5. Economics of Rural Development - Volunteers for Rural India

this model away but embraced it. Taiwan,South Korea, Indonesia, Brazil, for example,rolled out the red carpet for multi nationalcompanies and created a congenial politicalatmosphere. They provided docile, cheaplabour. This they could do becauseauthoritarian rule had been established inthose countries. Such a rule can easilyintroduce unpopular decisions because thereis no accountability to the people. Thesupporters of the market model believe that ifunder developed countries open up theireconomy, they will travel the road ofdevelopment. At present this model issupported by some powerful and influentialinternational organizations like theInternational Monetary Fund and the WorldBank.The next model of development is the welfaremodel which came into existence in the laterhalf of 19 th century and in the first half of the20 th century when the market model wasexposed to many shortcomings anddeficiencies.It has led to the concentration of wealth in ahandful of persons. It has led to monopolycapitalism. The market model laid stress onthe importance of individuals but the welfaremodel endeavors to reconcile the interests ofthe individual with those of society. This modelbelieves that development means insuringminimum social services to all members ofsociety. When this happens, there is welfarefor all. Development means developmentthrough the state. The market model banishedthe state. But this model invited the state andutilized it to modify the play of market forces inthree directions. First, it aimed at guaranteeinga minimum income to individuals and families.It ignored the market value of their work or oftheir property. Secondly, it restricted the extentof insecurity by enabling individuals andfamilies to face contingencies in life. Itprovided an umbrella to those who were sick,old or rolling in the abyss of unemployment.Thirdly, it made sure that all citizens gotcertain social services and in providing these,neither status nor class was taken intoconsideration. If Adam Smith was the father ofthe market model, J M Keynes was the initiatorand formulator of this model. He pointed outthat the economic anarchy of the marketmodel could not ensure full employment orsufficient equality of income or wealth.Collective action was needed. The functions ofthe government must be enlarged. Public workprogrammes and low interest rates should bemade instruments of the state’s action. Thismodel works within the market economy. Itbelieves that poverty, dependency andeconomic insecurity are caused neither bynature nor by laziness, lethargy aor theincompetence of the poor but rather they arethe consequences of the institutions ofsociety..This model gives great importance to the stateas an agent of development and isopposed tothe market model which holds that the statecan advance the interest of the individual byleaving him alone. The welfare model believesthat the state is a powerful vehicle which canbe used for furthering the common interest.The state should remodel and reorganize theeconomy in the interest of the welfare of all itscitizens. Translated into political terms, itmeans that only a democratic state canperform this task of development. A minimumstandard of welfare must be ensured for allcitizens. Welfare is not an abstract term. It hasa concrete meaning. It means medical care,education and housing for all. The entirepopulation should be covered by welfareschemes.The nature of welfare differs from country tocountry. In England welfare is based on theprinciple of equal and flat rate benefits for all.In Germany welfare benefits are linked to jobsand benefits distributed in harmony with thesalary. In the USA and Canada many schemeshave been introduced but they do not fallunder the category of welfare. India, too, haspassed through the welfare model ofstatehood. The leaders felt that it was notpossible to eradicate economic backwardness,illiteracy and poverty by remaining in themarket model but that the welfare model wasbest suited for these purposes. It pursued fourwell defined goals. The first was freedom ofthe economy from its reliance on strategicimports and foreign aid - a goal of selfsustained growth. The second was that theresources should be mobilized and capitalaccumulated to augment rates of saving andinvestment - the goal of achieving a high rateInternational Journal of Ruralvol. 15 no. 1 April 2008Studies (IJRS)ISSN 1023–2001 www.ivcs.org.uk/IJRS Article 5 Page 4 of 6