours might have been stimulated by better connecting Birakhap´s farms to the world´s markets.

Tapas and his brother Dilip owned 4.54 parched acres.   Their income from the one crop a year they were able to tease out of the land kept their household afloat for about four months.   The remaining eight months of the year they hired themselves out as labourers on other people’s land, often far away. If NREGA had been administered as the letter of the law provides it would have made their lives easier by employing them at minimum wage within five kilometres of their home.

Tapas´ dream was a deep well on his land delving down twenty feet to where he believed water lay.   His dream coincided with the clauses in the NREGA legislation providing for the funding of labour to create useful infrastructure either on public land or on private land belonging to smallholders.   Tapas submitted a well-digging proposal to the local authorities.

Tapas was ethnically a tribal person like most of the villagers in his district. In the district’s one non-tribal village 26 well-digging projects were funded between 2006 when NREGA began in the area and mid-2008. Tapas´ well was the only one ever authorized in any of the tribal villages. Tapas paid a bribe of 15,000 rupees.   The standard bribe in the district for approval of a well project was 10,000 rupees.

When his well project was approved and in principle funded, Tapas Soren automatically became the responsible leader of a ten men digging a well consisting of Tapas himself, his brother Dilip, and eight others.   His first major challenge was to keep his crew working.   When money to pay their wages was slow in coming, the workers were wont to walk off the job to take employment with local farmers.   The farmers paid less, but at least they paid promptly.   A farmer with a project, like Tapas Soren, could really only afford to run the project if he had funds of his own to keep his workers on the job while payment from public funds was stalled.   Tapas managed to field a big enough crew to keep digging sometimes three days a week, sometimes four.

The local panchayat administering NREGA was paying wages with delays as long as 40 or 50 days.     Under such circumstances nobody wanted to work for NREGA.   Nobody could wait that long to buy food.   This example explains a point made above that might have puzzled the reader.   The reader may have wondered how a local panchayat could make a dead letter of a national law requiring the State to provide employment on demand in 15 days or less, and for all practical purposes offer NREGA employment only during an agricultural off season.   Now we know.   At least we know one way to do it.   It can be done by delaying payment. (However, in Birakhap in the state of Jharkand in 2007-8 the facts were a little different.   NREGA projects were minimal even in the agricultural off season.[cxv])

In Tapas´ district in the year 2007-8 the average employment generated for a household participating in NREGA was 34 days.   During parts of the year there was no NREGA work at all.   There was no effort to build a road.

Work on Tapas´ well came to a standstill when it hit a layer of hard rock. Since NREGA had been deliberately designed (from fear of crowding out) to do only what could be done by manual labour, Tapas had no access to the jackhammers, dynamite, and scientific expertise that might have solved the problem.   Indeed proper technical backup might have advised Tapas not to try to dig a well in that particular place at all.   Thus there is a chain of causal influences linking his suicide to the general economic theories from which the doctrine of crowding out is derived, to the crowding out theory itself, and to the shape the NREGA act took under the influence of the crowding out theory.

On July 1, 2008, Tapas went to his bank expecting to find NREGA funds there to pay his workers with.   He was told that there was no money in his account.   The money had been deposited without his knowledge. Then it had been withdrawn without his knowledge. (This example shows one way the national directive requiring direct deposit of NREGA funds in participant accounts can be circumvented.) Tapas went to complain to the DBO (District Block Officer) and to a headman known as the panchayat sevak. It is not known what transpired in those conversations.   It is known that after them Tapas was heard shouting aur anyay nahi sahenge (I will not tolerate any more injustice.)

Tapas was trapped.   His workers were demanding their pay.   He could not move the rock. Administrators were holding him responsible for failing to complete the project they had authorized and funded.   He had spent more than he could afford on bribery and had nothing to show for it. His bank account had been looted.

On July 2, 2008, Tapas Soren doused his clothes and his body with kerosene and set fire to himself.   Six painful days later he died in hospital.

  1. Common Complaints against NREGA “In Principle”[cxvi]
“In my area I am assisting and involved in patrolling to stop crime, anti-crime patrol to fight crime.” CWP Participant,   Randfontein CDI

Expressed in US dollars the sums per year the Government of India has spent on NREGA have been:[cxvii]´

2006-7       2.5 billion dollars   (113 billion Indian rupees)[cxviii]

2007-8       2.6 billion dollars

2008-9       6.6 billion dollars

2009-10     8.68 billion dollars

2010-11       8.91 billion dollars

2012-13     approximately the same as 2010-11[cxix]

Expressed in South African rands at 9 rands per dollar these figures would be:

2006-7     22.5 billion rands

2007-8     23.4 billion rands

2008-9     59.4 billion rands

2009-10   78.12 billion rands

2010-11     82.09 billion rands

The cold numbers touch hot issues.   We start by noticing the numbers because it is a common theme in what we are calling “in principle” complaints that taxing and spending for purposes like NREGA’s is “in principle” uncomprehending and wrongheaded.   We use the words “uncomprehending and wrongheaded” to express the thought that the heads of people who make “in principle” complaints are “at a different place” from the heads of people like Jean Dreze, who was perhaps more than any other single person NREGA’s architect.   Speaking generally, the bottom lines of whole sciences and of whole worldviews often clash over numbers in budgets.   The worldviews may be incommensurable. Those who hold one worldview may view those who hold another not as simply mistaken about the facts or as slipshod in their reasoning, but as uncomprehending and wrongheaded. But when it comes down to how much (if at all) to tax the rich, and how much (if at all) to subsidize the poor, numbers in budgets give them something specific to disagree about.

In our modern world investors watch the budget speeches in parliaments as anxiously as their hunting forbears thousands of years ago watched the tracks of bison and sabre-tooth tigers, as anxiously as their farming forbears watched the clouds of the sky looking for signs of rain. What combination of fiscal and monetary policies will stimulate the most growth and minimize inflation? How much structural unemployment are “we” (Who is this “we”?) willing to tolerate in exchange for how much financial stability? It should be obvious by now that such questions have no acceptable answers. It is time to question the questions. The concept of unbounded organization does that, switching the focus from how to squirm inside the box to how to escape from the box.

“In principle” objections to NREGA show tips of icebergs protruding up from underwater worldviews.   For example, the objection that NREGA solves a non-problem because the percentage of workers who are unemployed most of the year in rural India is only 2% [cxx]is the tip of an iceberg. For heads “at a place” so different from Dreze’s that they make such an objection, the market is doing what it should do, the world is the way the world should be. The underwater worldview sees the market price of labour as the natural price of labour. Among the authors who fathered it was the classical economist Thomas Malthus (1766-1834) advised workers to commit suicide when the market price of their labour power fell below the market price of their food.[cxxi] To escape from the box that traps us in a mental and institutional space where markets determine what people are worth, unbounded organization (in line with Sen and Dreze) switches the focus.   The market doffs its robe and lays down its gavel. It is seen as judged, not as judge. Markets should not determine the value of human beings.   Human beings should determine the value of markets.

A generic objection to NREGA is that the generation of employment should be left to the private sector. A proof of the weight of this objection is that most nations do not have public employment programmes (although of course all governments do hire public employees to perform the functions of government, and often at some level of consciousness and in some degree or proportion a motive for hiring them is to generate employment). India (except for the state of Maharashtra) did not have a public employment programme until 2005. The underwater bulk of the iceberg under this objection is standard liberalism.[cxxii] One of its contemporary classics is Milton Friedman’s Capitalism and Freedom. In its first two chapters its author declares that its lodestar is “individual freedom.” Friedman’s “individual freedom” is equivalent to Smith’s “natural liberty” and to Marx’s “veritable Eden of the rights of man.” For Friedman maximizing freedom means minimizing government. (Sen and Nussbaum enter the lists challenging Friedman when they define freedom as capability.[cxxiii]) The rest of the book then applies to one issue after another the general principle established in its first two chapters.   On such an approach objecting to NREGA hardly merits a footnote. That there should be no public employment programmes is one of many particular conclusions drawn from the general argument that with few and limited exceptions everything is done best when it is motivated by profit-seeking and orchestrated by entrepreneurs. [cxxiv]

It is in such contexts that finance ministers grope endlessly in the dark in search of answers to unanswerable questions like, “ What combination of fiscal and monetary policies will stimulate the most growth and minimize inflation?” The institutional frame of liberalism implies the staggering fact that production depends on profit, and an equally staggering chronic weakness of effective demand.   Stimulating growth requires a regime of accumulation fine-tuning everything –yes everything[cxxv] — so that at the end of the day investors who start with money will end up with more money, encountering along the way consumers who have money to buy the products they invest money to make. It never adds up.   In spite of the brilliant efforts of brilliant minds over several centuries full or reasonably full employment with sustainable profits and stable currency has yet to become the norm. There is no formula for it inside the box.

Unbounded organization switches the focus from economics to psychology and to anthropology.   Psychologists, unlike most economists most of the time, study the actual motivations of people. [cxxvi] Anthropologists study the many ways human beings have organized themselves to meet their needs. More fundamentally, unbounded organization makes the logical move of defining the options available to get the world’s work done with negatives: unbounded, unlimited, infinite.   The practical payoff is building a plural economy where when one institution falters another takes up the slack — where everybody’s basic security in such forms as food, housing, health care, electricity, water, and sanitation does not depend on the ups and downs of capital markets; where finance ministers do not have to worry that if they fail to get macroeconomic policy right the economy will be devastated by bank runs and capital flight.

A third common objection agrees to spend public money to help the poor, but does not agree to spend it on public employment programmes.[cxxvii]   It reasons that the way to help the poor to rise into prosperity is to raise the value of what they have to sell. It does not imagine a time when the ex-poor will be prosperous for the same reason the rich are prosperous now: namely, because they capture rents. What the poor have to sell (now) is themselves.   They sell their labour-power.   This reasoning –which is the reasoning of the neoliberal Washington Consensus– goes on to recommend raising the market value of the labour power of the poor by concentrating social spending on health and on education.[cxxviii]   While human beings are seen less and less as imago dei and less and less as citizens with rights, they are seen more and more as human resources and as human capital.

“I work at CWP and on the days that I am not working there, I do door to door, I am selling.”                                 CWP Participant, Randfontein       CDI

The underwater worldview beneath this tip of an iceberg is once again Adam Smith’s. It is the beautiful idea of the self-regulating market. Leon Walras declared it to be as beautiful as the mechanical perfection of the starry skies.   But do not be deceived. Smith’s beautiful thought decorates a constraining box. Inside the box those who seek a good job to earn a good living –however healthy and however well-educated they may be– will find one only if there are profits to be made by hiring them.

Unbounded organization frees us from the constraints of the box by blessing us with plurality. Redundancy. Resilience. Community. Pragmatism. What the highly productive core of the economy (the capital-intensive knowledge-intensive multinational companies) cannot do (one thing the core cannot do is employ everybody who needs a livelihood) can be done by non-profits, green local farmers markets, by the public sector, by the para-statal autonomous sector, by public/private partnerships, by worker-owned enterprises, by tried and true indigenous material practices that have worked for centuries and still work now, by cooperatives ….the list is infinite, it has no end… all doing their strategic planning deliberately aligning themselves with the common good.   A key to making pluralism work, as we will see in other chapters and especially in chapter eight, is the transfer of rents (that is to say, of the surpluses not needed to fund and motivate production) from where they are not needed (or are less needed) to where they are needed (or are more needed).   On such a worldview –on such a realist worldview—public employment programmes are a valid part of the mix.   When they also catalyse community development that is frosting on the cake.

  1. Another Digression on the Philosophy of Social Science

We may well be succeeding in destabilizing the economic common sense of the times we live in.   The mini-farmers are small-scale entrepreneurs similar to those of classical theory.   Many producers of the same products competing in free markets are supposed to bring about maximum efficiency in the allocation of resources. For the mini-farmers to succeed in marketing their crops at cost-covering prices plus at least enough money to live on the wages of the landless labourers must be downwardly flexible. At this point reality rudely invades the make-believe world of liberal theory.   It turns out in reality that even paying starvation wages the mini-farmers cannot possibly survive unless the government buys wheat and rice at above-market prices and stores millions of tonnes of grain in warehouses, thus raising the price of food above what the hungriest can pay.

Anomalies like these are the stuff of which paradigm-shifts are made. They illustrate our claim about governability.   We defined governability as a culture’s capacity to discipline itself to do what must be done to adjust to physical reality in ways that meet the needs of all the people without damage to the environment. The anomalies of NREGA illustrate our theory: governability so defined cannot be achieved within the four walls (property, contract, the individual juridical subject, absence of a duty serve society and neighbour) of Smith’s natural liberty, Marx’s Eden of the rights of man, and Friedman’s individual freedom.

Poignant glimpses of the historical process that trapped India in the box can be found in Kim, a novel by Rudyard Kipling about an orphan boy running around India during times when as Mahatma Gandhi put it the British were masters in someone else’s house. The background against which the adventures of Kim stand out as foreground depicts the British assiduously measuring the land, in order to establish exactly who owned it, who was entitled to its profits (and by implication who was not), and who should be assessed to pay taxes on it.[cxxix]

To segue to the next stage of our endeavour to both deconstruct and reconstruct, we note that Gunnar Myrdal´s sojourn in India during the 1960s did nothing to shake his faith in Enlightenment ideals or in Western European social democracy.[cxxx] He and his partner Alva Myrdal came to India believing that social democracy had worked in Sweden and could be made to work in Asia. They left India still believing that the Swedish Model could become the world model.


[i] For example, Wittgenstein assembles a number of observations and invents a number of imaginary thought experiments concerning the related questions “What is a game?” and “What is a rule?” looking at these questions from different angles or perspectives. When he introduces the term “rule” he is not leaving the topic of games but rather continuing same effort to show the reader his way of seeing things.     Philosophical Investigations.   Oxford:   Basil Blackwell, 1958   paragraphs 66 through 85.   In paragraph 122 he suggests that he is seeking to “command a clear view” of the use of words.   .

[ii]   An already classic case of extending the use of “power” until it becomes “a night in which all cows are black” explaining nothing because it is alleged to explain everything is found in the works of Michel Foucault in the 1970s. See for example the use of pouvoir and dispositif de pouvoir in his La volonté de savoir. Paris: Gallimard, 1976.

[iii] Jan Kooiman, Exploring the Concept of Governability,   Journal of Comparative Policy Analysis. Volume 10 (2008) pp. 171-190.

[iv] H.L.A. Hart, The Concept of Law. Oxford: Clarendon Press, 1961.

[v] The three authors, a European, an American, and a Japanese prepared the report for the Trilateral (Europe, United States, Japan) Commission. New York: New York University Press, 1975.   This book has had many sequels including by the same authors The Passions of Law.   New York: New York University Press, 2000; and the best-selling books by Fareed Zakaria, The Future of Freedom: Illiberal Democracy at Home and Abroad. New York: W.W. Norton, 2003;   The Post-American World, Release 2.0.   New York: W.W. Norton, 2011.

[vi] Michael Coppedge suggests a simple definition of governability along these lines: there is governability when a balance of political forces assures (1) public order, and (2) economic development.   Prospects for Democratic Governability in Venezuela. Journal of Interamerican Studies and World Affairs. Volume 36 (1994) pp. 39-64 at 40.

[vii][vii] Atilio Boron, Governability and Democracy in Latin America. Social Justice. Volume 23 (1996) pp. 303-337 at 305.

[viii] Fareed Zakaria, The Rise of Illiberal Democracy.   Foreign Affairs   volume 76 (1997) pp. 22-43 at p. 22.

[ix] Stefan de Vylder shows that within the institutional frame of political economy it was impossible to carry out Allende’s programme.   Allende’s Chile: the Political Economy of the Rise and Fall of the Unidad Popular. Cambridge UK: Cambridge University Press, 1974.   Those not convinced that this conclusion follows from de Vylder’s analysis may be convinced by the reasons given for a similar conclusion regarding Sweden in Chapter Five below.

[x] See Jan Kooiman op. cit.

[xi] Like other contemporary definitions of governability, this one calls for concerted action of diverse stakeholders, not just governmental action. (Unbounded organization!) The idea that as far as the natural sciences are concerned it is perfectly possible to meet the needs of one hundred percent of humanity without damage to the environment was developed by Buckminster Fuller. See his Operating Manual for Spaceship Earth New York: Dutton, 1969 ( (accessed 24 January 2015);   Utopia or Oblivion: The Prospects for Humanity. Lars Müller Publishers, Baden, Switzerland. ( (Accessed 24 January 2015).

[xii] We will cite mainly criticisms appearing in the pages of India’s Economic and Political Weekly, and other papers and publications read mainly by academics, professionals, and civil servants.

[xiii] “…the inestimable value of khadi consists in its capacity for tremendous mass education, mass uplift and substantial relief from growing starvation.” Mahatma Gandhi, Young India 10-5-1928. Collected Works Volume 42, page 10. ( (Accessed 24 January 2015).

[xiv] For further details see Howard Richards et al, Gandhi and the Future of Economics. Lake Oswego OR. World Dignity University Press, 2013; and from a neo-Marxist point of view Lisa Trivedi, Clothing Gandhi’s Nation: Homespun and Modern India. Bloomington IN: Indiana University Press, 2007. (,+Clothing+Gandhi%E2%80%99s+Nation&source=bl&ots=lV23fZZJJ1&sig=CadhrXI12HRisRBZtdPgrHbhpxY&hl=es&sa=X&ei=08C6VNDKNKTT7Qan9ICwCQ&ved=0CDoQ6AEwBA#v=onepage&q=Lisa%20Trivedi%2C%20&f=false) (accessed 24 January 2015)

[xv] See Mahatma Gandhi, “Letter to Fulch and Shah,” August 9, 1918. Collected Works Volume 17, p. 183.( (accessed 25 Jan 2015)

[xvi] These figures come from the report of Niranjan Patniak representing the Utkal (Orissa) branch of Gandhi’s All-India Spinners´ Association, reproduced in Gandhi’s Collected Works Volume 42, page 436.

[xvii] Ibid p. 437.

[xviii] Mahatma Gandhi, “Letter to the Secretary, All-India Spinners´ Association,” January 20, 1929, Collected Works Volume 44, p. 25.

[xix] Mahatma Gandhi, Navajivan December 9, 1929. Collected Works Volume 45, p. 45. Economists will observe that Gandhi is here recommending the opposite of the division of labour to which in the first pages of the Wealth of Nations ( (accessed 24 Jan 2015) Adam Smith attributes the superiority of “civilized” over “savage” life.

[xx] Harijan October 8, 1935. Collected Works Volume 67, pp. 316-17.

[xxi] Harijan June 7, 1935. Collected Works Volume 67, page 231.

[xxii] Ela Gandhi, personal e mail communication, February 18, 2015.

[xxiii] The National Rural Employment Guarantee Act was enacted August 25, 2005 ( (accessed 24 Jan 2015). After partial implementation in pilot projects in 2006 and 2007 it began to be implemented throughout India in April of 2008.   Its name was changed to Mahatma Gandhi National Rural Employment Guarantee Act on October 2, 2009. ( (Accessed 25 Jan 2015).

[xxiv] If because of competition among sellers or for some other reason the buyers in fact pay less than they are willing to pay then the customers get some of the value created in the form of “consumer surplus.” See for example, Erik Brynjolfson et. al., “Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers,”
Management Science Volume 49 (2003) pp. 1580-1596. ( research/papers/176_erikb_onlinebooksellers2.pdf) (accessed 25 January 2015)

[xxv] The process of producing the product can be broken down into a chain of activities and transactions, where each link in the chain “adds value” which becomes manifest when a finished product is sold to a willing buyer. See for example, A.J. Higgins et al, Challenges of Operations Research Practice in Agricultural Value Chains The Journal of the Operational Research Society. Volume 16 (2010) pp. 964-973. ( (accessed 25 Jan 2015)

[xxvi] At this point it is perhaps becoming clearer why it makes a world of difference to CWP whether the real world resembles more closely the theoretical constructions of J.B. Say and others whom Joseph Schumpeter called “no-hitch economists,” or whether the real world resembles more closely the theoretical constructions of Thomas Malthus, J.M. Keynes and others whom Schumpeter called “hitch economists.” Keynes remarked: “A decreased readiness to spend will be looked on in quite a different light if, instead of being regarded as a factor which will cet. par. increase investment, it is seen as a factor which will, cet. par. diminish employment.” General Theory p. 185. Cet. par. is short for ceteris paribus which means “other things being equal.” See Joseph Schumpeter, History of Economic Analysis. New York: Oxford University Press, 1963. p. 640. ( (accessed 25 Jan 2015)

[xxvii] Mihir Shah (2007), “Employment Guarantee, Civil Society, and Indian Democracy,” Economic and Political Weekly. Volume 42, pp. 43-51. ( files/file/Employment%20Guarantee.pdf) (accessed 25 Jan 2014)

[xxviii]   MGNREGA participants do greening work both on public land and on private land belonging to poor farmers, but not on the estates of large landholders One of the complaints against the Maharashtra State rural employment guarantee (a predecessor of the national rural employment guarantee that started almost three decades earlier) was that sometimes it turned out to be a subsidy for the rich.   They sometimes got free labour at government expense to improve the fertility of their land.

[xxix] Jean Drèze, The Right to Work in Indian Democracy Peace Research. Volume 37 (2005) pp. 43-44. P.   43.

[xxx] ( (accessed 25 Jan 2015) “…citizens, men and women equally, have the right to an adequate means of livelihood.” Constitution of India Article 39.

[xxxi] Jean Drèze and Amartya Sen, Hunger and Public Action. Oxford: Clarendon Press, 1989; Jean Dreze, (accessed 25 Jan 2015) Democracy and Right to Food Economic and Political Weekly. Volume 39 (2004) pp. 1723-1731. (,%20Jean%20Dreze%20-%20EPW.pdf) (accessed 25 Jan 2015)

[xxxii] On the technological possibilities for prosperity see Peter Diamandis and Stephen Kotler, Abundance: The Future is Better than you Think New York: Free Press, 2012. ( (accessed January 2015) The argument is not just that new technologies make social justice and environmental sustainability possible, but also that the pace of innovation is accelerating at an exponential rate.

[xxxiii] These and other cases are summarized in John Saul and Patrick Bond, South Africa: The Present as History. London: James Currey, 2014. Chapter V. ( (accessed 25 Jan 2015)

[xxxiv] Jean Drèze, Democracy and the Right to Food op cit. p. 1726. (,%20Jean%20Dreze%20-%20EPW.pdf) (accessed 25 Jan 2015)

[xxxv] For a sophisticated, influential, but in our view ultimately unpersuasive fairly recent defense of rights-talk see Ronald Dworkin, Taking Rights Seriously Cambridge MA: Harvard University Press, 1977. ( (Accessed 25 Jan 2015). Many other authors have recently worked to make sense of rights-talk in our skeptical age, including Amartya Sen and Martha Nussbaum who relate rights-talk to capabilities-talk.

[xxxvi] Jeremy Bentham, Anarchical Fallacies in volume two of his Collected Works. Edinburgh: Tait, 1843. p 523. ( (Accessed 25 Jan 2015).

[xxxvii] Alasdair Macintyre, After Virtue: A Study in Moral Theory London: Duckworth, 1981. P. 67.

[xxxviii] Jean Drèze, Democracy and Right to Food Volume 39 (2004) pp. 1723-1731. At page 1723 Drèze quotes Ambedkar on the same page.

[xxxix] This is the official statement of purpose found on its website

[xl] In 2010 the State mandated minimum daily wage for NREGA work in Bihar was 100 rupees (on the order of two US dollars or 16 South African rands).   Worksite surveys showed wages actually paid varying from 20 to 125 rupees. Payment in NREGA is usually for work actually done at piece rates calculated to provide a normal worker who works seven hours with the equivalent of a minimum wage.   “Except in Himachal Pradesh, payment of wages under NREGA is on the basis of piece rate.” D. Narasimha Reddy et al,   “Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS) as Social Protection in India” available at, (accessed 27 March 2013). Cited hereafter as “Reddy et al.” p. 14. The state and national laws that prescribe exactly what “minimum wage” means at a given time and place, and how the minimum wage interacts with piecework rates and with rates of inflation, are complex and we do not attempt to explain them.

[xli] Jean Drèze, (2004) “Employment as a social responsibility” in The Hindu, November 22, 2004. ( (Accessed 25 Jan 2015). The panchayati or panchayat raj stems from a long tradition of local government in South Asia. The gram panchayat is the village (or small area) unit of administration and also the council of ten or so people who administer it. It is supposed to be run democratically in modern India, but often is not. The gram sabha is in principle the assembly of people living in the area. It is supposed to meet at least twice a year to review the work of the gram panchayat and to approve its budget.   See the website of the Ministry of Panchati Raj of the Government of India.

[xlii] The programme website keeps a running count of how many person-days of work have been provided in a given fiscal year.   As of April 1, 2013 the number for 2012-13 was 4.81 crore. A crore is ten million.

[xliii]   The number “usually unemployed” throughout the year may be as low as two percent. “…the number of working poor far outweighs the number who are poor for want of work.” (by a factor of approximately 4, i.e. on the order of 7% with too little employment and on the order of 28% with too little money to live on)  K.P. Kannan, “Linking Guarantee to Human Development”, Economic and Political Weekly. Volume 40 (2005) pp. 4518-4522. p. 4518. ( (accessed 25 Jan 2015) For more detail see A. Vaidyanathan, “Employment Guarantee and Decentralisation,” Economic and Political Weekly. Vol. 40 (2005) pp. 1582-1587. We seek here only to indicate the approximate rough dimensions of the problem for outsiders unfamiliar with India.

[xliv] This short paragraph draws on the longer accounts in Reddy et al op cit, and in Reetika Khera and Nandini Nayak, Women Workers and Perceptions of the National Rural Employment Guarantee Act Economic and Political Weekly.  Volume 44 (2009) pages 49-57 ( (accessed 25 Jan 2015); Bela Bhatia and Jean Drèze, Employment Guarantee in Jharkand: Ground Realities. ( Employment_Guarantee_in_Jharkhand_Ground_Realities) (accessed 25 Jan 2015)

[xlv] “After all, only those really poor or really in need will come forward to do the kind of arduous manual labour to be performed under the programme.”  Mihir Shah, Employment Guarantee, Civil Society, and Indian Democracy  Economic and Political Weekly.  Volume 40 (2005) pp. 599-602. p. 600.( (accessed 25 Jan 2015)

[xlvi] Mander’s affirmation that MGNREGA has raised agricultural wages is supported by data provided by C.P. Chandrasekhar and J. Ghosh (2011)  Public Works and Wages in Rural India (http:/  (accessed April 2013), and by Jean Drèze and Reetika Khera (2009) , The Battle for Employment Guarantee Frontline.  Volume 26. p. 10. ( (Accessed 25 Jan 2015).

[xlvii] Harsh Mander (2009), in a book review of Arundathi Roy’s Listening to Democracy. India International Centre Quarterly. Vol. 35 pp. 136-41. p. 140.

[xlviii] The school enrolment result is reported by Reddy et al op cit. The gender equality result is reported by Chandrasekhar and Ghosh op. cit.

[xlix] See Shamika Ravi and Monika Engler (2009) Workfare in Low Income Countries, an Effective Way to Fight Poverty?: The Case of NREGA in India, ( dec_09_conf/Papers/ShamikaRavi.pdf) (accessed 3 May, 2013);   World Bank (2011) Social Protection for a Changing India Washington DC: World Bank.  Social Protection for a Changing India;  Lalit Mathur, Employment Guarantee –Progress So Far Economic and Political Weekly. Volume 42 (2008) pp. 17-20 ( (accessed 25 Jan 2015); the paper by Reddy et al, and the article by Khera and Nayak previously cited.

[l]See Howard Richards, “Human Rights and the End of the Age of Keynes,”…/RichardsHumanRightsandKeynes.pdf and also at

[li] See Chapter Twenty Four of Keynes´ General Theory. ( (accessed January 2015). He thought full employment (which he defined in a way that allowed for five percent of workers to be unemployed even when employment was “full”) could be accomplished by low interest rates and by a certain amount of public participation in the planning and implementation of investments, which might today be called “industrial policy.”

[lii] See footnotes 39 and 42 above. (ß changeable numbers as notes may be added/substracted later on)

[liii] Political Aspects of Full Employment This essay was first a talk given to the Marshall Society at Cambridge and then published in Political Quarterly in 1943. ( (accessed January 2015). See also Michael Kalecki, The Last Phase in the Transformation of Capitalism. New York: Monthly Review Press, 1972. ( (accessed January 2015)

[liv] Constitution of India, Section 39.

[lv] The six steps are also available as a power point presentation at

[lvi] Our approach is not Popperian in the sense of always agreeing with Karl Popper.   See Howard Richards and Joanna Swanger, Dilemmas of Social Democracies. Lanham MD; Rowman and Littlefield, 2006. (,+Dilemmas+of+Social+Democracies&source=bl&ots=pmadRA9Lwu&sig=hnLMxgdKyoy4wmYgcj4NI6pzHNg&hl=es&sa=X&ei=cfq7VL6ONNDOaM3vgOAL&ved=0CDUQ6AEwAg#v=onepage&q=Joanna%20Swanger%2) (accessed January 2015) Chapter 9 titled “Karl Popper´s Vienna.”

[lvii] We use words like “production” in a common-sense way not limited by Adam Smith´s qualification that to be counted as productive labour must result in a “vendible”(i.e.saleable) product. Wealth of Nations. Book Two, Part 3. Smith´s qualification lives on today in standard economics.

[lviii] A Tobin tax is a tax on cross-border currency transactions.   An objective is to discourage short term capital movements that have no productive purposes.   Another objective is to raise some money for social programmes.

[lix] Douglas Racionzer, “All Entrepreneurship is Social”. ( All_entrepreneurship_is_social_entrepreneurship) (Powerpoint) (accessed January 2015)

[lx] This was the stated motive and we are not cynical enough to say it was absent from the real motives of the pioneers of the Chilean and Norwegian salmon industries. In the case of Norway the government assigned to university researchers the task of finding ways to alleviate the poverty of fishing villages in the north of the country. Alfonso Muena and Howard Richards “El Papel de la Empresa en la Eliminación de la Pobreza” Repensar   (This is an interview with the founder of the Chilean salmon industry.)

[lxi] This is Alfred Marshall´s “law of substitution”. Over time more efficient ways of doing things will replace and supplant less efficient ways.

[lxii] Keynes´ “animal spirits” Keynes points out that if business were conducted solely because of rational expectations of profits there would be less of it than there actually is.

[lxiii] See Rob Hopkins, The Power of Just Doing Stuff. Totnes UK: Transition Books, 2013; Blake Mycoskie, ( (accessed January 2015). Start Something that Matters. New York: Random House, 2012. (,_epub,_mobil) ßMcAfee security warning for this site).

[lxiv] José Luis Coraggio, De la Emergencia a la Estrategia. Buenos Aires: Espacio Editores, 2004. ( (accessed January 2015).

[lxv] The reason why the very concepts need to be reinvented is the pervasive influence of neoliberal social philosophies that conceive of certain basic juridical principles of Roman Law (seconded by similar principles in Anglo Saxon common law) as an eternal and universal framework of commerce that the sovereign people have no right to modify. See Howard Richards and Joanna Swanger, The Dilemmas of Social Democracies, op. cit.

[lxvi] Say´s Law will be discussed in detail in Chapter Six.

[lxvii] This topic will be further developed in a chapter on Alfred Marshall´s theories of rents and profits. The Marshallian tradition provides tools for distinguishing what is needed for efficient production from what is surplus that can safely be transferred to the social budget.

[lxviii] On the role of the state as partner see the works of Pierre Calame, a civil engineer with a long career in the French civil service who has devoted himself to rethinking economics and especially the state. Most of his works are available only in French but as time goes on more and more of them become available in English.

[lxix] Community Work Programme Implementation Manual. Pretoria: Department of Cooperative Governance, 2011, “Guidelines on Useful Work,” p. 19.

[lxx] Andrei Shleifer, The Age of Milton Friedman , Journal of Economic Literature. Volume 47 (2009) pp. 123- 135.   Friedman argued in his lecture accepting the Nobel Memorial Prize in economics that following Keynesian policies governments had created intolerable levels of inflation in a vain and unsuccessful attempt to create welfare states with full employment. Milton Friedman, “Nobel Lecture: Inflation and UnemploymentJournal of Political Economy. Volume 85 (1977) pp 451-472. ( `1976/friedman-lecture.pdf) (accessed January 2015)

[lxxi] Jeffrey Winters, Power in Motion: Capital Mobility and the Indonesian State. Power in Motion: Capital Mobility and the Indonesian State. Ithaca NY: Cornell University Press, 1996. ( (accessed January 2015). Winters shows that Indonesia could not govern more mobile assets and had greater ability to govern less mobile assets.

[lxxii] As will be discussed in the following chapter, the theory of crowding out was first developed by the Swedish economist Eli Hecksher.

[lxxiii] Farzana Afridi (2008) “Can Community Monitoring Improve the Accountability of Public OfficialsEconomic and Political Weekly. Volume 43, pp. 35-40. p. 35. (http://www.indiaenvironmentportal (accessed January 2015) Although there are several kinds of corruption, the one mentioned specifically in this article is “…leakages of funds due to corrupt practices of local officials (such as wage payments to non-existing labourers.)” p. 36.

[lxxiv] K.S. Gopal (2009) “NREGA Social Audit: Myths and Reality,” Economic and Political Weekly. Volume 44 (2009) pp. 70-71. p. 71. ( (Accessed January 2015).

[lxxv] A 2007 study by India’s Centre for Science and the Environment claims that according to studies by the Government of India itself, after accounting for administrative costs and corruption only 15% of the money appropriated for public programmes in general (without specific reference to NREGA) reaches the intended beneficiaries Centre for Science and Environment (2007) An Ecological Act: Backgrounder to the National Rural Employment Guarantee Act. Hyderabad: CSE. (http://www.indiaenvironmentportal (Accessed January 2015). A report filed from India by reporters for Bloomberg News claims that as of an unspecified date when 33 billion US dollars had been spent on MGNREGA 10 billion had been lost to corruption.   “District administrators and village heads have used tactics such as ghost workers, fake projects and over-billing to embezzle about $10 billion [US dollars] from the world’s largest workfare initiative…” India Jobs Program Scam Pays Wages to Dead Workers Bloomberg News, April 4, 2013, ( (accessed January 2015).

[lxxvi] Meeta and Rajivlochan, “Employment Guarantee SchemeEconomic and Political Weekly. Volume 31 (1996) pp. 179-80. p. 180.

[lxxvii] Mihir Shah, “Saving the Employment Guarantee ActEconomic and Political Weekly, Volume 40 (2005) pp. 509-602, p. 509.

[lxxviii] Ibid.

[lxxix] Ibid.

[lxxx] See for example, L.C. Jain, “Putting Panchayats in ChargeEconomic and Political Weekly. Volume 40 (2005) pp. 3649-3650. ( (Accessed January 2015).

[lxxxi] See for example, “Deena Khatkate, Why Employment Guarantee? Economic and Political Weekly, Volume 40 (2005) pp. 2114-2208.

[lxxxii] See for example, Aiyar and Samji, “Improving the Effectiveness of the National Rural Employment Guarantee ActEconomic and Political Weekly. Volume 41 (2005) pp. 320-326. ( (Accessed January 2015).

[lxxxiii] See Reddy et al op cit, comparing Rajasthan with a strong NGO presence and Andra Pradesh and Bihar without. See also Farzana Afridi (2008) cited above.   In several instances workers interviewed reported more abuse in Rajasthan. It could be that there was more abuse in Rajasthan, but it could also be that workers there felt less intimidated and more supported, and therefore spoke more freely.

[lxxxiv] See for example an editorial (2008) discussing the findings of the Performance Report on the first two years of NREGA by India’s Comptroller and Auditor General. “Wake-up Call on Rural Employment Guarantee” Economic and Political Weekly. Volume 43, pp. 5-6. ( =8d96804307dc96a1a9c7f7412787d745) (Accessed January 2015).

[lxxxv] W.W. Charters and John E. Jones, “On the Risk of Appraising Non-Events in Program Evaluation,” Educational Researcher. Volume 2 (1973) pp. 5-7.

[lxxxvi] Mihir Shah (2008), “Radicalism of NREGAEconomic and Political Weekly. Volume 43, pp. 4, 74. ( (Accessed January 2015).

[lxxxvii] For some references to experiences in several countries see Farzana Afridi (2008) op. cit. For a success story where participatory democracy has been associated with virtually zero corruption see Howard Richards Solidaridad, Participacion, Transparencia: Conversaciones sobre el Socialismo en Rosario, Argentina. Rosario: Fundacion Estevez Boero, 2008. participaci%C3%B3n_transparencia.html?id=h4ZFAAAAYAAJ&redir_esc=y) (accessed January 2015) Some of the chapters have been translated and are available at Unbounded Organization.

[lxxxviii] Anish Vanaik and Siddhartha, “Bank Payments –End of Corruption in NREGA?” Economic and Political Weekly. Volume 43 (2008) pp. 35-39. p. 35.   The article goes on to answer its title question negatively, in spite of the positive step of paying wages through banks.

[lxxxix] The Bloomberg News article cited above is an example.

[xc] For valiant efforts see Agatha Stachowicz-Stanusch (ed.) Organization Immunity to Corruption; Building Theoretical and Research Foundations. Charlotte NC: Information Age Publishing Company, 2010.

[xci] In Marx’s terminology production depends on capital accumulation.

[xcii] General Theory, p. 250.

[xciii] Remember that for us Keynes’ chronic weakness of effective demand (or chronic weakness of motivation to invest) is only an entering wedge, the tip of an iceberg.

[xciv] Throughout we use the word “liberal” in its European sense as an adjective form of “liberty” where what Adam Smith calls “natural liberty” becomes the touchstone informing all public policy; and not in the common American sense where “liberal” is equivalent to “social democratic.”

[xcv] We simplify for clarity. Normally the question is not whether all or zero of public employment is a net increase in employment. It is how much is a net increase and how much is offset by a resulting decrease in private employment.

[xcvi] More complete wage data can be found in Chandrasekhar and Ghosh op cit.

[xcvii] It should be noted that Reddy et al also find that most of the time (about three quarters of the time) there is grassroots participation in deciding what tasks to undertake with NREGA-paid labour. The picture of the privileged few continuing to dominate the underprivileged many drawn by Deena Khatkate op. cit. is not the whole picture.

[xcviii] We know of no quantitative measures or estimates of how widespread either phenomenon is, i.e. that of use of manual labour where a more capital-intensive technology would be more rational, or that of workers feeling demeaned. We think their apparent existence, in whatever quantity, tells us something about the system and the need for an unbounded approach to transforming it.

[xcix] We speak of a “majority” involved in the complex politics of getting the act into final form. In its final form it was passed unanimously.

[c] T.S. Papola (2005) A Universal Programme is Feasible Economic and Political Weekly. Volume 40, pp. 594-599. ( (Accessed January 2015). The “universal programme” would of course be only similar to a right to work for every citizen, since it presumably would be limited as NREGA is to the countryside, to people able-bodied and over 18, and to one worker per household.

[ci] We assume that Papola reveals not only his own attitudes and beliefs, but also something of the frame of mind of the audience he writes for and hopes to persuade.

[cii] Papola, p. 596

[ciii] Lentils

[civ] Chicken bits in spiced yogurt sauce

[cv] Lamb in hot sauce

[cvi] Curried shrimp

[cvii] However from an objective if not yet from a subjective point of view it is a technical necessity for India to transform its economy to make life there sustainable.   This point is well made by the Indian physicist Vandana Shiva in several works. For example Vandana Shiva (1988) Staying Alive ZED Books, London. ( (Accessed 2015).

[cviii] “…the government has been saddled with massive foodgrain stocks which had built up to 63 million tonnes by the beginning of July 2002….”   Prabat Patniak (2005) On the Need for Providing Employment Guarantee Economic and Political Weekly. Volume 40 pp. 203-07. p. 203.   ( seq=1#page_scan_tab_contents) (Accessed January 2015). Jean Drèze writes of 70 million tonnes of surplus grain in government warehouses.   Dreze op. cit. 2004 p. 1722.

[cix] Raj Patel (2008), Stuffed and Starved: Markets, Power and the Hidden Battle for the World Food System. London: Portobello Books. ( (accessed January 2015) See also the Wikipedia article “Farmer Suicides in India”.

[cx] The conception of the multiplier was first introduced into economic theory by R.F. Kahn in his 1931 article, The Relation of Home Investment to Unemployment Economic Journal Volume 41, pp. 173-198.( http://www. (accessed January2015)

[cxi] There is evidence that MGNREGA is indeed to some extent stimulating rural economies by augmenting rural purchasing power.   See Indira Hirway et al. (no date),   “Analysing Multiplier Impact of NREGA Works through Village SAM Modeling” Annandale-on-Hudson: Levy Economics Institute of Bard College. ( (Accessed January 2015).

[cxii] For example, Michel Foucault, “Alternatives à la prisonCriminologie. Vol. 26 (1993) pp. 13-34, at p. 25. ( (Accessed January 2015).

[cxiii][cxiii] Here we are not generally advocating Weber’s goal-oriented rationality as the best of all possible rationalities; we are only saying that more of it would have been in this context an improvement.   For a discussion of different rationalities for choosing public policies see John Dryzek, Rational Ecology. Oxford: Basil Blackwell, 1987.

[cxiv]   The following paragraphs are based on Anish Vanaik (2008), NREGA and the Death of Tapas Soren, Economic and Political Weekly. Volume 43, pp. 8-10. ( 40277757?seq=1#page_scan_tab_contents) (Accessed January 2015), Vanaik’s data on payment delays and number of days worked are fruits of NREGA’s transparency policy putting information on-line for the entire world to see.

[cxv] Id. p.8.   Part of the explanation might be that generation of work depended in the Birakhap area on someone paying a bribe to get a Project approved.

[cxvi] By “in principle” here we mean coming from a different worldview, a different frame of reference, asking different questions and interpreting data differently.

[cxvii] Source: Wikipedia article Mahatma Gandhi National Rural Employment Guarantee Act     ( January 2015)

[cxviii] This number does not exactly match the ballpark 50 rupee per dollar conversion factor we have used previously because it reflects actual exchange rates in 2006-7.

[cxix] The budget for 2012-13 was somewhat reduced but Jairam Ramesh the minister in charge said that counting funds left over from the previous year there would be no lack of funds. He explained that MGNREGA is a demand-driven programme where the amount spent depends on how many people demand work and not on how much the government budget provides. (It might be mentioned also that Centre funds can be withheld from States that do not properly implement MGNREGA.) “No lack of funds for NREGA, claims RameshThe Financial Express. March 18, 2012. ( (Accessed January 2015).

[cxx] This objection is made e.g. by Deena Khatkate, op. cit.

[cxxi] Thomas Robert Malthus, An Essay on the Principle of Population. Oxford: Oxford University Press, 1993 (1798)

[cxxii] The general philosophy that everything works better when money is left in private hands and not taken as taxes to be spent according to public priorities is espoused in the popular works of Milton Friedman, for example Milton Friedman, Capitalism and Democracy. Chicago: University of Chicago Press, 2002 (1962), Milton and Rose Friedman, Free to Choose. New York: Harcourt Brace, 1980. In the first two chapters of Capitalism and Freedom Milton Friedman comes close to ruling out non-market solutions a priori and on principle.   He takes his general principle to be “individual freedom” and says the rest of the book will apply that general principle to specific issues.   A World Bank report has argued MGNREGA is an obstacle to development because of its policy goal of slowing rural-urban migration. Rural people should be free to migrate to the cities when they see fit in pursuit of better jobs. World Bank (2009) World Development Report 2009.

[cxxiii] Amartya Sen Development as Freedom. Oxford: Oxford University Press, 1999; Martha Nussbaum, Creating Capabilities: the Human Development Approach. Cambridge MA: Belknap Press of Harvard University, 2011.

[cxxiv] Thus Vijay Joshi and Ian Little (1996) argue with respect to the privatization of public sector industries in India, and the ensuing dismissal of redundant employees by the new private owners, that the dismissed employees will find real jobs in a private sector revitalized by India s economic reforms. They will then earn their pay by producing goods for which there is market demand. These authors are liberals but not social darwinists, proposing what they believe to be better ways to serve the poor. The same authors endorse improving the marketable skills of the poor by public expenditures on health and education.   India’s Economic Reforms, 1991-2001. ( (accessed January 2015). New York and Oxford: Clarendon Press.

[cxxv] The “everything” is spelled out by David Harvey in The Condition of Postmodernity Oxford: Basil Blackwell, 1989, and in other works.

[cxxvi] For this reason Herbert Simon after studying economics and political science devoted himself to psychology to pursue his goal of understanding how humans make decisions. See Herbert Simon, Administrative Behavior. 4th edition. New York: Free Press, 1997 and other works by the same author.

[cxxvii] We here distil what we take to be a principal underlying premise of many mixed bag criticisms, i.e. that the real way to end poverty is for all poor people to acquire marketable skills, not to separate the duty to work from the necessity to sell. See for example the Wall Street Journal article, India’s Boom Bypasses Rural Poor April 29, 2011. ( (Accessed January 2015).

[cxxviii] The same or similar reasoning can be used to justify going beyond health and education to support the poor in any number of ways, with the end-in-view of empowering them to compete successfully in markets.

[cxxix] Rudyard Kipling, Kim. London: Macmillan, 1901. In his early work Hind Swaraj (1909) Mahatma Gandhi alleges that the British brought poverty to India by imposing an adharma “Satanic” modernity that destroyed the traditional moral order of the Indian village. Mohandas Gandhi, Hind Swaraj and Other Writings. Cambridge UK: Cambridge University Press 1997 (1909).

[cxxx] Gunnar Myrdal, Asian Drama. London: Penguin, 1968. ( (Accessed January 2015).
See especially the chapter on Enlightenment ideals.   Myrdal came to India as head of a United Nations agency charged with teaching the world how to eliminate poverty.


Howard Richards is a member of the TRANSCEND Network for Peace, Development and Environment. He was born in Pasadena, California but since 1966 has lived in Chile when not teaching in other places. Professor of Peace and Global Studies Emeritus, Earlham College, a school in Richmond Indiana affiliated with the Society of Friends (Quakers) known for its peace and social justice commitments. Stanford Law School, MA and PhD in Philosophy from UC Santa Barbara, Advanced Certificate in Education-Oxford,  PhD in Educational Planning from University of Toronto. Books:  Dilemmas of Social Democracies with Joanna Swanger, Gandhi and the Future of Economics with Joanna Swanger, The Nurturing of Time Future, Understanding the Global Economy (available as e-books), The Evaluation of Cultural Action (not an e book).  Hacia otras Economias with Raul Gonzalez, free download available at www.repensar.clSolidaridad, Participacion, Transparencia: conversaciones sobre el socialismo en Rosario, Argentina. Available free on the blogspot lahoradelaetica.


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