Narratives matter for the economy. The point is somewhat obvious, but the Nobel laureate economist Robert Shiller re-emphasizes the point in a new book (a preview here). Yet, as Shiller argues correctly, we miss this point all too often. We claim that data will speak for itself, but people think in terms of overarching stories rather than nuanced arguments. And, in this, I shall argue, Bengal misses a trick.
By Bengal, I mean the state of West Bengal in India. This sliver of the ancient state of Bengal, which became prosperous and pre-eminent in Indian politics for a variety of environmental (changing courses of rivers), historical (the gradual shift of influence from Dhaka to Calcutta, via Murshidabad) and economic (early emergence of capitalist class through privatization of land ownership, spread of English education and emergence of a hub of global trade) reasons, is - by common perception - in a state of decline. When I use Bengal, I am only using the popular shorthand, as it's referred to as in contemporary India; but, as I look at the state's possibilities, creating a narrative for a unified Bengal remains a clear opportunity to explore.
However, that may be getting ahead of ourselves here. First, it is important to consider the narrative of decline as it stands today. Bengal, as it is perceived today, is a backward, work-shy and politically violent place, ruled by whims and run by impractical babus. This is a significant fall from grace of being the pioneer of modern capitalism and global trade in India; from the glory days of political and manufacturing pre-eminence - Gokhale had a point when he said 'what Bengal thinks today, India thinks tomorrow' - to a politics of eternal disaffection and obstructionism to a point when it seems that the rest of India is leaving the state behind.
People with the first-hand experience of Bengal may object to this characterisation. They may point to the strong economic fundamentals of Bengal - a strong rural economy, relatively equitable distribution of income and several other indicators of human development, as well as a strong GDP growth - as evidence why the perception of a weak economy is off the mark. They may point to the fact that Bengal's politics is no more violent than that of the other Indian states and absence of strong landlords and their private armies mean the nature of conflict and violence is different in the state. Indeed, they will have a harder time explaining the urban unemployment, where youth inactivity is widespread and quite visible, but this is exactly where the gap between perception - and consequent lack of investment in new industries - and reality - the economic fundamentals - come to play a role.
My argument is that this failure to attract investments to create new industries is attributable to the narrative gap. Without fixing it first, the annual investor jamborees are going to yield little result. Besides, part of Bengal's problems is its lack of policy influence in India's Union government and to regain policy initiative, Bengal needs to attain a leadership position, both in economic and political terms. This is unlikely to be achieved by hosting MeToo events or sending out delegations to foreign nations.
Instead, a fresh start would mean developing a new Narrative strategy and to escape its Cold War-era image of a backward Socialist bastion. Bengal was ruled by a left coalition for an unbroken 34 years since 1977 and then by a populist leader to this day: This had put it in oppositional terms with successive governments in Delhi. However, Bengal's oppositional relationship with Delhi did not begin in 1977: It started much before, right after the Independence, as an Independent-minded and ably led Bengal politics sat uneasily within the increasingly personality-driven culture of Congress. The two ruptures in the early 70s, brutal suppression of Left youth movement by Indira Gandhi's regime and a transformation of liberal nationalist politics as independently-minded leaders were replaced by sycophants, followed this historical tension. That nominal communists swept to power in 1977 in Bengal was no manifestation of the world revolution, but rather a reaction to the personal hegemony of Mrs Gandhi through Congress. In fact, the whole country (except some Southern states) voted in a similar way that year: Only in Bengal, it resulted in a stable administration.
The other important point to remember is that this Communist administration was quite weak at the core. Bengal's industries, and particularly its mainstay, Jute, suffered from the disappearance of its supply chain after the partition of Bengal. This led to the gradual transfer of ownership of manufacturing industries from the Anglo-Indian (or English) owners to Marwari traders and money-lenders, who looked to financially exploit the assets, often by asset-stripping, selling out real estates and raising loans in the business and going bankrupt thereafter. Increasingly marginalised, the agitational mood of the urban working-class politics only signified its weakness, not strength. Instead, the Communist Party, led mostly by the urban intelligentsia, had to draw its support mostly from landless peasants, who were impatient with Congress' unkept promises of land reform. This had to be a key plank of the Communist politics in West Bengal, often overcompensating the rural communities at the expense of urban working classes and professional workers.
This, in a way, is the origin of the negative narrative. Rajiv Gandhi, who called Calcutta a 'dead city' in the 80s, was merely expressing his frustration at the parallel developmental narrative that Bengal administration, driven by land reform and expansion of public health and education systems, rolled out. That label was lapped up by those who lost out in these land reforms and whose families featured prominently among the Bengali diaspora abroad. As Bengal's economics and politics diverged from India's overall direction, the two interests - of Indian policy-makers and disaffected gentlemen who lost land-holdings - converged in promoting a narrative of decline.
An understanding of this dynamic is needed to reverse the impact of the narrative. I shall argue that there is little to be gained by trying to follow the footsteps of the states like Karnataka or Gujrat. Structurally, the economic and political structures of Bengal have evolved differently from those states. A copycat approach, as was adopted since 2004, only accentuated the narrative of decline and neglected the states' unique strengths. Its relatively better educational and healthcare infrastructure never even featured in the conversation, while the difficulties of industrial land-acquisition in a state with empowered peasantry made all the headlines. Desperate attempts to woo IT services jobs produced limited results, because winning business away from successful clusters (such as Bangalore) is always too difficult and those businesses themselves are in the middle of a contraction (as it faces the full impact of process automation); but the fact that there are many talented Bengali engineers and entrepreneurs powering these companies have gone completely unremarked.
A new narrative is, therefore, needed, and this needs to be crafted playing on the strengths of Bengal. This should be an ongoing conversation but to conclude this post, I would like to offer some ideas.
First, Bengal must confront its narrative of decline. Part of the problem has already been recognised: That it must stem its young talent from leaving for better prospects elsewhere. However, to treat the disease rather than its symptom, Bengal has to become an open and inviting place in the first place. It could indeed take the lead in engaging with its diaspora. Indeed, much of the diaspora actively promotes the decline narrative and are still bitter from the loss of land and privileges earlier. However, many diaspora bengalis are still very deeply connected and a genuine outreach would indeed engage many of them. But, keeping with Bengal's culture, this needs to be more than a conversation about investment, the kind of 'I want your money but not your opinion' mode that rest of India uses to engage with its diaspora. The overseas Bengalis are no more disaffected or persecutated than the overseas Chinese and a Deng Xiao Ping approach - learn from brethern overseas - is needed. Instead of 'Bengal is open for business', this should be 'Bengal is open for ideas'; the closed mind of India, where a narrow elite cornered all the privileges and are now driving blindly to a collective disaster, needs to be prised open, and Bengal can, and should, show the way.
Second, as the 'liberalised' development model of the Indian economy, driven by growth in service industries and urban middle classes, is facing existential challenges (from its internal inconsistencies - weakness in internal demand - and global headwinds), the alternative path that Bengal has taken should not appear like a baggage at all. The job of balancing this with urban prosperity remains, but the story of stronger rural economy - and therefore demand - needs to be told. This has been the reason, rather than violence, why the Communists ruled for 34 years, and it sustained the current government as it took up the mantle. It's best to recognise that instead of the industries which take up a lot of land but benefits local economy very little, like car manufacturing plants, it's the industries and businesses which sit comfortably with this model, such as food processing and agricultural innovations, those that enhance the value chain, will fit the state better. But this story needs to be told.
Third, for West Bengal, it's best to work together with Bangladesh, which has found its own 'economic' feet lately, and promote a connected bengal story. The two Bengals have similar challenges - Bangladesh also must find urban prosperity and urban sustainability - and together they offer a 300 million people strong market. This may take many forms - encouragement for cross-investment, special treatment of Bengalis in terms of work and study visas (an utopian idea at this time, as Delhi wants to promote division rather than coordination), coordination with both diasporas rather than being religiously divided - but before anything else, a narrative of secular commonality must take precedence. One must understand that this is not about competing with the Bengal-in-India story, but rather a Bengal-as-a-connected-civilisation story.
I am not naive about how difficult all of this is: The unimaginative politics of a developing nation is driven by passions, rather than ideas. But, then, narratives may be the next fad in town - and this is why a book by a Nobel laureate helps a lot. And, at that point - it's only a hope - someone in a position of influence may be persuaded to look beyond the usual 'Bengali genius' story: A question may be posed how to gain economic momentum and political leadership again. There, when the future, rather than the past, becomes Bengal's narrative, it will regain the initiative. This may indeed never happen, but this fragile optimism is what makes me a Bengali, after all.
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