Abstract: 20th century economic theory is inadequate for solving the complex, multi-faceted problems of the 21stcentury—a poly-crisis necessitating new solutions to existential problems of climate change, runaway technologies, and breakdown of global governance, to be implemented all together, and in a hurry too. A new framework of ‘systems thinking’ with ‘systems acting’ is required: ‘systems thinking’ to see the problems as inter-connected within an integral whole; and ‘systems acting’ to evolve new institutions for collective action founded on collaboration, rather than competition, to improve the condition of the whole; and innovation and progress with ‘creative construction’ instead of ‘creative destruction’.
The essay is in three parts. Part 1 presents insights from a comprehensive examination of the process of rural transformation in India. The ‘rural’ lives closer to, and within Nature than the ‘urban’. It is not fully ‘industrialized’ and remains more ‘agricultural’. India has the largest rural population in the world today, with the largest number engaged in agriculture. Economists say this is the cause of the low ‘productivity’ of the Indian economy which can be improved only by getting more citizens out of rural areas and agriculture into cities, industries, and technology-driven services. However, cities, industries, and technology driven services are not providing enough good jobs with sufficient incomes and social security. A new economics is necessary to enable ‘in situ’ progress within the rural areas and in agriculture-allied activities.
Part 2 explains a systems approach for understanding and acting on the ‘poly-crises’ the world is facing now. It also analyses some key concepts with which a new economics should be evolved, which will improve and sustain the health of the whole system, not just grow the economy and the GDP.
Part 3 outlines a universal systems solution for improving the sustainability and development of local socio-environmental-economic systems, including India’s rural economy. The 17 UN Sustainable Development Goals, which encompass inter-related global environmental, social, and economic political problems. Their aim was to solve these problems by 2030. Forecasters estimate that, with the present pace of progress, the goals are unlikely to be achieved even by 2080. Albert Einstein (and others) have said, what is common sense, that one cannot solve systemic problems with the same thinking that has caused them. Top-down scientific solutions universally applied are not working well. Local systems solutions cooperatively implemented by communities is the only scientific way to solve the many, interconnected, global systemic problems.
Part One: RURAL TRANSFORMATION
Economic development progresses through distinct stages, according to theory. In the first stage, there are large shifts in population from rural areas to cities, and from agriculture to industry. In the second, post-industrial phase of economic growth, work in the cities moves from industry to services. Very few people remain in rural areas in this phase. This is how the economies of the industrially advanced countries of North America and Europe had grown in the 19th and 20th centuries, and therefore this has become the standard model of economic growth. The East Asian tiger economies appear to have followed this model mostly, and therefore the validity of this model has been reinforced.
According to this model, India’s economic growth has been slower than the East Asan ‘tiger economies’, and India has been unable to reach the per capita incomes achieved by them because India’s industrialization has been retarded, and also because infrastructure has been lacking in India’s cities, with too many Indian citizens stuck in agriculture to earn a living, thereby suppressing the ‘productivity’ of agriculture (defined as output per person employed) and also the productivity of the economy as a whole.
The failures of Indian cities and large industries to provide employment with adequate wages and decent living conditions became poignantly vivid during the Covid pandemic when millions of workers migrated back from cities to their villages for opportunities to earn and live. The additional numbers seeking employment in rural areas depressed improvements in agricultural productivity and added to the numbers of people employed in informal rural enterprises.
Another problem with the pattern of India’s economic growth, according to the standard growth model, is the very large ‘informal’ sector of the Indian economy. Therefore, economic policies have pushed for more ‘formal’ enterprises that will (or should) provide more productive, ‘formal’ employment, with good wages, sufficient social security, and decent living conditions too.
With the advent of economic planning after India’s independence and formation of its Planning Commission, industrial policies promoted building of large industrial establishments in ‘backward’ districts to provide employment there. They provided some employment, though much of it required higher skilled workers and professional managers who had to be imported from other states. The numbers of local persons employed in these large, capital-intensive enterprises generally exceeded the numbers of local persons displaced. Though the large-scale, formal enterprises added to the state GDP, their contribution to the welfare of their states’ poorest citizens was inadequate. Rural areas stayed backward, and most people remained engaged in informal, smaller scale enterprises that employ more people per unit of capital invested in agriculture, industry, and services.
Persistent ‘backwardness’ of India’s rural areas, where most of India’s population continues to live and work, has compelled governments at the national and state levels to proactively assist the economies of rural areas. Many schemes are directed to build physical infrastructure in rural areas—roads, electricity supply, schools, and more lately sanitation, etc. Others to build the requisite financial infrastructure to connect the rural, informal economy with the formal financial economy—rural banks, micro-lending, etc. And others to build requisite enterprise structures to enable informal and small enterprises to aggregate their produce and connect with wider markets—cooperative enterprises, contract farming, producer companies, self-help groups for women workers and entrepreneurs, etc.
Rural and agricultural economies are embedded in the land. Land provides incomes, and ownership of land provides security to families and lenders of money to them. Reform of land ownership is a critical driver for the improvement of incomes and reducing wealth (and power) inequality in rural areas. Rural areas are locked into historical patterns of social relationships, and patterns of work and earning distribution, related to the ownership of land. Thus, caste systems, associated with the work that different classes of humans are compelled to do for earning incomes, remain deeply embedded in rural areas.
Rural development involves not only economic development: it is a societal transformation process too, which must navigate through entrenched systems of social and political power. Transformation of the rural economy, for increasing productivity and incomes equitably, is a social reform process too. Cognizant of this, many government programs give preference to the most marginalized communities. And lately, preferential assistance to women.
The rural transformation process involves economic and social sector changes, occupational and consumption changes, as well as inter-and intra-community relations and their dynamics. Considering the numbers of Indian citizens dependent on agriculture and who live in rural areas, it is worthwhile to examine how well rural transformation has worked so far across Indian states, and how much multiple policies and schemes over the past three decades have contributed to increase economic growth, productivity, incomes and equity in rural areas. This is the subject of the July-September issue (Vol.80 No.3) of the Indian Journal of Agriculture Economics. The essays and case studies in this review are founded on extensive data analysis.
I will apply the insights presented in this comprehensive review and the questions it raises to re-examine current ideologies of economics driving policies for boosting economic growth.
The review is organized along three themes:
1. Rural Transformation and Inclusion.
This section examines the pattern of inclusion in the benefits of economic growth across the country by various policies and schemes. This comprehensive survey reveals that that the schemes are not aligned sufficiently amongst themselves, and therefore large amounts of financial resources and financial effort expended in them have not produced the desired systemic transformation adequately.
Better integration of schemes at local levels to fit local contexts can produce
outcomes faster and avoid unnecessary financial and administrative inputs.
2. Reimagining Commons and Governance: Pathways to Institutional Innovation.
This section examines the structural reasons why coordination at the local community level, though desired, does not happen. And why, whenever it does happen, as with the Kudumbashree process in Kerala, it produces the desired systemic changes. The keys are shifts in power in the process of planning and implementing change, from the top towards the bottom to local communities, and the leadership roles of women in their communities.
This section also highlights the continuing challenges, despite national legislations for empowering them, of forest dwellers and pastural communities to gain more control of their natural environment on which they depend for their livelihoods. These empowering legislations run counter to other long-standing legislations for protection of forests and animal species from human encroachment. The two legislative frameworks operate on opposing principles. In one, experts in conservation and environmental sciences know best how to protect nature; in the other the people who live with nature and depend directly on it for their lives would know better how to nurture the system of which they are a living part.
3. WTO, Economic Growth and Environmental Sustainability.
This section reveals the extent of the hypocrisy of the WTO which is supposed to be managing a global trade regime which is fair for all, by analysing global trade rules regarding the import and export of agriculture products. Agriculture is the backbone of food security and rural livelihoods for all developing countries, and it is a key driver for their economic growth until their populations can transition out of agriculture into industry and services. India is in this transition.
The already developed, industrially and technologically advanced countries should not be relying on agriculture any longer. Nor should they have a need to protect their few remaining farmers. But they do, while insisting that developing countries open their markets to imports of food (cereals, dairy, fruits) from them. The European Union imposes a135 per cent import duty on dairy and fruits; the US 188 per cent on cereals and dairy; Japan 457 per cent on rice; Canada 570 per cent on dairy; and Switzerland, the home of the WTO, imposes 857 per cent on fruits, 888 per cent on dairy, and 962 per cent on meats! Even these barriers seem insufficient to protect these countries’ agriculture sectors. They are now raising non-tariff barriers against agricultural imports from developing countries to protect their natural environments, they say. Their restrictions on imports from developing countries are sought to be justified to protect the global environment for everyone, including citizens of developing countries.
The core of this worldview is, ‘we’, the intellectually and technologically advanced, and therefore richer countries, know better than you how to manage complex problems. The same arrogance of the ‘better educated’ wealthy elite runs through developing countries too. The knowledge of ‘upper’ classes is presumed to be always superior: they know better than the ‘backward’ classes and people in ‘backward’ districts on how their local economies should be managed and their environment governed.
Definitions of what are rural or urban places, and what are purely agricultural or agriculture-related activities are not precise. Broadly estimated, 910 million live in India’s rural areas; 500 million in China; and 55 million in the US. 226 million are employed in agriculture in India; 184 million in China; and only 2.3 million in the US. India is being left behind in the development race, economists say, because India has too many people living in rural areas engaged in agriculture. They want to move more Indians out of rural areas and agriculture and from informal enterprises into urban areas, industry and services, and into formal enterprises. However, formal industries, and cities and services within them cannot provide employment with adequate incomes and social security for the masses who need it when they migrate out of rural areas and agriculture.
Present models of economic growth, founded on the histories of economic progress of Western countries in another era of technology, cannot provide good solutions for India’s economic progress in the 21st century. India needs a new economics for in situ development of its rural areas, to provide more decent employment with adequate social security, which causes less harm to the natural environment than prevalent industrial models.
Part Two of this essay explains changes in the paradigms of economics and systems governance required for sustainable and equitable progress.
Part Two: A SYSTEMS VIEW OF THE ECONOMY AND A NEW ECONOMICS
Complex, Self-Adaptive Systems
A nation is a complex, self-adaptive system composed of three complex, self-adaptive systems: a complex self-adaptive and evolving environmental system, a complex self-adaptive social system, and a complex evolving economic system. None of these complex sub-systems exists in isolation of the others. They depend on each other and co-evolve.
Complex, self-adaptive systems have fractal structures: the same structure repeats at several levels of scale within them. Local systems within nations have the same structure as national systems: they too are composed of the same three co-evolving sub-systems. The global system too, has the same basic structure as national and local systems, composed of inter-acting environmental, social, and economic sub-systems. Therefore, the architecture of the system is the same at all levels, and the same principles of governance apply at all levels. The local is the global and the global is the local.
Exploitation of Nature and Society for Economic Growth
The structure of the entire system and interdependencies amongst its parts cannot be seen only through an economics lens. For an economist, the other two sub-systems are ‘externalities’ for the economy. They provide resources for the economy, to be exploited efficiently for increasing the output of the economy.
For an economist, or a businessperson, the value of a forest lies in the economically useful timber that can extracted from it. Other flora and fauna around the trees are useless and they should be cleared to make more room to access and grow more timber producing trees. The Earth also provides the economy with energy stored as fossil fuels, the extraction and use of which enables higher productivity of theeconomy in terms of economic output produced per unit of human labour.
The valuable resources for the economy that human society provides it are the physical and mental energies of human beings, in the forms of human labour and human intelligence employed in economic enterprises. These resources are extracted out of human society and deployed in formal enterprises that can use these resources more efficiently.
Adam Smith presented his model of a pin factory to demonstrate how the work necessary to increase the output of a factory could be increased most efficiently by humans performing simple, repetitive tasks. Fredrik Taylor, the father of ‘time motion’ studies and ‘industrial engineering’, and Henry Ford, who transformed the auto industry by applying these techniques on scale, translated Smith’s ideas into practice in large, formal, factories. Ford complained, however, that when he wanted only a pair of hands, he got a whole human being with emotions and demands for fairness and justice. He would rather have his workers leave such human needs outside his factories when they came to work.
Mechanisation and automation with new technologies have met Ford’s needs. Modern factories need fewer humans to work. They are more ‘productive’ in terms of output per unit of human labour, though less productive in terms of output per unit of other forms of energy they use to replace human labour. Artificial intelligence is now enabling the replacement of human intelligence in economic enterprises. 21stcentury technological advances are making human beings redundant for the economy all round, except as consumers of what economic enterprises produce. The problem is that citizens must earn money somewhere else to pay for what they want to buy from these highly productive enterprises. When the enterprises themselves don’t need them, who will provide them with employment?
The solution according to some economists is a universal basic income provided by the state. The state needs financial resources for this. However, it is forbidden from taxing owners and investors in enterprises because this will reduce their incentive to invest more. This is the fundamental flaw in the design of a capitalist economy in which government is considered an unproductive institution whose size must be reduced; and in which the ‘ease of doing business’, which investors and their economic enterprises want, always trumps the needs of common citizens for their ‘ease of living and work and earn’.
Concepts of business entrepreneurship developed in the formal financial sector are being extended into rural areas too, also into agricultural enterprises. There too challenges are coming up of connecting the private with the public, and enterprises embedded in the stock market with the society and environment around them.
The Architecture of Governance Institutions
Four fundamental tensions in the architecture of governance institutions are:
1. The conflict between property rights and human rights
2. Private or public property
3. Valuation of life and work
4. Forms of institutions
1. Property Rights and Human Rights
When the Soviet Union collapsed in 1991, political scientist Francis Fukuyama prematurely declared the ‘end of history’. He believed that capitalism and democracy—the Washington Consensus—had finally prevailed over socialism and totalitarianism.
History has returned. Demands are increasing from the Left of the ideological spectrum for a larger role for governments in the provision of public services and social security. Others on the Left are speaking up louder than ever for protection of the natural environment. Meanwhile the Right advocates for lower taxes, less regulation, and more freedom for capital to roam the world.
The fundamental conflict between the core principles of capitalism and democracy—i.e. between the rights of owners of capital on one hand, and the rights of all humans on the other—continues. It is a conflict between political conservatives and political progressives. Between conservatives, who want to retain their power to fix the rules of the game from which they have benefitted, and progressives who want to change the rules for the benefit of those left behind.
Democracy and capitalism are founded on different conceptions of fundamental rights. Capitalism’s foundation is property rights. Democracy’s is human rights. Capitalist institutions run on the principle that whosoever owns something has the right to use it as he wishes, and whoever owns more of a shared resource must have a greater say in how that resource is used. Therefore, whoever owns more shares in a corporation has a larger vote than those who own fewer shares.
On the other hand, ownership of property does not matter while assigning voting rights in democratic institutions. Because, in a democracy, every living person, whether she has a billion dollars of wealth, or no dollars at all, has an equal vote in the governance of the collective human enterprise. The clash between capitalism and democracy is a clash of fundamental principles for good governance of societies. When appliances designed to run on AC power are plugged into sockets providing DC power, there will be blow-outs. Similarly, when institutions of governance designed to run on fundamentally different principles are plugged into each other something will blow up.
Fundamental contradictions between the principles of capitalism and democracy are causing violent conflicts amongst nations and within nations. To create an equitable, sustainable, and more harmonious world in the 21st century, new institutions of democracy and capitalism must evolve together.
2. Private Property or Public Property
The expression “possession is nine-tenths of the law” is a very old legal proverb. The protection of property rights has been a foundational principle for good governance of societies for centuries around the world. Courts often start by assuming that the person in possession of a property is its rightful owner, unless the other party can prove otherwise.
Anthropologist Garett Hardin published an influential article in Science Magazine in 1968 explaining the “Tragedy of the Commons”. His theory explained individuals’ tendencies to make decisions based on their personal needs, regardless of their impacts on others. His conclusion was that a property that belongs to everybody will be managed by nobody. Therefore, a property must belong to somebody to be managed efficiently. His theory supported the tenet of “private property”, a core principle of capitalism. It also justified state ownership of private property and its management by the state on behalf of citizens.
The difference between capitalist and communist modes of ownership is that private capital owners also own the economic surplus produced by the efficient management of their property and are free to do what they will with it. Whereas the surplus produced from a state-owned enterprise belongs to the public on whose behalf the state consolidates and manages the commons to be used for the benefit of the public. The state may invest the surpluses in ill-conceived or badly run large enterprises: but the enterprises it invests in belong to the public too. Whereas the surplus produced from private enterprises can legally be invested in, and generally is, in other ventures that will produce more income and wealth for their private owners. Thus, the wealth of a few private entrepreneurs grows in capitalism, often exceeding the wealth of democratically formed states of millions of citizens.
Elinor Ostrom was the first woman to win the Nobel Prize in economics in 2009, after sixty-two men had won it. Her empirical work showed that the “Promise of the Commons” can be realized when citizens have collective ownership and responsibility for the governance of a shared property. She showed that genuine democracy—which is governance of, for, and by the people themselves—does work. Whereas the abrogation of citizens’ rights to govern themselves to private owners (or the state) diminishes the agency of citizens and destroys democratic institutions.
The challenge in realizing the Promise of the Commons on scale is to define the boundaries of which environmental assets belong to which people. Whereas boundaries of the land can be more clearly demarcated, boundaries of other ‘commons’ necessary for life, like water from rivers that flow through the lands, or in underground aquifers, cut across their legal governance jurisdictions lands. The atmosphere above them knows no boundaries. Nature’s commons cross all man-made legal jurisdictions. These larger, boundary crossing commons must also be managed cooperatively.
The concept of giving a river its rights to life has been gaining some currency. Ecuador had formalised it in its Constitution. Now a referendum is underway in the country to undo it. The problems with giving a river justiciable rights and citizens with justiciable rights to clean air have become clear in India’s national capital region, which has the most polluted air in the world today, and the Jamuna River running through it becoming a toxic hazard too. Which state should lawyers defending the Jamuna on behalf of Delhi’s citizens sue? The pollution of the Yamuna is an accumulation of the consequences of rapid industrialisation, large irrigation projects, and sewage mistreatment by several states along its course. The governments of which states surrounding Delhi are responsible for Delhi’s air pollution along with Delhi’s own government, and how much harm is each responsible for and can be legally sued for? How much can the farmers of Punjab and Haryana who burn paddy stubble in the winter be sued for the pollution in Delhi, and how much should the citizens of Delhi themselves who are driving air polluting vehicles round the year be sued for?
The principles of collective ownership and collective governance, and the will and ability to manage cooperatively, must operate at all levels—local, state, national, and international. All must share responsibility for what happens across their own borders. However, this conflicts with the principle of sovereign rights of nations at the international level to be free from interference to do what their own citizens want within their borders. It also conflicts with the liberal principle of inalienable human rights of individual citizens to sue any or all others for the infringement of their personal rights. These are the fundamental conflicts in principles of justice that the Supreme Courts of India and the US, the world’s two largest democracies, and the International Court of Justice are now struggling to resolve.
In a liberal market economy, nations trade with each other, and individuals transact with each other. The values they exchange with each other must be measurable in a common currency to determine whether the relationships are fair. The currency in use is money.
3. Value of Life and Work
Human labour is essential for economic and social activities. Human societies are created by humans providing services to others. Humans need labour for their well-being. A mother’s care for her child is described as a labour of love, which continues after her labour of giving birth to her baby. Work and labour are also required to fulfil other human needs: to sow and reap crops; to spin, weave, and sew clothes; even to sing and entertain. Economies, on the other hand, are created by what human beings produce for what is defined as “the economy”. All goods and services must be ascribed a money value to become tradeable in an economy. Thus, human labour becomes converted into a commodity in the economy. While there does not seem to be anything immoral about converting forest produce and minerals into commodities to be traded in markets, moral questions arise when human beings are considered resources for the economy.
Human labour is not a storable commodity, unlike money in digital currency. It is stored in a human body, which can be called upon by its owner to provide labour whenever whoever is considered its owner—the individual herself, or whoever pays for the work, requires it. Wealthy plantation owners in the United States imported slaves from Africa through slave traders who made fortunes in Britain. Slave owners used the stores of energy in the human bodies they had purchased. Human labour was also stored as indentured labour (a variant of slave ownership) in mines and plantations in the East.
Slaves became valuable economic resources (and economic assets) for the owners of plantation businesses. A bloody civil war was fought in North America amongst “civilized” people on both sides of the conflict. One side defended their property rights over the human beings they had paid money to buy. The other side said that human bodies cannot be another’s property like land and other commodities.
The slaves were “capital” assets for their owner’s lucrative economic enterprises. When the war ended, the owners were prepared to forego their ownership rights provided they were financially compensated. Even though there were ethical objections that under the law compensation is not due for stolen property, and that the slaves had their lives stolen from them, compensatory emancipation of slaves was allowed. Human capital was converted back into financial capital for the owners to use elsewhere.
Systems of justice continue to value human lives according to what a human life can add to an economy. Hundreds of thousands of poor Indians died in an industrial accident in a chemical plant in Bhopal owned by a US company. A US court awarded them only a small fraction of the compensation that would have been given if the victims were US citizens. Because earnings in dollar terms of the Indians, had they lived, would be much less than what an American could expect to earn, the Court explained. In the formal economy, the only work that is considered valuable is work done to earn money because its value can be measured and added to the GDP.
Economies must be reformed to provide more care for people in future because they will not have secure employment in formal organizations. Children need more care. People are living longer everywhere, and as they age, they cannot be discarded. Older persons will need more care too. Provisioning of healthcare, education, and caregiving must be increased. Where will the money come from to pay for such services when employment of humans in economically productive sectors is shrinking with technological advances, and governments are unable to raise sufficient taxes?
Let’s pause a moment and reflect on the history of human work. Let us honor those whose work has nurtured us throughout our history. Because if we will not value their work any longer, we will not survive much longer.
Ever since human beings came to live on the Earth, our mothers have worked to bring us into the world. They have worked to nurture us without being paid to do it. They have done this work because it was natural human work for them, and it fulfilled them too. The work of our mothers and other caregivers has brought goodness to society, even though it has added nothing to GDP measured in rupees and dollars.
It is ironic that those economically advanced countries where birth rates have fallen well below population replacement levels with the success of their earlier schemes to add more women into the formal work force to boost economic growth and enhance the empowerment of women (Korea, Singapore, Japan, France, Finland, Poland, China, and others), are now providing women with economic incentives to have more babies. These countries are very concerned about the future viability of their economies. So far, their incentives have not worked. Another warning to men not to meddle with the ways in which Nature is designed to work with their policies to increase economic growth.
4. Forms of Institutions
Formal economics cannot provide solutions for the looming demographic crises of these countries. Families and communities are social organizations. They have forms too: they are not “informal” organizations.
Industrial economies are designed to grow the sizes of economies rather than the qualities of societies. In an industrial economy all organizations conform to a factory-like form that fits the requirements of the economy. There is a bias in favour of the factory form of organization because it creates more economic efficiency. Industrial form organizations are designed for the efficiency and growth of economic enterprises. Scale and efficiency are drivers for their growth. Adam Smith’s ‘factory form’ pin factory is more economic efficient, though less human, than the small, family form enterprises prevalent in Smith’s time. Factory form organizations, in manufacturing and services, in which each worker is like a standard pin can be scaled up more easily than family form enterprises built on personal relationships.
The limited liability corporation is an invention of man: a device created to attract investors. The liabilities of investors are limited to encourage them to invest and take risks with their capital. The East India Company, founded in 1600AD, was one of the first limited liability corporations in the world. Its owners contributed capital for the voyages of the company’s ships to India and the East. The owners, in London, shared the profits amongst themselves. The responsibilities of the company’s board of governors were to ensure that accounts were kept properly, and profits were shared equitably amongst the investors. They were not concerned how the profits were made. They were not liable for the damage caused to the lives of the people in India where they made their profits.
The principle that the purpose of a limited liability business corporation is only to make profits in business became further reinforced by Nobel Laureate economist Milton Friedman’s insistence in the twentieth century that the business of business must be only business. The board and managers of a company should stay focussed on their responsibilities to investors and not be distracted by the problems of the societies in which the company operates. Governments must take care of those complexities. The Friedman school of economics also said, however, that governments waste economic resources, and therefore health, education, and other public services should be privatised too. Everything should be monetised.
Money is the currency for transactions in an economy. Work is paid for with money. Healthcare enterprises employ workers who are paid for with money. Services provided by care-providing enterprises must be paid for in money by someone (the care receiver or the government) to enable employees in these enterprises and their contractors to be paid and for the enterprise to make a profit too.
Exchanges in ‘social’ organizations are not paid in the currency of money. Traditional social organizations—communities and families—are being broken up to plug workers into ‘jobs’ fitted to the requirements of enterprises designed for efficient production in which they are paid in the currency of money. Thus, social values are replaced by economic values. People care to do the work because they are paid to do it.
Humanity must become one family. Rather than trying to put more economic efficiency into social forms of organization, we must put more humanity into economic organizations. Can you imagine a family without women? You can imagine an army without women though. Sadly, we are now training women to fight like men in armies. We are forgetting the value of living like a family. We are changing the shapes of our communities and the shapes of our families to train human beings for roles in the economy because we want our economies to grow. We have become blind to the collateral damage we are causing to the quality of our societies.
We need a new vision of the future. Vasudhaiva Kutumbakam (One Earth, One Family, One Future) is an aspirational idea promoted by India. Let us, in India itself, mean what we say and measure what we mean. To imagine a new future as one family, we must listen to the caregivers in our societies and families, who historically have been mostly women. We must listen to women for their vision of what the future of work should be, and to their vision of a better society for all.
Part Three: SYSTEMS SOLUTIONS TO COMPLEX LOCAL AND GLOBAL PROBLEMS
Albert Einstein (and others) have said, what is common sense, that one cannot solve systemic problems with the same thinking that has caused them. A new way of ‘systems thinking’ is required, instead of the narrow scientific way of the present paradigm of scientific progress whereby experts in their siloed disciplines know more about less and no one sees the whole. And a new way of ‘systems acting’ is required founded on cooperation as the way to progress instead of global competition amongst nations, corporations, and individuals.
GDP is only a small part of the story
Medical experts have found strong correlations between the health of individuals and the conditions of their local communities. Even within the same country and the same city, longevity is significantly different between communities living only a few miles apart. Michael Marmot, President of the World Medical Association, found that the differences in life expectancy for men living in Carlton, a down-at-heel part of Glasgow and in Lenzie, a much more affluent area, 20 miles apart, is 20 years (Michael Marmot, The Health Gap: The Challenge of an Unequal World, 2015).
The McKinsey Global Institute has produced a detailed map of realities on the ground in its report Pixels of Progress: A Granular Look at Human Development Around the World. (December 7, 2022). It divides the world into 40,000 micro-regions and using advanced statistical techniques it zooms in to examine actual progress in human life on the ground which statistical averages of human progress at the country level and GDP cannot reveal. Like Marmot and the World Medical Association, it also uses the yardstick of life expectancy and income to compare the well-being of people in these regions. The report concludes that “the growth of GDP per capita at a country level explains only 20% of the progress on the ground. The remaining 80% is local and specific”.
Fossil fuels and the modern economy
The Czech Canadian environmental scientist, Vaclav Smil, analyses the circulation of fossil fuel-based energy in the modern economy in his book, How the World Really Works: A Scientist’s Guide to Our Past, Present, and Future (2022). Fossil fuels are used as inputs, and as energy, in the production and distribution of four foundational materials for modern civilization: steel, concrete, plastics, and food. Steel and concrete are required for buildings, roads, and bridges, which provide basic needs of habitation and transport. Steel is also the backbone of most machinery. Moreover, almost all mobile machinery used for transportation and farming runs on fossil fuels. Plastics in many compositions have become ubiquitous in the construction of machines, buildings, and appliances. They are light, easy to mold, and durable. Plastics also enable hygienic storage and transportation of foods and are widely used for sanitary protection in hospitals and homes. Plastics are formed from fossil raw materials, and fossil fuels are also required in plastics’ production processes.
Smil evaluates the "total system" requirements of fossil energy (and steel, concrete, and plastics) for technological innovations for renewable energy solutions such as electric vehicles and solar panels. It will take many decades to replace these basic materials, and fossil energy, in their production processes.
Food is the most fundamental need for human survival: more fundamental than steel, concrete, and plastics. (And more fundamental than digital communication services, Smil points out). Fossil fuel-based solutions have become integral for increasing the scale of food production and distribution systems in the last century, to meet the needs of the human population on the planet, which has increased in the last one hundred years from 2 billion to 8 billion (1.4 billion in India). Fertilizers are produced from fossil-fuel feedstock. Farm machinery is made of steel and runs on fossil fuels. Plastics are used for hygienic transportation of food in global supply chains.
Smil says “the greater the retreat of agricultural mechanization and reduction in the use of synthetic agrochemicals, and reduction of these fossil-fueled based services (which is necessary now), the greater the need for the labor force to leave cities to produce food in the old ways. Purely organic farming would require most of us to abandon cities and resettle villages”. “Are we prepared to do this”, he asks?
Systems science reveals that local systems solutions, cooperatively developed by communities in their own villages and towns, is the way to solve global systemic problems of climate change and inequitable economic growth.
This was the “Gandhian” solution for India’s economic and social progress, which was set aside to adopt modern, Western solutions for development since the 1950s. 64% of Indian citizens live in rural areas (36% in China; 17% in USA). A majority work on farms, and in small industries in rural India; not in large factories that use automated equipment. Rather than trying to catch up with rich countries on their historical development paths, India should take advantage of its present realities.
Benefits of Local Economy Webs
Shorter supply chains and local economy webs can have many benefits.
1. They are more resilient. Lockdowns during Covid-19 disrupted global supply chains. They caused shortages of food and medical supplies in rich countries too. Industrial supply chains also broke down, and production and employment in them had to be reduced. Thus, the overall well-being of citizens suffered. Countries were compelled to develop local solutions.
2. Another benefit of shorter supply chains and local webs is the reduction in energy requirements for the transportation and preservation of goods.
3. The third benefit of dense, local economic webs with shorter supply chains is the are more environment friendly than global supply chains. In natural systems, the use and reuse of materials occurs in proximity. The leaves of trees fall to the ground around the tree, nourishing the soil and feeding the roots beneath it, giving more life to the tree. Producers and consumers in dense, local, economic webs are citizens of the same socio-economic-environment system. They can see the impacts of economic solutions on their society and on their environment, which distant policymakers and distant investors of capital cannot. Local citizens can govern their commons to create economic and social benefits equitably, which remote experts cannot.
Rural and urban communities must transform themselves, by changing the ‘unwritten rules’ and norms of the inter-locked, social, environmental, economic and political institutions operating within their commons.
The process of institutional reform is like the redesign of the systems of an airplane in flight, with the passengers and crews (the citizens and their government) in it. All systems must be reformed together to change the capability of their airplane for it to fly faster and higher and take them safely through the storm around it. The new design of the engines must fit the new design of the wings, The design of the navigation system, and the fuselage and tail must be aligned too with the changes in all the others. And reform of none must get ahead of others, or the airplane will crash with all within it.
The rewriting of written rules and the making of new laws in state, national, and international bodies, cannot change the behaviours of institutional systems. Citizens within local systems in which they live must be willing to implement new rules with changes in their attitudes and behaviours. Therefore, local systems solutions cooperatively implemented by communities is the only way to solve the systemic global problems besetting the world in this millennium.
It’s the time to speak Truth to Power. The powerful must learn to listen to the wisdom of the powerless; and listen to Nature to learn how to live instead of improving Nature with their science. Then only will everyone learn live together and make the world better for everyone.
India’s policy makers must free themselves from Western dominated theories of economics. These are the causes of global problems, not their solution. The time has come to go back to old philosophies to go to the future. Rural Bharat can be a university for the world, if we listen to it, for producing innovations in institutions and policies for inclusive and sustainable growth.
Arun Maira
December 7, 2025