The Affluence Machine: Purchasing Power for Millions – A Growth Strategy – Abraham Thomas

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Three hundred million jobs

India’s primary dilemma

To achieve our objectives of development, we have to give purchasing power to the bulk of the population. In a free economy, purchasing power has to be linked to employment. In totalitarian countries, the state is responsible for all employment and people can be made to work on socially useful projects while being rewarded with controlled purchasing power. But, in India, millions of people obtain minimal food, shelter and clothing even though they are unemployed. If their minimal needs were not met, they would not have survived. If these millions are to be employed on jobs created by the state, they have to be paid a remuneration that is in excess of whatever is their present means of sustenance. Since the economy has no surpluses to employ for this purpose and deficit financing to provide such funds will lead to the evil of uncontrolled inflation, we are faced with the prospect of having an enormous labour force that cannot find employment and consequently does not have sufficient purchasing power to buy even the simplest of manufactured goods. We are caught in a vicious circle of high unemployment and low production, each reinforcing the other. If our target of development is to be achieved, a way has to be found to provide useful employment to hundreds of millions of people in the country as an acceptable means of increasing their purchasing power.

The problem of employment is central to the problem of development. The problem of employment has taken on a new dimension. The need for jobs overshdaows every aspect of life in the country. As in every other part of India, the spectre of unemployment stalks the lush green paddy fields of Kerala. Unlike the peasants of Bihar, or Orissa, the people of Kerala have very visible means of sustenance. By and large, they are healthy and wellfed. But the problem of unemployment is still the most important economic issue. Kerala is probably an indicator of the future dilemmas in store for India, even as she solves the problem of feeding her millions.

Tall clusters of palm groves border the fertile paddy fields of Kerala and provide shelter and shade to the simple homes of the farmers. Even the poorest homes are clean and comfortable. The roofs and walls are built from overlapping layers of palm leaves. The flooring is finished to a hard clean surface with cowdung slurry. Each home is set in a minimum of 300 square metres of land with a few coconut palms. Tapioca plants grow in the shade of the palms. This idyllic scene is the background for the new employment issues that we are likely to face in the future.

In these villages of Kerala, a typical four hundred hectare paddy field is cultivated by over seven hundred farmers. Each of these seven hundred cultivators is an entrepreneur, faced with problems of raising finance, employing labour, making innumerable decisions regarding sowing, weeding, using the right fertilisers, struggling to meet expenses and risking a11 his resources with each monsoon. While farm labour can be considered necessary for this field, seven hundred managers, to cultivate a four hundred hectare paddy field are six hundred and ninety nine too many, Even assuming a need for them, there remains many a relative who has no specific job whatsoever. In the earlier part of this century an uncle or a cousin lived on the farm without doing any real work and did not consider himself unemployed. He was as happy as he could be. The concept of ‘unemployment’, (in itself an evil import from the decadent West), had not yet arrived. His primary needs were met, he lived in a beautiful village and he had no responsibilities whatsoever. He could continue his life comfortably to the end of his days. These conditions exist even today in the green villages of Kerala. Hundreds of thousands of dependent relatives live in these villages having enough food to eat and clothes to wear, living in simple beautiful homes. They are educated and have an ample supply of books to read in the local libraries. These people have, apparently, the perfect prescription for happiness.

The only snag in this plan for happiness is the emotion that the late President Kennedy described as ‘man’s unsatisfied aspiration for economic progress’. This aspiration, which lay dormant in the earlier part of this century, exploded into the countryside with the spread of communications.

Newspapers, magazines, radio and television bring messages of material, goods a man can possess and intellectual pleasures he can enjoy, to every corner of the country. Every enterprising individual who ventures out of the village returns with messages of opportunities and hopes. Today, a ‘whole world of employment and self employment possibilities have opened’ up for the average man. A desire, to find satisfying employment and a useful role in society, exists in every individual. To a villager who has known only partial employment, an erratic and undependable income and, occasional near starvation, a job, however menial, which assures him a steady income every month, is the most desirable of all modern man’s inventions. Can he be blamed for wishing to work when he could remain idle?

In the villages of Kerala, basic education and the spread of communications changed millions of surplus agricultural workers from contented do-nothings to impatient job-seekers. Their dissatisfaction and despair are reflected in the local literature and culture. Advertised jobs bring thousands of applicants for a handful of posts. Every magazine story in Malayalam refers at least once to the hero’s fruitless quest for jobs. The heroine of many a Malayalam movie is driven to ruin after her hopeless search for salaried employment. Winding processions of healthy and wellfed young men march down the picturesque streets of the towns of Kerala chanting ‘joli tharu’ – ‘Give us jobs’.

Employment and Automation
The folly of restraining technology to create jobs

The four hundred hectare paddy field in Kerala could be cultivated by a handful of people with modern equipment. A large and more scientifically managed farm will give higher yields and cost less to society, But mechanisation and automation are unthinkable in this context. The few tractor operators in the fields of Kerala live in constant fear of violence for being instrumental in taking away manual jobs. Political parties and labour unions recognise the situation and actively support measures that will reduce efficiency so that more people may be employed to produce the same goods. Fragmentation of farms, work to rule formulae and opposition to more efficient methods of cultivation are all measures recommended to provide more employment. But this approach to the problem of providing employment has builtin disadvantages.

We do not have to compete with machines. But the results are tragic when we do. In industry and in agriculture, employment competes in a national market. Raw material and finished product prices for the products of industry and agriculture are fairly uniform throughout the country. The value added by industry, or agriculture, as a component of the final selling price, also remains fairly uniform throughout the country, for each item of production. The price of a tonne of rice is approximately the same all over India. Every producer will also receive similar amounts towards the labour component of its cost of production. The labour element of cost, in the cost of production can be reduced by a producer or a group of producers by mechanisation. Contrary to wild claims that developing countries undertake mechanisation indiscriminately, the average producer, in India’s fiercely competitive economy, will introduce mechanisation only if total machine labour, depreciation, interest and operating costs are lower than manual labour costs. Where mechanisation is only marginally more profitable than manual labour, a producer is unlikely to go to the expense of introducing it. (Mechanisation may be introduced in a deliberate effort to avoid labour problems. But, in this case, savings in labour management costs contribute to economy in production.)

Generally, mechanisation is introduced when it is far cheaper than manual labour. It costs the equivalent of ten man days of labour to bring one truck load of sand for concreting from the Puduchatram river bed, over a distance of thirty kilometres to Madras City. It will take two hundred men to bring it by head loads this distance in one day. Depreciation, driver’s salary, fuel/costs, capital costs and truck operator’s profit a added together costs one twentieth of equivalent manual labour costs in this case. Whenever it is applied in Indian industry, mechanisation reduces the costs of production. As labour costs for a product reduces through mechanisation, the producer who uses manual labour for his production gets paid less and less for his efforts. He stops being competitive. He is forced to lower wages and adapt unfair labour practices. Man loses when he competes with machines.

When we follow policies that encourage labour to remain working in fields where mechanisation is competing with them, an economically unproductive and socially explosive situation is created. State subsidies for the manually operated sector and restrictive laws against the modern sector create conditions that ultimately cripple the whole industry. Strikes, lock-outs, social unrest and high prices to the consumer are the ultimate end products of this policy. If our objective is development, a course of action that hampers production and creates social unrest can hardly be considered a development policy. We should define a successful development policy as one which will create millions of jobs while encouraging the most modern technology for production. Any other solution will only be another involved piece of doublethink.

This book suggests a programme of action for the development of our backward regions. We have defined development simply as the creation of those conditions where every citizen can live in a decent house, have access to medical attention, go to school or college, visit a cinema or theatre, enjoy national sports, have a few sets of clothing and afford a few industrial products. We have seen that this will entail increased production and the creation of a so-called consumer society. It has been shown that the primary constraint in achieving this target is the lack of purchasing power among the bulk of the population. We have seen that within the limitations of a free economy, purchasing power can only be created through gainful employment. Employment is central to the problem of development. The need for jobs also hampers production and creates social unrest. Where machine labour is cheaper, jobs, created by deliberately making production inefficient through the use of manual labour, generate unhealthy conditions in industry and harm the community in the long run. A truly successful development programme will create millions of jobs, while, at the same time, using the most efficient means for production. An ideal solution should seek to put people into partnership with machines, not in competition with them. Such a solution should also find hundreds of millions of jobs for tomorrow’s India. Such a solution is possible.
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