Indian peasants have together constituted one of the most enduring forms of economic organisations the world has known. Rajas, sultans and firangis came and went. They knew that as long as they did their work and did not bother the peasant, they were alright. The ones who intervened drastically eventually suffered and caused suffering, ending ultimately as the pariahs of history.This, of course, holds true for other old civilisations and even a few new ones too. Farming is a way of life. Sometime in the seventies of the last century a new world began. Michael Piore showed that in Emiglia Romana, northern Italy, a generation of tailors and garment artisans had turned the region into a powerhouse by linking up their inherited strengths with world markets through technology. I saw the potential in this for India and invited his chela, Werner Sengenberger, for a road show in India.The last three decades have been decades of churning. The original Piore Sabel thesis was picked up in India and some good work done. But, by now, all that is passe. Change is fast and India has also to keep up with it at the ideas level, in spite of the mortis rigor that has set in in of its once prestigious think-tanks.France has a long tradition of thinking on the management of natural resources and has always prided itself on its global ethos. Some of the best work on electricity pricing, for example, or agro-climatic management was done there. Now Piere Noel Giraud, a professor at the Ecole de Mines in Paris has come out with a brilliant thesis, trying to catch the last three decades in a historical sweep. It is the kind of thought process we in this country love and I suspect it will make waves when it is published in English, as it already has been into Chinese and other languages.Giraud makes the point that nation states prevent or put obstacles in the movement of goods, money or men. He terms those activities “nomadic” that promote such flows across countries and “sedentary’, those activities confined within a territory. With opening up, sedentary activities become nomadic. Nomads also bring technical change, competition, as well as stimulate activity.For example I have always held that international trade will provide technological stimulus to agriculture outside the limited territories it is presently restricted to in India. But nomads can also destroy the sedentary people and Giraud says there are no a priori laws to say which tendency will be more powerful. The question is to strike the right balance and that needs more work. Giraud makes the point that the period of closed economies was that of reduction of inequality because nations competed to better the lot of their sedentary people at the political level, even when the economies were closed. But all that is now the history of the last century and its social democratic traditions.The nomads will create new areas of prosperity and will succeed because they are competitive, for instance, the Indian software expert. But whether they help spread prosperity, is a hypothetical question according to Giraud but to me appears a policy one. Giraud sees a balance between nomads and sedentary groups as the big question the world will have to resolve. Poverty removal in a Rawlsian world he argues is consistent with increasing inequality. But large spatial inequality can have terrible social consequences and mankind will have to strike a balance.Coincidentally, in a recent article in Fortune, the old conservative investment banker Warren Buffet has raised the same issue. Buffet points out that the consequence of the large American deficits is that foreigners own dollars. Indian economists I know have long predicted that the dollar would collapse because of persistent US deficits. This was rubbish, since people all over the world had confidence in the stability of the dollar and gladly hold assets in it. But from these holdings, as Buffet points out, the next step is to buy assets in the USA. Now you start running into the same kind of problems that Giraud talks about, to rephrase it, the interests of the sedentary holders of assets and the competitive nomads who buy them.Buffet gives give some very interesting proposals to create a balance. Interesting, but even coming from Buffet they still appear impractical. We don’t know the answers yet, but Giraud has raised some fascinating questions. In spite of all our problems and griping — some problems like violence against a few are real, others not so — an open Third World democratic nation state is a progressive force in the world. We must live up to this view of the world in full measure.
