How Just is the Demonetisation ‘Masterstroke’ in the World’s Largest Democracy? Lessons from Rawls and Gandhi – SARTHAK GAURAV

1000-rs-notes-banned

By Sarthak Gaurav*

 

Abstract

The recent demonetisation ‘masterstroke’ of the Government of India violates two simple principles of justice that are normatively appealing, namely Rawlsian ‘difference principle’, and Gandhi’s Talisman. While both the principles stress on evaluating the impact of one’s action on the ‘least advantaged’ or the ‘weakest’ in society, in its laudable and bold attempt to curb the problem of black money and counterfeits in currency circulation, the government has failed to pay heed to some fundamental ideas of justice that are central to democratic policy making.

Introduction

The institutions and laws of a society determine how resources are distributed among members of the society. Institutions are not an Act of God, nor are they the outcomes of an Artificial Intelligence (AI) algorithm. Institutions, however, are the acts of members of the society within an unambiguous acceptability of what the norms of that society comprise. Over millennia, citizens of different societies have devised several mechanisms to determine how resources would be distributed, and how the benefits and costs from economic activities would spread across members of the society. Political processes are one such mechanism.

In a society, a dictator might decide not only how a pie is made but also how it is distributed among the members of the society. In another society, a benevolent leader of the masses who was democratically elected by a certain format of electoral process may decide another way of how a pie is made and how it is distributed among the masses. How fair is the framework of distribution of the pie? This is an important question that comprises the idea of distributive justice. In doing so, we have to understand which distribution processes are morally acceptable and which are less acceptable. In essence, we rank the distribution processes from the most acceptable to the least acceptable. How do we go about achieving this? In order to address the aforementioned phenomena, some wise members of several societies have agreed upon certain principles of justice – political philosophical frameworks with well-argued moral guidelines that help choose one pie distribution process over another. Let us look at some of these in evaluating the recent demonetisation decision of the central government of the largest democracy in the world.

One intuitive framework for distributive justice is where each member of the society gets an equal share of the pie. This seemingly egalitarian mechanism is called ‘strict egalitarianism’. This ensures an equality of outcomes in society. While the strict egalitarian notion is somewhat Utopian, one may settle for a weaker version where members of the society agree to accept a greater degree of equality of the distribution of the pie (income or wealth or even a pie). For a society to be just, in modern democracies, it is more or less a norm that there is some form of egalitarianism at work. While the French accepted it in their motto of ‘liberte, egalite, fraternite’, the Preamble to the Constitution of India clearly emphasizes the solemn resolve of the people of the nation to secure to all its citizens justice: social, economic, and political, along with equality of status and opportunity; among other lofty ideals. Another intuitive framework for distributive justice is utilitarian in principle.[i] If members of the society can distribute the pie among themselves so that it maximizes the welfare in society, that process is fair enough. While the utilitarian ethic varies in choosing over achieving the highest total welfare to maximizing the average utility (say satisfaction, happiness irrespective of how it is measured) of society, there has been a quest to arrive at alternative pie cutting mechanisms that make sense.[ii] As a critique of the utilitarian principles (among the many that have been propounded), one of the most popular one is that of Rawls (1971, 1993).[iii]

The principle of justice offered by Rawls is called the Difference Principle. The essence of the principle is that deviations from strict equality in society is permissible as long as the resulting inequalities result in ‘least advantaged’ in society being better off than they would be under strict equality. Gandhi, on the other hand gave a simple talisman that offered a mechanism to evaluate the implications on one’s potential action(s) on the weakest in the society. Together, the two principles offer a simple framework to evaluate how morally just the recent policy manoueuvre of the central government is.

Rawlsian Difference Principle and the Demonetisation Policy

In his seminal work Theory of Justice, Rawls (1971) proposed two principles of justice 1. Each person has an equal claim to a fully adequate scheme of equal basic rights and liberties, which scheme is compatible with the same scheme for all; and in this scheme the equal political liberties, and only those liberties, are to be guaranteed their fair value. 2. Social and economic inequalities are to satisfy two conditions: (a) They are to be attached to positions and offices open to all under conditions of fair equality of opportunity; and (b), they are to be to the greatest benefit of the least advantaged members of society While principle (1) pertains to distribution of liberties, (2) is relevant from a distributive justice context. 2(b) in particular, is the ‘difference principle’. There is a preference ordering in terms of priority of the two principles that is worth noting. Rawls argues that if there is a conflict between the two principles, (1) is preferred to (2), and (2a) is preferred to (2b).[iv] This ensures that in a well-ordered society, basic liberties cannot be sacrificed in order to generate greater equality for even the worst off in society.

For our conceptualisation of distributive justice of the recent demonetisation policy of the Government of India, we focus on (2b) – the difference principle. In this conceptualisation, the absolute position of the least advantaged group is of importance, instead of their relative position. If a policy improves the absolute position of the least advantaged or least well-off by having some inequalities, then as per the difference principle, such inequality is acceptable as long as the least advantaged can be made no more better-off. This is where the current demonetisation policy fails. If one weighs the evidence (journalistic as well as experiential) on the inconveniences caused to the least-advantaged in terms of the negative liquidity shock or loss of income and peace of mind due to time spent on long queues outside banks and ATMs, the policy is likely to have adversely affected the absolute position of the least advantaged. Even if the middle-class as well as high net worth individuals are affected, by putting higher weight on the position of the least advantaged, this principle offers an insight into how one could examine the parameters for accepting inequalities in society. Whether or not the policy has improved the absolute position of the least advantaged in society, irrespective of the laudable and bold attempt to curb black-money and counterfeit currencies notes in the economy, is anybody’s guess.

Gandhi’s Talisman and the Demonetisation Policy

In one of his last notes, Mahatma Gandhi, he left behind a simple framework that provides an intuitive test to morally evaluate how just or unjust one’s potential action would be. The note is popularly known as Gandhi’s Talisman, and it is as follows: “I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.” (Pyarelal, 1958, p.65) In the context of the demonetisation policy that is being lauded as a ‘masterstroke’ of Prime Minister Modi’s government, applying Gandhi’s Talisman, one is compelled to wonder if the step the government has taken is going to be use to the poorest and the weakest in our society. Will she or he gain anything from the masterstroke? Will it restore the individual control over her or his life and destiny? Given the observations as one steps out on to the streets of the country since the implementation of the policy, the answers to these questions are justifiably in the negative.

Concluding Remarks

The recent demonetisation ‘masterstroke’ of the Government of India, although laudable in the government’s attempt to curb black-money and counterfeit currencies in cash stocks, fails in two simple tests of principles of justice, namely Rawlsian ‘difference principle’, and Gandhi’s Talisman. Since both the principles stress on the impact of the actions on the ‘least advantaged’ or the ‘weakest’ in society, the inconveniences caused to these sections of society leads to an outright failure of the policy in terms of it being just. While this note offers a few perspectives among reasonable plural alternatives, it also offers food for thought in terms of where we are headed as a nation when it comes to arriving at socially acceptable norms of justice and fairness. In terms of more immediate response to the problems faced by the citizens and lesson for future precision strikes on the relatively better off sections that are party to the black-money system, putting oneself in the shoes of the least-advantage and weakest of society might offer a more pragmatic solution to the pressing problems of our times.

References

Dworkin, R., 1981a, “What is Equality? Part 1: Equality of Resources,” Philosophy and Public Affairs, 10: 185–246.

–––, 1981b, “What is Equality? Part 2: Equality of Welfare,” Philosophy and Public Affairs, 10: 283–345.

Pyarelal, 1958. Mahatma Gandhi – The Last Phase. Vol 2. Available at http://www.mkgandhi.org/ebks/last-phase-vol-9-part-one.pdf

Rawls, J., 1971, A Theory of Justice, Harvard, MA: Harvard University Press. –––, 2001, Justice as Fairness: A Restatement, Cambridge: Harvard University Press.

Roemer, J. E., 1996, Theories of Distributive Justice, Cambridge, MA: Harvard University Press.

Notes

[i] Thinkers such as Shaftesbury, Hume, and Hutcheson had utilitarian principles in their accounts of morality whilst the classical tradition may be attributed to the work of Bentham, Mill, and Sidgwick

[ii] In spite of the several ways of conceptualising utilitarian welfare, there are libertarian principles that critique the distributive aspects of material goods on the grounds that emphasis on such material or economic goods is inferior to that of liberty.

[iii] There are schools of thought that argue about the importance of luck as well as responsibility (desert-based or who deserves what outcomes based on their effort) in moral evaluation of economic outcomes (see Dworkin 1981a, 1981b; Roemer 1996 for a detailed discussion on these topics).

[iv] In a lexical or lexico-graphic preference ordering sense.

Disclaimer: The views expressed in article are the author’s personal views, and do not represent that of the institute he is affiliated to. Usual disclaimers apply.

The author is assistant professor at Indian Institute of Technology, Mumbai. Previously he has worked with London School of Economics. 

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