TCA Srinivas Raghavan

Political scientists analyse politics in terms of political parties. But in the Indian context that’s nowhere near being granular enough. Indian politics runs as much on parties as politicians who are the equivalent of free radicals. That’s why our politics leaves foreigners so flummoxed. Their politics represents class and group interests first and personal interests second.

In India it’s the other way around. A superior way to understand Indian politics, I think, might be to apply some economics to it. That could help explain political behaviour in India better. So let’s look at Indian politics as a marketplace.

When there’s only one seller the market structure is called a monopoly. And when there’s only one buyer it’s called a monopsony. When there are many sellers you get a competitive market. When there are hundreds of them, you get what’s called a perfectly competitive market. Now apply this to Indian politics.

There are thousands of politicians, or more accurately, people who are in the business of politics. These people are offering services — politely called support — to the single buyer, that is, the dominant party, or single buyer. So how much the seller politicians receive in return depends on the price they can extract. The minimum that they need to fight an election in a medium sized parliamentary constituency is now around ₹15-20 crore.

So between 70 and 100 per cent of that is the minimum a political party must be able to offer. This is what makes the dominant party the single buyer, or monopsonist. It alone has that kind of money. Thus politics now is like business where money gets you dominance and dominance gets you money. It’s only when the brand declines on quality grounds that the two are lost.

Market behaviour

But how will the political monopsonist choose whose services to buy? The only criterion is the probability of a win. The higher it is, the more the seller can hope to get. The less the probability gets, the lower is the price that he or she will extract. This all but locks out decent sellers in our political marketplace. As the saying goes, nice guys come last.

This feature of Indian politics today has led to some strange consequences. So strange, indeed, that even what we had a scant 20 years ago, namely, some pretence to a belief in an ideology, has disappeared. It’s all purely commercial now. In fact, if you think about it, what we have now closely resembles an agricultural market. One buyer, many sellers. It’s very much like the APMC mandi system where the farmer can only sell to the mandi in his neighbourhood.

Given this, how will a seller behave? Economics offers an answer. The seller will go to the highest bidder or, in this case, the political party that minimises his or her own personal investment. But what if — as happens in the mandi system — there is only one bidder, namely, the dominant party in the district or region? The seller then has to maximise his or her winnability in order to minimise the personal outlay. This is where caste or community and muscle come into play.

It’s the political equivalent of embedded technology and marketing in a product. Embedded technology is the investment made by previous producers, that is, family. Marketing is the use of not-so- gentle persuasion with muscle or money or both.

This free-radical nature of Indian politicians is entirely consistent with Article 19(g) of the Constitution. This Article makes the right to carry on a business a fundamental right. That’s why the anti-defection law is a violation of fundamental rights. It interferes with this right.

Utility maximisation

We can understand individual political behaviour via the theory of utility also. This says everyone acts in ways that will maximise their utilities.

So if a political party won’t let you contest an election or, even after you win, it won’t offer you a ministerial post, or influence contracts, how do you maximise your utility, especially if you have spent a lot of your own money?

This is where William Baumol’s theory of contestable markets comes in. A contestable market is a market where entry and exit are free and sunk costs are low in comparison to the benefits of exit. In Indian politics this has created challengers to incumbents who can come in very easily and go equally easily.

Over the last two decades as the number of such challengers has increased because of demographics, the market has become ever more contestable.

This has made dominant parties more vulnerable and more dependent on single brands.

But what happens if these brands don’t perform? I think we all know the answer.