A friend had to buy railway tickets for the family to
visit Kerala from Delhi. He was told that the tickets
sold out within 10 minutes of the opening of the
reservation window. He went there at midnight and saw
a few people already camping near the window. He
joined in. They all faced one big problem: How can one
maintain the position in the queue and attend to
nature’s calls or fetch garam chai or just walk around
once in a while to keep the blood flowing? They had
eight hours to exhaust.
One person took out a paper and suggested that everyone
write down their names in the same order as the
queue. Suddenly, instead of being tied down to one spot
for eight hours, they all felt free. This is a great example
of how people solve their own problems. It is an illustration
of how order emerges spontaneously from seemingly
chaotic situations without any authority trying to create or impose an
order.
Spontaneous order, as FA Hayek famously phrased it, is the ‘result of human
action but not of human design.” The laptop, on which I am writing this piece,
is designed by someone who had to engineer all the pieces put together to
make it work. It is the result of human design. An army is made of a commander
and soldiers, and the orders of the commander create the muchadmired
order of the army. Similarly, a firm has a chairman and employees who
strive to achieve the goals set by the chairman. These are examples of order
created by conscious plan or design.
On the other hand, there is no one who sets goals or gives orders to the
whole of society. A society is a complex system and the order that you see
emerges through the spontaneous interaction of millions of people.
______________________________
In Bangladesh, all rural areas and poor
villagers have access to credit, almost on
demand. In India, hundreds of farmers
commit suicide since they can’t access
sufficient credit. How is this possible? Ours
was a national movement, a commitment of
the government with all its powers and
expertise.
______________________________
|
The same is true for language, morals, markets, and the (common) law. No one wrote down the Oxford Dictionary of English and told people to start communicating with words instead of gestures. The most important pillars of our civilisation are actually this type of self-organising complex systems with emergent properties. The systems that nobody has designed and no one commands. They are the result of ‘human action but not of human design.’ Some of you are by now thinking that this is an interesting idea and probably an insightful way of looking at the world but does it have any real life applications? Once we understand that many critical institutions and mechanisms that sustain our society and life are not really planned by anyone, it really liberates us to see our problems and particularly their solutions in a very different light. |
Take, for example, the problem of making credit available in villages and to
poor people. Seeing that most private banks and lending institutions were in
cities, Indira Gandhi nationalised banks and insurance companies. Now under
government control, these banks were ordered to open branches in rural areas
even if they were unprofitable. They were required to lend a stipulated proportion
of their loan portfolio to agriculture and other social priority areas.
Many in the country thought that this would usher in a new era of equitable
access to credit; it would end the extortionist monopoly of the moneylender in the village. Alas, the dream remained a dream.
Bank nationalisation was a political solution to the problem. This is the
approach we most often take for many of our social and economic problems. It
has tremendous intellectual as well as emotional appeal. It seems that the
country has finally realised the plight of the rural areas, has set a goal to achieve more even distribution of credit and make sure that the poor are not
left out of this much needed facility to improve their lives. The nation has
awakened and set clear targets to work for. Experts are put in charge to completely
revamp the system and deliver the service. A whole bureaucracy with
its intricate checks and balances is put up to make sure that the targets are
achieved. People feel elated, energised, and patriotic. Political leaders are eulogised
in folklore.
Intuition seems to tell us that this is the right and probably the only way to
address such large social problems: mobilise the country, set clear targets and
deadlines, and put experts in charge. Everyone feels part of it and is able to see
exactly what is done to address the dire problem. As is the case with social and economic issues, intuition leads us astray. Such
planned, designed, visible solutions don’t actually solve these problems. But is
there any other way of addressing such problems?
Muhammad Yunus made his first loan of $ 27 to women making bamboo furniture
in 1974. To his surprise, the loan was fully repaid, and in 1976 he
launched the Grameen Bank. Today, there is not a single village in Bangladesh,
a country far poorer than India, where the people lack access to the services of
the Grameen Bank. The Grameen approach has expanded into many areas,
notable among them is the Grameen Phone. From the remotest areas of the
country, one can connect through a mobile phone owned and operated by a
woman. Basically, a mobile phone PCO! Last year Professor Yunus, an economist
trained in the US, won the Nobel Peace Prize.
___________________________
There is no one who sets goals or gives
orders to the whole of society. A society is a
complex system and the order that you see
emerges through the spontaneous
interaction of millions of people. The same
is true for language, morals, markets, and
the (common) law.
_____________________________
|
In Bangladesh, all rural areas and poor villagers have access to credit, almost on demand. In India, hundreds of farmers commit suicide since they can’t access sufficient credit. How is this possible? Ours was a national movement, a commitment of the government with all its powers and expertise, and we boldly sacrificed the families that owned and operated private banks. Professor Yunus started as a single individual with small personal savings. There was no national mobilisation, no powerful institutions behind the efforts. And surprisingly no one’s fortunes or lives were sacrificed. Neither private banks, nor greedy moneylenders were forced to quit their business. They could openly compete with the Grameen Bank, if they chose. India nationalised banks in 1969; the Grameen Bank began in 1976. If anyone was asked at that time to predict which country would solve the problem of access to credit for poor villagers, the answer would have been unanimous. Our intuition would have picked India as the winner. The winner, the true solver of the problem, is Bangladesh. Actually not Bangladesh, but Professor Muhammad Yunus! It wasn’t even a local or regional effort, let alone a national undertaking; it was the effort of one man. |
Professor Yunus’s approach is the civil society approach where individuals or
groups of individuals who come together voluntarily to address the concerns
that move them. When they start, their efforts always look insignificant, a drop
in the ocean, a well-meaning gesture. How could a few individuals address the
problem faced by millions? But that really is the power of the civil society
approach.
The opposite – the political approach – always starts on a grand scale with
the confidence that the problem will be vanquished shortly. And as with any
mammoth attack, a few lives are usually sacrificed, which at that time seems
like a small price to pay for the grander social goal.
As we confront more and more acute problems of the nation, it is very critical
to understand the differences between the political approach and the civil
society approach towards their resolution.
(Parth J Shah manages the School Choice Campaign of the Centre for Civil Society,
parth@ccs.in, www.schoolchoice.in )
