Demonetisation And The Soured Milk Of Human Kindness

This is the third part of the five-part series on demonetisation.

Experiments that require stealth, speed and scale are conducted frequently in democracies burdened with sycophancy, sloth and sleaze. The outcome of the experiment is inconsequential in the eyes of the state; all what matters is that it is conducted. If it fails and you are voted out, know this that your successor will conduct an even bigger experiment that will fail even more spectacularly. And so you will return. We succeed not because we are good, but because the other is worse.

Demonetisation is one such experiment. But it is no ordinary experiment. What sets it apart is that it is a social experiment as much as it is economic. Economic experiments reveal our ideology, and for this reason they are largely cushioned from collective anger – the people voted for a socialist or a capitalist system, the people made a choice, the people will rue or rejoice. Social experiments, on the other hand, reveal something else; something inner, more visceral – our moral and philosophical fabric, our place on the evolution metric.

Demonetisation as an economic experiment might still succeed. The theory is simple, it is sound, and as this author had pointed out earlier, if conducted with stealth and speed – which it wasn’t – , if piloted in good faith – which it also wasn’t – demonetisation could have been a game-changer. Anyhow, half the good economists are for it, the other half against and so things can’t be all that bad. Keynes and Hayek traded punches till the clapper fell off the bell and we still don’t know who won. Economies collapse, economies rebound; rinse, repeat.

Demonetisation as a social experiment, however, is what should trouble us more, for it has revealed to us who we are and what we want. Ever since November 8, India began to speak, for itself and for Bharat. All those commentators, journalists, Twitter economists, economists on Twitter, columnists and editors who blindly supported the Demonetisation soon found themselves also supporting its catastrophic implementation. Day after day, week after week, they rationalised suffering using a lens of their own choice and thickness, and focused it where they wanted. They gladly bought in to the 50-day timeframe, the Prime Minister’s assurances, the explanations for the long queues, the dozens of constantly-changing guidelines from the Reserve Bank of India, the justifications for the cash crunch, the excuses for printing errors, the calls to go digital, the video clips showing content citizenry, the opinion polls announcing triumph. They equated successful landing with a horrible crash. They made a conscious choice – to believe in the lightness of suffering. And in doing so, they, along with the State, conformed to a misreading of the most unshakable axiom of life itself: the Theory of Evolution.

Capitalism is compatible with the Theory of Evolution, but to thrive unchecked, it partakes in a wrongful version of it, called Social Darwinism. A mottled concept that appropriated ‘Survival of the Fittest’ and ‘Evolutionary Adaptation’ for its nefarious means, Social Darwinism justifies selective application of Darwin’s theory to human societies. Only the fittest shall survive and inherit the earth. From wiping out entire human populations, to empire-building to colonialism, to plundering of continents to racism and eugenics, Social Darwinism predisposes in its proponents the rationalising of suffering and the concept of the greater good. In fact, it is the antithesis of Darwin’s theory, in that it vetoes the spread of human genetic diversity. Societies built on Social Darwinism can prosper briefly, but they cannot last – genetic mixing lies at the heart of adaptation and survival.

But there is something else that pumps blood in to this heart, an idea that Darwin himself was at pains to emphasise but one that advocates of Social Darwinism ignore cold-bloodedly: the idea of empathy.

Empathy stems in large measure from egalitarianism. Egalitarianism – not to be confused with Communism, which is incompatible with the Theory of Evolution except for a tiny subset and a sub-optimal predisposition of it called Quorum Sensing – is a natural consequence of human evolution. It reduces inequalities within hierarchical systems and creates conditions for empathy and morality within the boundaries of natural selection. Empathy forms as much the core of evolution as does ‘Survival of the Fittest’. It is a tragedy that Darwin is associated with the latter and not the former. Suffering and empathy were traits that intrigued him immensely. In his epochal The Descent of Man, Darwin talks of morality and sympathy as being intrinsic to the evolutionary process. It may come as a surprise to many, but Darwin’s views on sympathy (the word ‘empathy’ didn’t exist in his time) were based on those of Adam Smith who was of the view that a man might be greedy and selfish, but the happiness of others is necessary to him “though he derives nothing from it except the pleasure of seeing it”. But Darwin went further than Smith. “Ultimately,” he wrote, “our moral sense or conscience becomes a highly complex sentiment – originating in the social instincts, largely guided by the approbation of our fellow-men, ruled by reason, self-interest, and in later times by deep religious feelings, and confirmed by instruction and habit…We are impelled to relieve the sufferings of another, in order that our own painful feelings may be at the same time relieved.”

Darwin, though, missed one crucial fact, which is, that to be impelled to relieve the suffering of others, one must first see it.

The next 42 sentences are encased in a single paragraph. Skip it; skip the suffering.

Fifteen years ago, there were 5.3 bank branches per one lakh Indians in rural India. Today that figure stands at 7.8, an increase of just 2.5 per lakh. As a direct result of demonetisation, the informal credit system that to this day represents a vital part of rural and small-town economy has collapsed, along with micro-financing. There is no money to lend and none to repay. In Bahour, the rice bowl of Puducherry, thousands of farm and construction labourers have been rendered jobless. District central cooperative banks (DCCBs), Primary agricultural credit societies (PACS), and Urban cooperative banks (UCBs) – with the first two the lifeline of rural economy – are reeling from the demonetisation sucker punch. A hastily-assembled fact-finding government team has discovered a groundswell of acute rural distress. From Telangana to Tamil Nadu, there are reports of extensive loss of livelihood, severe cash crunch, disruption of the sowing season, job losses in the informal sectors, not to mention interminably long ATM queues. Two farmer unions, the All India Kisan Sabha (AIKS) and Bhartiya Kisan Union (BKU), confirm the acuteness and the sheer scale of the rural distress. Farmers have begun dumping tons of paddy and potatoes in front of Legislative Assembly buildings in protest. There exist two crore unregistered Micro, Small and Medium Enterprises (MSMEs) in rural India. Delhi has more ATMs than entire Rajasthan. The above two sentences are jarring and wouldn’t normally bear a correlation, but now they do because demonetisation has crippled small enterprises in rural and semi-urban India. There is no cash to pay labour, and no cash to buy produce. In Odisha, farmers walk all day to reach a bank and stand in line, only to be disappointed. Lack of cash has given way to bartering. With no new cash available, and business in a downward spiral, fisher folk in Tamil Nadu continue to use the demonetised currency. In one Adivasi village in Maharashtra, villagers have only rice to eat, no vegetables. The transport industry is in disarray. Eight per cent of its transactions, according to the Chairman of one Truckers Union, are cash-based. Trucks sit idle, the goods they carry perish, the losses mount. Rural towns have been badly hit given the migratory nature of their workforce. There is no money to pay the farmhands. Elsewhere, migrant workers from cities are heading back to their villages. Across tea estates, delivering wages to a million workers is proving to be a logistical nightmare. Factory workers are refusing to take their wages in the old currency, but with no new cash to pay them the options are limited. The handloom sector in Tamil Nadu, right up from production down to sales, has been left reeling. As many as 38 districts in the North East have as few as 10 functioning banks. Towns and villages across the length and breadth of India tell the same story, a story that can be summed up in two words: distress and suffering. In Manipur, printing of newspapers has stopped as distributors struggle with the cash crunch. Ludhiana, a garment industry centre, has reported a sharp dip in production. The situation in Bihar is calamitous. The state, with a population of the size of Philippines (103 million), has only 7000 bank branches and 6,600 ATMs. Of these ATMs 50 per cent do not work and nearly 40 per cent of those that do haven’t yet been recalibrated to take the new currency. The government has banned the use of old Rs 500 and Rs 1000 denominations in private hospitals. Thing is, only 11 per cent of Indian doctors work in government hospitals. Fifty eight per cent of rural India uses private healthcare services, this when 69 per cent of total Indian healthcare expenditure is private, ie out-of-pocket. Twenty-one days after the onset of demonetisation of Rs 14.17 lakh crore worth of currency, Rs 9.4 lakh crore or 65 per cent of illegal currency has been deposited. Only Rs 2.16 lakh crore worth of currency, or 15 per cent, has been withdrawn from banks, post-offices, and ATMs. Clearly, not only is there not enough legal currency to exchange illegal currency with. There aren’t enough number of places to make possible this exchange. India has a rural population of 833 million amounting to 207 million households – 76 per cent of them without a tap, 56 per cent of them without electricity, and 56 per cent without a toilet. To serve this population there exist on paper 38,380 ATMs of which functional ATMs are half that number; loaded ATMs even less. Scheduled commercial banks (SCBs) account for only 7.5 per cent of total rural credits with the majority relying on the informal line of credit.

Knowing this, knowing all this, the government went ahead with a timeframe of 50 days to implement its demonetisation plan. Not one week, not 10 days, but 50. Why restrict yourself to 50 days? Why not buffer for unforeseen contingencies? After all, when the back is against the wall to begin with, it does not matter how much further you shift the wall. Wherever the wall goes, the back follows. Let suffering enter the stationary phase like a bacterial colony; let people get accustomed to it so they develop resistance, become immune.

The Finance Minister Arun Jaitley seems to think this way. Hardships associated with demonetisation, he now says, will last for only one or two quarters. Fifty days have now become 90 to 180 days. But he is not to blame, no one ever is.

Suffering is elastic; one can stretch it without it ever reaching breaking point. It is so ingrained in the Indian psyche for both, the sufferer and the perpetrator, that it has been rationalised almost to perfection. The rationalising is on two counts – Social Darwinism, and an understanding of the Human condition that runs in our veins thus: “Whatever has happened has happened for the good, whatever is happening is happening for the good, and whatever will happen will happen for the good.”

Social Darwinism not only rejects the expression of empathy but also its biological necessity, refusing to believe there is a neurobiological basis to it, channelled as it is through what is called the Mirror Neuron System, driving kinship and prosocial behaviour, and ultimately survival, with the neurobehavioral mechanisms governing empathy highly conserved across animal species.

Cooperativity, a direct outcome of empathy, was understood earlier in the context of kin-selection theory, but not much else. Dramatic progress in molecular biology, our ability to sequence and gain information from entire genomes, knowledge of gut biomes, and development of laboratory-directed evolution techniques has led to a new understanding of cooperativity in the non-kin context. Reciprocity and mutualism are now established evolutionary concepts that explain non-kin cooperativity. Neurobiologists are of the view that empathy and cooperativity, because of their computational requirements, have led to enlargement of the brain over the course of evolution. This is true. In just 2.5 million years, human brain has tripled in size, with much of the new neural volume utilised for empathy, morality, cooperativity, and social cognition. Recent evidence from reciprocal altruism theory suggests that empathy has been intrinsic to species evolution and is phylogenetically ancient. As Dacher Keltner, Director of the Berkeley Social Interaction Laboratory and author of Born to be Good puts it, “Our mammalian and hominid evolution have crafted a species – us – with remarkable tendencies toward kindness, play, generosity, reverence and self-sacrifice, which are vital to the classic tasks of evolution – survival, gene replication and smooth functioning groups.” Landmark studies by Keltner and others show that compassion and empathy are associated with activation of the vagus nerve that is part of the parasympathetic autonomic nervous system. Indeed, the success of homo sapiens rests primarily with our capacity for empathy, says primatologist and evolutionary biologist Dr Frans de Waal, “We have thrived on the milk of human kindness.”

The milk of human kindness. What a beautiful phrase. But when the state and its supporters rejoice in apathy rather than empathy, the milk turns rancid, kindness evaporates. Wittingly or otherwise, the Indian state has indulged in Social Darwinism. It may well be that after the demonetisation catastrophe is over and things crawl back to normal, the state will lessen the suffering of the poor by announcing a flurry of new schemes or by simply depositing a chunk of new money in their bank accounts. It may well be that this action will make the poor forgive the state. Indian suffering anyhow is alleviated before elections are fought, not after they are won – through liquor, cash, sari, bags of rice, TV sets, or mixer-grinders. But the state must know that suffering occurs in quanta and that this particular quantum of suffering that it has adjudged to be massless will haunt it forever, unforgiving and without empathy.

The author can be contacted at anand.icgeb@gmail.com and on Twitter @ARangarajan1972