Harsh Mander is a human rights worker, writer, columnist, scholar and teacher, works with

survivors of mass violence, hunger, homeless persons and street children. His books include
'Unheard Voices: Stories of Forgotten Lives', 'Fear and Forgiveness: The Aftermath of
Massacre', 'Fractured Freedom: Chronicles from India's Margins', 'Ash in the Belly: India's
Unfinished Battle against Hunger' and 'Looking Away: Inequality, Prejudice and Indifference in
New India'.

India's Poverty is Social Violence

There are many exiles faced by India's poor. They are exiled from the consciences of the
people of privilege and wealth. They are exiled from our cinema, television and newspapers.
They are exiled from the priorities of public expenditure and governments. They are exiled from
debates in Parliament and offices. They are exiled from institutions that could offer them some
basic security through education, healthcare and social security. And they are exiled from the
hope that their children or their grandchildren will one day escape a life of backbreaking toil and
social humiliation.

This last is the most profound of their exiles. In my new book 'Looking Away: Inequality,
Prejudice and Indifference in New India' I speak of these many exiles, but most of all, the exile
from hope.

P. Chidambaram, former Finance Minister, in an interview with the BBC in 2007, declared his
confidence that by 2040, India would wipe out poverty. What is noteworthy, firstly, is that the
poverty of which he promised erasure is closer to near starvation-level ultra-poverty, not
poverty as defined by the global norm of $2 income per day; secondly, he did not regard this
timetable problematic in any way. The deputy chairperson of India's Planning Commission
during the United Progressive Alliance (UPA) years, Montek Singh Ahluwalia, also went on
record with the same time frame. Anthropologist Akhil Gupta observes: 'By the time the Indian
government plans to wipe out poverty, very few of the poorest people living today will still be
alive. Such a statement makes sense... only against a backdrop in which high rates of poverty
are taken as normal.'

Gupta illustrates this normalisation of poverty by posing a vexing question: why does a state
whose legitimacy should derive from bettering the lives of the poor, continue to allow between
250 and 427 million people to live in desperate poverty, and deny them food, shelter, clean
water, sanitation and healthcare? He suggests that poverty is a form of 'structural violence'; that
there is little substantive difference between genocide and simply allowing poor people to die.
He calculates conservatively that about 2 million people have died of malnutrition and
preventable diseases every year in post-colonial India. The total number of people who died in
India's last major famine, the Great Bengal Famine of 1943, was three million. The annual
number of India's hidden, avoidable deaths dwarfs the annual loss of human life resulting from
all natural disasters globally, estimated at about 300,000.
The reason why the preventable deaths of these many millions year after year is not
'considered exceptional, a tragedy and a disgrace', according to Gupta, is the normalization of
poverty.

Indeed, for most people in India, just as there are hills, valleys, deserts, rivers and forests in this
teeming, ancient country, there is also poverty. There has been poverty in the past, it exists in
the present, and it will endure long into the foreseeable future. The social acceptability of letting
people stay poor, therefore, is not considered problematic.

Not providing food, clothing, shelter and healthcare to people in dire need is not seen as killing
them. This social violence is rendered invisible so that poverty does not constitute a scandal,
and the preventable deaths of masses of the poor do not provoke soul-searching or public
outrage.

I argue also that the challenges of inequality in India are compounded by the powerful revival of
the politics of difference, a new conservatism, and the evidence of active social and state
hostility towards minority groups and communities, reflected in grossly under-provisioned
Muslim ghettoes, religious profiling in both terror-related and other crimes, and the extra-judicial
killings of tribals, Muslims and Dalits. There is a growing appeal among the middle classes of
right-wing politics that often combines market fundamentalism with hostility towards minorities
and India's neighbours. In the general elections of 2014, this mood was best represented by
Narendra Modi, who fought a blistering electoral battle deploying 'shock and awe' tactics
against his adversaries-including liberals, socialists, 'secularists' and minorities - whom he
felled decisively to become India's sixteenth prime minister.

Of all the major political parties seeking votes in the 2014 elections, the BJP, through its prime
ministerial candidate, offered the Indian electorate perhaps the most cohesive, if troubling,
vision for the country. Modi offered a combination of three fundamentalisms. First, a market
orthodoxy, which guarantees unprecedented levels of subsidies to big business in the form of
long tax holidays, soft loans, cheap land and electricity, at the expense of public expenditure on
education, health, social protection and public infrastructure. Next was communal
fundamentalism, constituting barely -disguised hostility towards religious minorities, especially
Muslims, which was the main rallying agenda on the ground in electorally-crucial states like
Uttar Pradesh and Bihar. And the third was a militarist fundamentalism, envisioning an
aggressive foreign policy, including war with Pakistan.

Modi's offer to the voters was a kind of 'buy one, get two free' political bargain, but one in which
you cannot embrace one of the fundamentalisms without also accepting the others. The
attraction to the middle classes to this kind of politics, I argue in my book, is because they are
raised in three normative systems which justify inequality. The first of these is the caste system,
which validates a social order in which a person's birth legitimately determines her life chances,
her access to education and the livelihoods open to her.
The second is the British class system, in which people with old wealth, combined with
exclusive education, acquire 'refined' lifestyles that mark them out from the 'boorish lower
classes' and the 'upstart new rich'. And the last of these is the more recently acquired
celebration of conspicuous consumption associated with the collapse of the socialist world and
the rise of neo-liberal, market-led growth. The dominant value is that 'greed is good'- it is time to
liberate oneself from the 'socialist guilt' of the past, to abandon old-fashioned values of thrift,
restraint and modesty, and instead to make - or inherit - money and spend on oneself with no
restraints or inhibitions.

This is the new India which celebrates when India's richest man, Mukesh Ambani, follows up
his gift of a 60-million-dollar jet-plane to his wife with the most expensive residence in the world,
a twenty seven-storey house for a family of four, built at an estimated cost of one billion dollars,
which boasts three helipads, four storeys of hanging gardens, and a staff of 600 domestic
helpers. This, in a city where at least two hundred thousand people sleep on pavements, and
more than 40 per cent of the population lives in shanties.

In the words of film-maker Saeed Mirza, "Large sections of the formerly 'stoic' middle class got
seduced. It got seduced by all the goodies on display: food, clothes, cars, electronic gadgets,
toiletries, beverages, shoes and everything else on display in those incredibly inviting store
windows and shelves. It began to party.

It was almost as if after years and years of abstinence this solid bloc of sobriety had gone on a
binge. What nobody realized was that the centre of the nation had caved in. There was nothing
to temper the onslaught of excess. All this was happening in a country where over seventy per
cent of citizens lived on less than two dollars a day."

This explains also why there is resistance among people of relative privilege to legislation which
aims to make access to food, shelter, education, work and healthcare the fundamental right of
every Indian citizen; or to efforts to implement policies of affirmative action for historically -
disadvantaged groups. There is, in reality, a hierarchy of citizenship under the thin veneer of
equal citizenship guaranteed by the Indian Constitution. Full citizenship is enjoyed only by the
middle and upper classes-and even within these groups, it is enjoyed much more fully by urban,
upper-caste, Hindu, non-tribal, able-bodied, heterosexual men. Today, the neo-middle classes
and the aspirational classes are knocking on the doors of these dominant groups, hoping not to
change the status quo, but to share its privilege.

25 years after liberalisation

Twenty five years ago, on July 24, 1991, Finance Minister Dr Manmohan Singh rose in
Parliament to present a budget speech that was to alter the destinies of India and its people in
fundamental ways. He spoke in his characteristically gentle, low-key and self-effacing manner
disguising a steely resolve. His words were memorable even if debatable.
Quoting Victor Hugo "no power on earth can stop an idea whose time has come" he
declared that "the emergence of India as a major economic power in the world happens to be
one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall
prevail. We shall overcome."

The legacy of that moment remains highly contested. A quarter-century later, India is indeed a
major economic power, altered in fundamental ways from the country that Singh helped steer in
new directions. With a GDP of $2 trillion, it has edged itself among the ten largest economies of
the world. But in what ways have the economic reforms launched with this historic budget
speech contributed to changing the lives of Indias dispossessed millions? As we look back, it is
important today to draw up a careful balance sheet of what the promises were and what was
actually accomplished after India changed course so fundamentally 25 years ago.

The "structural reforms" that Singh announced, and which every successive Union government
with varying urgency and priority has since advanced, made way for global private enterprise to
enter and increasingly occupy the commanding heights of the Indian economy.

Until then, these were dominated by the state. The reforms package opened the economy to
global competition; it stressed on fiscal consolidation and discipline for macro-economic
stability; it liberalised trade and capital markets; it dismantled the notorious licence-permit raj
that stymied local enterprise by rent-seeking; and it facilitated and expanded competitive private
provisioning of public goods like health, education, public transport and infrastructure.

Three promises

There were three main promises of economic reforms. The first was that these would unfetter
the economy and spur economic growth and development. The second was that growth would
crank up manifold the creation of wealth and jobs, and through this would erase poverty,
hunger and want. And the third was that reforms would significantly reduce corruption and rent-
seeking by ending licensing and bureaucratic regulation of private enterprise.

Let us take each of these promises, and assess with the hindsight of a quarter-century what
indeed was accomplished and what were the intended and unintended consequences of these
reforms.

There is no doubt that reforms did hasten economic growth to rates that were double, and even
at times three times the pace of growth that the country had settled into until then in four
decades since Indias freedom. Twenty five years later, India is the fastest growing economy in
the world. It has also created unprecedented levels of wealth (however unequally distributed),
so that today India is home to the third-largest population of dollar billionaires in the world. The
ranks of middle-class Indians have grown, as they have transitioned from lives of customary
austerity to substantial improvements in their material well-being, from habitual thrift to
unrestrained consumption.
This massive enlargement of wealth has also meant that governments in India at all levels
Union, state and local have far greater resources in absolute terms available to them for
public investment and spending than they did in the past (although because of official
reluctance to expand Indias direct tax base significantly, public spending as a share of gross
domestic product remains one of the lowest in India among comparable countries).

This is however where I feel that the good news of economic reforms ends. Reforms did
stimulate high economic growth and yield greater wealth creation. But this wealth was very
unequally distributed, raising sharply levels of economic inequality in a country that was already
historically profoundly unequal. Levels of absolute poverty have no doubt declined, as have
malnourishment and hunger. But the question to ponder is whether these have declined fast
enough. Even neighbouring Bangladesh with half Indias per capita income has been able to
eliminate want and malnourishment far more successfully than India.

Wage growth

In India, from two resident billionaires with an income of $3.2 billion in the mid-1990s, the
number grew to 46, with a combined wealth of $ 176 billion in 2012. Their share of GDP rose
from 1% to 10%. A recent report by Oxfam titled Even It Up observes that income concentration
at the top fell in the first three decades after Independence, but since then for the top 0.01%,
real wages grew annually at 11%. By contrast, the rise in real household expenditure for the
rest of the population rose by only 1.5%.

In agriculture, growth in real wages was 5% in the 1980s, but fell to 2% in the '90s, and virtually
zero in the 2000s. If judged by the median developing-country poverty line of $2 a day on
purchasing power parity, more than 80% rural and just below 70% of India's urban inhabitants
continue to be impoverished.

As Oxfam Director Byanyima observes, "A child born to a rich family, even in the poorest
countries, will go to the best school and will receive the highest quality care if they are sick. At
the same time, poor families will see their children taken away from them, struck down by easily
preventable diseases because they do not have the money to pay for treatment.

The unfairness of this unequal world is indeed enhanced because the majority of richest
persons are born into their wealth. Children and grandchildren of the rich will largely replace
their parents and grandparents in the steep economic ladder, as much as children and
grandchildren of the poor will remain impoverished, regardless of their potential and hard work.

In India, the burdens of unequal birth weigh heavily on those born into disadvantaged castes,
gender, religion and tribes. In the countryside, poverty rates are 14% higher for Adivasis and 9
percent for Dalits, compared to non-scheduled groups. In urban areas likewise, the poverty of
Dalits and Muslims is 14% higher than the others.
Looking away

I worry not just about the rapid pace of growing inequality. Even more worrying is the
indifference, the absence of outrage, among people of privilege about the monumental levels of
preventable suffering that surrounds them.

As I argue in my recent book Looking Away: Inequality, Prejudice and Indifference in New
India, historical ideas of caste and class that justify inequality have been topped up in neo-
liberal times with the belief that greed is good. This has resulted in a particularly uncaring
middle-class and the exile of the poor from their conscience and their consciousness.

The Oxfam report calculates that if even a tax of 1.5% was imposed on the wealth of all the
worlds billionaires, it could get every child into school and deliver health services in all the
poorest countries of the world, saving an estimated 23 million lives. It estimates that if India just
stops inequality from rising, it could end extreme poverty for 90 million people by 2019. If it
reduces inequality by 36%, it could eliminate extreme poverty.

One promise of reforms that has been most belied is that reforms and galloping growth would
unleash millions of jobs. If they actually did so, it is claimed by reform votaries, this would do
more than just lift people out of poverty: it would also make increasingly irrelevant the
withdrawal of the state from supplying basic public goods like health and education, because
people would be able to buy these competitively in the market.

However, the reality of what was accomplished in the years of high noon of economic growth in
India was certainly the accelerated but unequal expansion of wealth as observed but not
the expansion of decent work for Indias poor. On the contrary, we had seen the reverse: the
shrinking of decent work in the sunshine years of high growth.

As Coen Kompier establishes in the India Exclusion Report 2013-'14 undertaken by the Centre
for Equity Studies, very few jobs have been added, mostly of low quality, whereas employment
opportunities in public enterprises, the formal private sector, and agriculture actually
declined (my emphasis).

In the decade 1999-00 to 2009-'10, "while GDP growth accelerated to 7.52% per annum,
employment growth during this period was just 1.5%, below the long-term employment growth
of 2% per annum, over the four decades since 1972-'73. Only 2.7 million jobs were added in the
period from 2004-'10, compared to over 60 million during the previous five-year period."

Increasing informalisation

It is significant that employment in the organised sector actually fell after 1997, while that in the
unorganised sector rose. The 2009 report of the official National Commission for Enterprises in
the Unorganised Sector finds that the "vast majority of jobs created in recent years have been
in the informal sector, in the absence of a legal framework for labour protection and social
security. Out of every 100 workers, the report revealed, around 90% work in the informal
economy producing half of Indias economic output. This implies that out of a current total
workforce of around 475 million, around 400 million workers, considerably larger than the total
population of the USA, are employed with little job security or any formal entitlements to call
upon the protection of the labour law regime."

The third big promise of economic reforms that the dismantling of the proverbial license-
permit raj would help greatly reduce corruption and rent-seeking has also been belied
spectacularly. Far from reducing corruption, official malfeasance has risen incrementally.

In the '80s, the Bofors scandal alleging a kickback of around Rs 80 crores for the purchase of
Swedish weapons had fatally shaken the Union government of the time led by Rajiv Gandhi.
Today we routinely observe crony capitalism involving losses to the public exchequer
sometimes of amounts that have so many zeroes that it is confusing to even count.

The culture of public life has changed dramatically. For the first half-century after
Independence, accepted norms for probity in public life required that public officials kept a
careful public distance from private business. Today they are so closely bound together by the
hip that it is routine for people in high office to benefit from and share the opulent life-styles of
the super-rich, and they pass this off as contributions to nation-building.

One particularly tragic outcome of this contemporary era of crony capitalism is the highly
accelerated dispossession, actively facilitated by state authorities, of Indias most impoverished
tribal communities, by big industry hungry for the coal and mineral reserves over which the
disinge forested habitations lie.

The price of crony capitalism

Another outcome of the new age of crony capitalism is very high public subsidies for big
business, reflected for instance in the over Rs five lakh crore of revenues foregone to industry
in every budget, and this at the expense of adequate public funding of health care, education,
water, sanitation and social protection, and the farm sector. This has led development
economist Jean Dreze to describe India as a world champion of social under-spending.

In particular, out-of-pocket expenditure on health care is twice the levels of public spending, a
disgraceful record unmatched by most countries. Our public schools are shamefully under-
resourced with trained and motivated teachers and basic infrastructure, and only seven per
cent people are still able to complete their college graduation. Nine in ten persons are in
informal employment, and they are deprived of any or adequate pensions in their old age.

Many believe that the retreat of the Indian state away from the principle of primary public
responsibility for health, education and social protection of its disadvantaged populations, and
from redistributive taxation since the 1990s, was part of the package of economic reforms
driven by the Washington Consensus of the World Bank and the International Monetary Fund.
In 2014, the president of the World Bank, Jim Yong Kim, admitted that the assumption that
people in poor countries should pay for healthcare was wrong: "Theres now just overwhelming
evidence that those user fees actually worsened health outcomes. So did the bank get it wrong
before? Yeah. I think the bank was ideological."

In any honest assessment of economic reforms in India, it is imperative that we admit that the
movement away from public provisioned health and education has been a mistake that has
resulted in enormous avoidable human suffering and loss for millions of our people. But there is
little evidence of such soul-searching.

Economy of exclusion

In a similar self-critical tone, Christine Lagarde, managing director of the IMF has said, "In far
too many countries, the benefits of growth are being enjoyed by far too few people. This is not a
recipe for stability and sustainability." She went on, "Let me be frank: in the past, economists
have underestimated the importance of inequality. They have focused on economic growth, on
the size of the pie rather than its distribution. Today, we are more keenly aware of the damage
done by inequality. Put simply, a severely skewed income distribution harms the pace and
sustainability of growth over the longer term. It leads to an economy of exclusion, and a
wasteland of discarded potential."

She compares rising inequality in the US and India. "In the US, inequality is back to where it
was before the Great Depression, and the richest 1% captured 95% of all income gains since
2009, while the bottom 90% got poorer. In India, the net worth of the billionaire community
increased twelvefold in 15 years, enough to eliminate absolute poverty in this country twice
over."

She argues that distribution of wealth matters and contrary to prevailing economic orthodoxy
until now, redistribution policies are not counterproductive for growth, "because if you increase
the income share of the poorest, it has a multiplying effect on growthbut this does not happen
if you do so with the richest."

A fair and sober assessment of the impact of 25 years of economic reforms in India therefore
requires on the one hand an acknowledgment of its contribution to unleash the potential of the
economy for growth and the creation of wealth.

But at the same time, it is both callous and disingenuous to ignore the evidence that growth by
itself is no guarantee of a better life for people of social and economic disadvantage, which
surely should be both its primary objective and the paramount yardstick for evaluation of its
success.
The unequal distribution of wealth, crony capitalism, low public investments in health,
education, social protection and infrastructure, and the chronic neglect of small-farm agriculture
continue to shackle millions into hunger, want, low-end uncertain employment, distress
footloose migration, damaged health and survival chances, and denial of quality education that
could harness young peoples full potential.

New orthodoxies

Twenty five years ago, when Dr Manmohan Singh spoke to the nation of an idea of which he
was convinced the time had come, he called for freeing ourselves from one set of orthodoxies.
But his prescriptions have had mixed results, many of its promises are unrealised, and millions
still live wretched lives of avoidable suffering with oppression and want.

In the long dark shadows of the glitter of economic reforms are the unequal distribution of
wealth, crony capitalism, low public investments in health, education, social protection and
infrastructure, and the chronic neglect of small-farm agriculture. These continue to hamper
many millions of young people, still trapped in Rohith Vemulas haunting description of the "fatal
accident" of their births.

The radical prescriptions of 1991 have become the powerful new orthodoxies of today, canons
which have conquered not just India but most of the world. New voices in many parts of the
world are speaking out against these orthodoxies. Today in India we need to summon even
much greater courage than 25 ago to liberate ourselves from these new dogmas.

Only then will we muster the political and moral will to change course once again, to recognise
that all people deserve decent work, health care, education and social protection; that markets
cannot assure them these; and that wealth is not development, unless it is shared.

But to change course, more than courage we need compassion.

What is the homo economicus? Homo economicus or "economic man" is the characterization of
man in some economic theories as a rational person who pursues wealth for his own self-
interest. The economic man is described as one who avoids unnecessary work by using
rational judgment. The assumption that all humans behave in this manner has been a
fundamental premise for many economic theories.

The history of the term dates back to the 19th century when J. S. Mill first proposed the
definition of homo economicus. He defined the economic actor as one "who inevitably does that
by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with
the smallest quantity of labor and physical self-denial with which they can be obtained."
The idea that man acts in his own self-interest often is attributed to other economists and
philosophers, like economists Adam Smith and David Ricardo, who considered man to be a
rational, self-interested economic agent, and Aristotle, who discussed man's self-interested
tendencies in his work Politics. But J.S. Mill is considered the first to have defined the economic
man completely.

The theory of the economic man dominated classical economic thought for many years until the
rise of formal criticism in the 20th century from economic anthropologists and neo-classical
economists. One of the most notable criticisms can be attributed to famed economist John
Maynard Keynes. He, along with several other economists, argued that humans do not behave
like the economic man. Instead, Keynes asserted that humans behave irrationally. He and his
fellows proposed that the economic man is not a realistic model of human behavior because
economic actors do not always act in their own self-interest and are not always fully informed
when making economic decisions.

Thus, Ludwig von Mises noted that the homo economicus model described behavior for only
one small type of human action, and failed to account for the behavior of consumers:

The much talked about homo economicus of the classical theory is the personification of the
principles of the businessman. The businessman wants to conduct every business with the
highest possible profit: he wants to buy as cheaply as possible and sell as dearly as possible.
By means of diligence and attention to business he strives to eliminate all sources of error so
that the results of his action are not prejudiced by ignorance, neglectfulness, mistakes, and the
like...

The classical scheme is not at all applicable to consumption or the consumer. It could in no way
comprehend the act of consumption or the consumer's expenditure of money. The principle of
buying on the cheapest market comes into question here only in so far as the choice is between
several possibilities, otherwise equal, of purchasing goods; but it cannot be understood, from
this point of view, why someone buys the better suit even though the cheaper one has the
same "objective" usefulness, or why more is generally spent than is necessary for the minimum
taken in the strictest sense of the term necessary for bare physical subsistence. If an
economics model tells us very little about consumer behavior, then its value is limited, to say
the least.

Mises further commented on homo economics in "Human Action" when he wrote: It was a
fundamental mistake; to interpret economics as the characterization of the behavior of an ideal
type, the homo economicus.

According to this doctrine traditional or orthodox economics does not deal with the behavior of
man as he really is and acts, but with a fictitious or hypothetical image. It pictures a being
driven exclusively by "economic" motives, i.e., solely by the intention of making the greatest
possible material or monetary profit.
Such a being does not have and never did a counterpart in reality; it is a phantom of a spurious
armchair philosophy. No man is exclusively motivated by the desire to become as rich as
possible; many are not at all influenced by this mean craving. It is vain to refer to such an
illusory homunculus in dealing with life and history.

As Mises notes, it is not true that all persons seek to become as wealthy as possible in
monetary terms, and profit takes many forms other than money. Nor is it true that all persons
seek the same goals in life. And, since persons have an uncountable number of diverse goals
for themselves, it is also therefore impossible to generalize about what is rational or irrational
for them. For some people, a life of aestheticism in a hermitage may be the most desirable, and
thus it is rational to pursue that lifestyle. For others, a life spent playing video games and
visiting shopping malls be the most desirable.

It is thus quite impossible to generalize and certainly impossible to create a model for an ideal
of human behavior.

There are two problems with this conception of homo economicus. Firstly, and rather obviously,
the idea that homo economicus represents a rational, self-serving individual is an overtly
simplistic and one-dimensional proposition. Are we seriously suggesting that every individual is
entirely rational? Are we honestly arguing that individuals are completely self-interested?

I doubt I am the only individual whose actions contradict the conception of homo economicus.
People spend money on things they dont need, drink themselves stupid at prices they cant
afford and perhaps worst of all, offer charitable donations and expect nothing in return.

The conception of homo economicus vastly underestimates the greater qualities of the
individual: kindness, generosity, solidarity, waywardness, stupidity and drunkenness. The great
mass of individuals, Im afraid, are neither self-serving nor even remotely rational.

The second problem with homo economicus is that even if one accepts that individuals are both
rational and self-interested, one could still question whether the free-market system is the best
economic model. Karl Marx, for example, would have surely argued that the economic actor is
self-interested, yet would have imagined a different system to cater to that self-interest. Would
Marx not argue that it is in the interest of all - or at least the vast majority - to destroy free
market principles? Would he not suggest that it would be rational to completely abandon
capitalism? Yet economists argue that the conception of homo economicus prompts us to
accept free market ideals.

The reality, however, is that even if we accept the foolish estimation of the economic man, it
wouldnt convince us to adopt a free market economy or any other system. Accepting the
obviously simplistic and erroneous conception of homo economicus actually achieves nothing.
We would still be left arguing about which economic system would profit from the actions of a
self-interested and rational individual.
Economists can be terribly one-dimensional. The worst among them believe that economic
reasoning can explain the universe. The best understand that economics is limited in its scope.
Homo economicus is one of those economic ideas that endeavour to explain everything. It
adopts a very rudimentary philosophical argument regarding human nature and attempts to
justify political and economic systems based on that argument. This idea in itself might lend
credence to the notion that individuals are self-serving - the economists in question are usually
ratifying their ideological beliefs based on this misguided concept - but it falls short in terms of
demonstrating individual rationality. Homo economicus is an entirely irrational conception and it
would ironically be both rational and self-serving if we ignored this overtly simplistic and utterly
nonsensical idea.

Although there have been many critics of the theory of homo economicus, the idea that
economic actors behave in their own self-interest remains a fundamental basis of economic
thought.

It is a clich that most people are self-interested. At least that is what an unsuspecting reader of
mainstream economic theory might conclude. The literature makes constant reference to
rational self-interest as the prime motivation of economic agents. Of course, there is also a
specialised literature on other possible motives, such as compassion and commitment. And
even in the mainstream literature, a discerning economist would point out that the crucial
assumption is not really that people are self-interested, but that they that have consistent
preferences, whatever these are not necessarily selfish. But most of the time, these
subtleties are ignored, and the assumption of rational self-interest is taken at face value. The
assumption is so pervasive that rationality and self-interest are often conflated.

As Nobel Laureate Robert Aumann puts it: The assumption of rationality- that people act in
their own best interests, given their information; underlies most of economic theory and indeed
of economics as a whole.

This self-interest assumption, read literally, has no theoretical or empirical support of any sort. It
is a kind of superstition. Anyone who has bothered to look around, or to read the worlds history
and literature, or even just to watch a few Bollywood films, would notice that people often act on
the basis of other-regarding motives love, kindness, solidarity, compassion, reciprocity,
patriotism, public-spiritedness, and more. Some even make great sacrifices for their friends,
families, community, or country.

Further, it is not always clear where self-interest ends and concern for others begins. Human
beings, by nature, are interested in each others lives. Whether an active schoolteacher, a
committed trade unionist, or passionate artists are acting out of self-interest may be hard to tell
not only for others but even for themselves. It is difficult to imagine what a totally selfish
person might look like (perhaps hard-core egoists dont have babies, so they are not around
anymore).
Even in the animal world, there are many instances of co-operative behaviour or even self-
sacrifice, as Peter Kropotkin pointed out long ago in his wonderful book Mutual Aid. From ants
to elephants, animals have learnt to behave in ways that further not only their own interest but
also that of other members of the species. Ants work hard to build common nests, migratory
birds fly in formation, elephants help the wounded examples are aplenty.

These instincts are not based on any sort of ethical reasoning they are the product of
biological evolution. Human beings, however, do not have to wait for long-run evolution to
develop habits of co-operation or public-spiritedness. Social norms can also change, more
rapidly, through ethical reasoning, public discussion, value education, institutional innovation,
and other means.

With this preamble, let me turn to a specific type of non-selfish motive: public-spiritedness,
broadly defined as a reasoned habit of consideration for the public interest. The use of the
term habit acknowledges the fact that we often act on the basis of habits of thought or
behaviour rather than case-by-case optimisation. For instance, many people are used to
standing in a queue at the bus stand or railway counter, without getting into a cost-benefit
analysis of the choice between joining or jumping the queue (based for instance on the length
of the queue, the cost of missing the bus, the risk of being beaten up for jumping the queue,
and so on).

Of course, we may be able to justify these habits if need be hence the term reasoned habit,
which also helps to distinguish public-spiritedness from the sort of instinctive co-operation
behaviour that can be found in animals.

The term public interest may or may not be well defined, depending on the situation. The
public interest of British citizens in Brexit is not clear it is a matter of judgement. But the public
interest of Indian and Pakistani citizens in avoiding nuclear war is reasonably clear. So is the
public interest of humanity in avoiding self-destruction through global warming. The term
public need not refer to the society at large depending on the contexts; it could mean a
smaller group such as a family or local community.

The importance of public-spiritedness in social life, and for human development, can be
conveyed with two simple examples. The first is punctuality. When we go to (say) a meeting,
there is a temptation to go a few minutes say five minutes late, to avoid the inconvenience
of waiting for others.

But then, others may also reason that way, so ten minutes may be safer. Extending the
argument further, we may end up going very late indeed, if we stick to this self-interested
reasoning. Formally, the situation has the basic structure of an escalation game. Game theory
tells us two important things about escalation games: first, things can go badly out of hand in
such situations, and second, many escalation games are such that there is no rational way to
play.
Both insights (already discussed in the section on War and Peace) are consistent with real-life
experience. Stories of trivial quarrels that got out of hand by escalation, sometimes ending with
a murder, are reported almost every day in the newspapers. Even the First World War, as
mentioned earlier, can be interpreted in those terms.

In these circumstances, it may be best (from a collective point of view) not to play the game at
all. That is what punctuality is about. In societies with punctual habits, people refrain from
embarking in this escalatory reasoning they simply turn up on time, as a matter of social norm
or habit of thought. For whatever reason, some societies have cultivated habits of punctuality,
others have not.

The contrast struck me a few years ago when I spent some time with a mixed team of Indian
and Japanese visitors. The Japanese were obsessively punctual, the Indians blissfully oblivious
of time. This is not to say that the Japanese are somehow less selfish than Indians, or that they
have more evolved ethics. Punctuality is just a habit of thought they have cultivated.

This may seem like a trivial example. Punctuality may or may not matter much for development.
R.K. Narayan, the celebrated writer, argued that it does not: Personally speaking, I feel, under
normal circumstances, most things can survive a little delay; In a country like ours, the
preoccupation is with eternity, and little measures of time are hardly ever noticed. It is,
however, not difficult to cite examples where a modicum of punctuality would make a big
difference. For instance, punctuality can greatly facilitate collective action. In some parts of rural
India, gramsabhas (village councils) have proved very difficult to convene because people have
no sense of time: many turn up hours late, and by the time the laggards arrive, the early birds
have lost patience and left the venue.

Turning to a more significant example, it is often forgotten that the entire edifice of electoral
democracy rests on a simple act of public-spiritedness: voting. Every voter knows that his or
her vote will not make any difference (except in the miraculous situation where there would be a
tie without it). Yet large proportions typically a majority of people do vote in democratic
countries. Many people even vote in difficult circumstances, trekking long distances or queuing
for hours in chilly weather. This is a telling example because many of the arguments that are
often invoked to explain co-operation within the self-interest paradigm (e.g. repetition of the
game, reputation effects, and so on) do not apply in this case in the framework of game
theory, this looks like a one-shot Prisoners Dilemma.

Even social norms are of little help: there is, typically, no social norm against abstention from
voting. Plausible interpretations of the situation must clearly go beyond self-interest. One of
them is that voting is a simple act of public-spiritedness.

As these examples illustrate, public-spiritedness does not always require self-sacrifice or deep
ethical thinking. Ethics, of course, can help: someone who considers it unethical to make other
people wait for no good reason is more likely to develop a habit of punctuality.
But often we act or can act in a public-spirited way as a matter of habit. Punctuality, for one,
is a habit that many people imbibe in the course of a healthy upbringing or social life. If called to
justify this habit, they may invoke ethical principles, but some may give other reasons, like I
hate being late.

Someone who acts out of habit may sound less than perfectly rational, because he or she
misses the opportunity to optimise (make the best of a situation) on a case by case basis.
This argument, however, is deceptive.

One of the main insights of game theory is that, in situations where peoples decisions are
interdependent, optimisation may not be well defined (this point has already been illustrated
with reference to escalation games). In these situations, it often helps to fall back on some sort
of rule of thumb or bounded rationality. A related escape route (proposed by Robert Aumann)
is rule rationality settling for a rule of behaviour that serves us well in general, even if it may
not be the best thing to do in every single case. There is, thus, nothing wrong in acting on the
basis of habits of thought.

All this may sound like hair-splitting, but I believe that it has an important bearing on the scope
for cultivating public-spiritedness in social life. If public-spiritedness required strong ethical
commitments, we might be sceptical of the possibility of it spreading beyond a minority of
principled individuals.

One branch of mainstream economics does depart in a fundamental way from the rational self-
interest paradigm behavioural economics. Much of that literature, however, does not really
shed the assumption of self-interest; rather, it explores psychological and other reasons why
people are not always able to pursue their self-interest in a rational manner for instance, for
lack of self-control. It is mainly in the literature on social preferences, often considered as a
field of behavioural economics that serious consideration is given to non-selfish motives.