A passage to capitalism: India, China and Russia are undertaking varying, yet similar, voyages into the 21st century

by Gilbert Keith

A passage to capitalism: India, China and Russia are undertaking varying, yet similar, voyages into the 21st century

History has a curious way of turning received theories about it on their head. Having reached socialism first, bypassing advanced capitalism, China and Russia are on their reverse passage from socialism to capitalism. India too is in the midst of a transition from a planned to a market economy. Recent visits to China and Russia gave me an opportunity to compare these transitions. These comparisons are, of course, no more than the casual observations of a passing traveller.

A striking feature of China’s urban landscape is the hectic pace of construction. High-rise apartment and office blocks, factories, broad urban avenues, new metro lines, expressways, ports, airports and railroads are all being built at a dizzying pace. Not surprising for a country that has grown at double-digit rates for decades and continues to invest nearly half its GDP. Heavy construction acti-vity is also evident in Russia, but the pace of new construction there pales in comparison with that in China. In many Russian towns you also see whole streets of abandoned houses and buildings. As old inefficient industries died with the arrival of perestroika and global competition, the workers moved on. Only ghost towns remained. I have not seen this in China.

In India, we see a bit of both. In parts of the dead textile mill belt of Mumbai or the old industrial belts of Kolkata and Howrah, you see the ugly face of urban decay. But in the Gurgaon-Manesar industrial belt, in Noida, in Bangalore, and many other parts of urban India, you see a pace of growth and new construction comparable to that of China. Unfortunately, there is no infrastructure to match, spawning nightmarish urban chaos.

Food makes another interesting comparison. The incidence of malnourishment in India is too high to allow any sensible comparison. Between the other two, wet markets or supermarkets we visited in China were much better stocked than their Russian counterparts, and the food is cheaper. This is also reflected at the table. Comparing like for like, among fine dining restaurants, fast food restaurants etc, the cost of a sumptuous meal in China is less than that of a modest meal in Russia.

No wonder then that the restaurant diners you see at tables around you are eating much heartier and healthier meals in China than their counterparts in Russia. I may be revealing my Asian bias, but longevity and morbidity statistics should bear me out, sooner or later.

All three emerging markets are caught in a frenzy of consumerism. Luxury car showrooms have sprung up in the cities and big towns. Other luxury goods from jewellery and designer watches to perfumes, fine spirits, and expensive branded garments are on display in luxury hotel arcades as much in St Petersberg and Moscow, or Mumbai and New Delhi, as in Beijing and Shanghai. You will also find them in Gum, the famous department store in Moscow, or similar high-end malls in India and China.

The difference is the profusion of such luxury goods outlets in, say, the 12 largest Chinese cities compared to the 12 largest cities in India or Russia. Not surprising when China has by far the largest population and GDP among the three and is the fastest growing.

But these are not the stores where real people shop. For that, you have to check out lower-end malls and markets. The stores in these markets in Russia or China are quite comparable to, say, our shops in Sarojini Nagar of New Delhi or Dadar in Mumbai. However, there is a difference. The hunger for customers you see in these bustling markets in India is very similar to what you see in China, but it is conspicuously absent in Russsia.

This missing eagerness to sell is symptomatic of something deeper. During the early stages of perestroika, a Member of Gosplan, the Soviet planning body, once told me: “They (the Chinese) have an advantage over us. The entrepreneurial class that existed before their 1949 revolution is still alive. Our entrepreneurs who were alive in 1917 are all gone now.” From the smallest shopkeeper to the largest oligarch, Russia of course has its new class of entrepreneurs. But relative to the size of the economy, they are nowhere comparable in scale to the vast army of entrepreneurs who are powering China’s rise to global economic dominance. Russia’s entrepreneurial deficit is a great disadvantage.

The deficit of entrepreneurial energy in Russia is perhaps matched by the weariness of its people. Working people struggle for their livelihood everywhere. But you can struggle with hope and optimism, or you can struggle in gloom. As i watched people on the streets and in trains and buses, or interacted with them in offices, shops and restaurants, i could not help feeling that it was the latter in Russia. In China it was quite the opposite. India probably should not be compared to either on this score because the freedoms we enjoy are quite different, and along with it all the chaos and cacophony of a noisy democracy. In the long run, is that a major liability or is it our greatest asset? That is the 64 million dollar question.

This piece is deficient in its casual observations.

India and Russia probably took off around the same time (1991-92) but that is where the similarities end. India’s per capita electricity consumption is one-tenth that of Russia; a lot of households are just getting acquainted with fridges and TVs.

I was also talking about the consumer zeitgeist with a few folks… and maybe it’s my small sample size, but it seemed rather subdued. There were lots of salespeople who didn’t have a customer to sell to. Perhaps I need to visit pre-Diwali bonanzas here to find the kind of activity the author mentions.

The comparison of “sumptuous meal” and “modest meal” is all kinds of prone to random errors, too, and I’m honestly surprised that the author chose to do what he did. When comparing prices across borders, you always compare similar sets of good, and if you’re including services in there, you always compare similar services as well. The Gujarati thali I had in Chetana in Dadar was a veritable feast, with several rounds of vegetables, varieties of rice, 3 servings for sweets, etc. I would have called it a sumptuous meal. It came at a cost of Rs. 315. I could have had a Gujarati thali for 2500/- (timescity recommends Maya in Bandra (E).) That is an 8-fold difference in price within 15 miles. Oh, and please stop talking about the “healthy Asian meals” nonsense. I will not accept any amounts of money to say that the newly wealthy Indians eating in restaurants are eating healthy. An unhealthy number of the folks you see in the back seats of imported cars and parading around in malls are plain F-A-T. There are no two ways about it.

The author also talks about construction booms, but the analysis again seems lacking. It also fails to make any mention of China’s newly built and completely uninhabited ghost towns. To be fair, Hyderabad had its share of aborted construction projects the last time I saw the “new developments” in the outer rings of the city, and perhaps more of these exist now. But all that said, with population growth still occurring and urbanization still an ongoing process in India and portions of China, I can see the need for newly-built infrastructure to absorb this demand. I cannot see the need for it in Russia.

The point about the entrepreneurial class is well taken. And it may yet be the saving grace of these new economies. There are all kinds of new, innovative products (have you heard of the battery operated ping-pong paddle-like device which zaps mosquitoes?) and services which make life easier. A lot more could be done, especially if it makes the operation of getting goods and people from one place to another within cities much simpler, but that will come eventually.

Whatever, maybe I’ll go into Russia and hangout with those wealthy milliionaires that always seem to make it into the middle sections of the in-flight and in-hotel magazines and discover what kind of “hip” things they are up to.