onomi e orms 6.7
the target population, it takes time, but the efforts breakdown of feudalism and the growth of a
a government initiates to increase the supply, market or capitalist society14 in its place, which
i.e., increasing production becomes visible soon. became popular in economics via the writings of
As production is done by the producers (i.e., Adam Smith (its founding father in the USA) and
the capitalists), prima facie the structural reform got identified as a principle of laissez-faire.15
measures look ‘pro-rich’ and ‘pro-industrialist’ The term liberalisation has the same
or ‘pro-capitalist’, known with different names. connotation in economics as its root word
Ignorant people easily get swayed by the logic that liberalism. Pro-market or pro-capitalistic
everything which is ‘pro-rich’ has to be necessarily inclination in the economic policies of an
‘anti-poor’. But it was not the case with the economy is the process of liberalisation. We see
process of economic reforms. Unless the economy it taking place in the whole Euro-America in the
is able to achieve higher growth (i.e., income) 1970s and particularly in the 1980s.16 The most
wherefrom the purchasing power of the masses suitable example of this process could be China of
will be enhanced? And increased income takes the mid-1980s when it announced its ‘open door
time to reach everybody. If the economy lacks policy’. Though China lacks (even today) some
political stability, this process takes even more trademark traits of liberalism, as for example,
time due to short-term goals set by the unstable individualism, liberty, democratic system, etc.,
and frequently changing governments—the exact still China was called a liberalising economy.
case is with India. We may take an example from the history
of the world economy—putting the USA of the
the lPg early 20th century and the communist China on
The process of reforms in India has to be completed the two poles of the scale—thus representing the
via three other processes namely, liberalisation, best historical example of the liberal economy
privatisation and globalisation, known popularly and China being the best example of the ‘illiberal’
by their short-form, the LPG. These three processes economy. With the USA on the south pole and
specify the characteristics of the reform process China on the north any policy movement towards
India initiated. Precisely seen, liberalisation shows ‘the south’ is ‘liberalisation’. The movement
the direction of reform, privatisation shows from the south to the north will be known as
the path of reform and globalisation shows the ‘illiberalisation’.
ultimate goal of the reform. However, it would It means that the process of decreasing traits of
be useful to see the real meanings of these terms a state economy and increasing traits of a market
and the exact sense in which they are being used economy is liberalisation. Similarly, the opposite
worldwide and particularly in India. will be the process of illiberalisation. Technically
speaking, both the processes will be known as the
LIbEraLIsatIon processes of economic reforms, since ‘reform’ as a
term does not say anything about the ‘direction’.
The term liberalisation has its origin in the All the economic reforms in the world have been
political ideology ‘liberalism’, which took its
form by early nineteenth century (it developed 14. Andrew Heywood, Politics, (New York: Palgrave,
2002), p. 43.
basically in the previous three centuries). The
15. Robert Nisbet, Prejudices: A Philosophical Dictionary,
term is sometimes portrayed as a meta-ideology (Massachusetts: Harvard University Press, 1982), p. 211.
capable of embracing a broad range of rival values 16. ‘Economics: Making Sense of the Modern Economy’
and beliefs. The ideology was the product of the The Economist, London, 1999, pp. 225–26.