Randy McDonald (rfmcdpei) wrote,
Randy McDonald
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[LINK] "Kerala sets example to the world"

Over at Asia Times, Shirin Shirin's article "Kerala sets example to the world" argues that the economic model of that Indian state sets an example for the world with its resistance to "market fundamentalism" and its significantly positive outcomes in terms of human and economic development.

Kerala boasts one of the nation's finest healthcare systems, even for those who can't afford to pay user fees and therefore depend on government hospitals. Kerala's infant mortality rate is about 16 deaths per 1,000 births, or half the national average of 32 deaths per 1,000 births.

Aside from the social development indicators, Kerala's growth rate in the last few years averaged between 6-10%, not only keeping pace with the national average but at times ranking among the fastest growing states in the country. The sectors that are doing well are largely those that are thriving across India - information technology, services and tourism - but agricultural production and small-scale manufacturing are also succeeding.

Development experts have debated for years about whether or not a "Kerala model" exists and, if so, whether that model can be exported to other countries or even other Indian states. Whether or not Kerala's development experience can be categorized and replicated, a few things stand out about its political and economic history.

In the first place, the state had a matrilineal and even a matriarchal society, with a line of forward-looking queens that still ruled much of Kerala in the early days of the British Empire. The queen of Trivandrum, for instance, issued a royal decree in 1817 declaring that "the state should defray the entire cost of the education of its people in order that there might be no backwardness in the spread of enlightenment". Not until the latter part of the 19th century would countries like Britain and the United States provide such services for their own populations.

A single party, the Communist Party of India (Marxist) or CPI(M), has ruled Kerala for much of the past 50 years. The CPI(M) successfully pushed for three major reforms in the 1960s and 1970s. The first and most important was land reform. While nearly everyone looks on land reform as a huge success in Kerala, the policy was controversial when it was first proposed in 1959. Land reform, after all, is an attack on one of capitalism's founding principles - the right to property. The central government intervened and effectively blocked the implementation of land reform for 10 years. But planners and unions in Kerala understood that building a more egalitarian economy required attacking the old feudal system at its roots, and small farmers weren't going to stand for anything less.

Secondly, the CPI(M) deliberately and methodically invested in education, setting goals so popular with the electorate that even when the communists lost power, new governments did not dare modify education policies.

Lastly, Kerala invested heavily in government-financed healthcare. The state now boasts 160 patient beds per 100,000 people, the highest rate in the country.

When considered in its component pieces - state-sponsored land reform, education, infrastructure and social services initiatives - the "Kerala model" is not particularly revolutionary. Even the International Monetary Fund (IMF) uses land reform (though it uses the phrase "market-based land reform" to justify a different kind of redistribution).

So why haven't other Indian states - or even many other developing countries - been able to use the Kerala model as a path to development? The answer may lie in when Kerala chose to follow this path. The 1960s and 1970s were before structural adjustment programs and free-market principles dominated the discourse of development economics. Kerala borrowed heavily - and still borrows - to finance its social investments. While other countries have made similar investments, IMF-backed austerity measures have rolled back those investments before they could bear fruit. Now that the age of Milton Friedman appears to be nearing its end, the world would do well to give Kerala another look.


Shirin overlooks ways in which Kerala's economic model is based on highly contingent factors like (say) the influx of funds via Gulf workers' remittances, and "market fundamentalism" is a phrase that leaves me cold. Still, there is still be something to Shirin's argument.
Tags: economics, india, kerala, links
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