ABSTRACT
The big mistake Gandhi made was to advocate the spinning wheel', said one influential Indian government economist. No one in India could tell me what the economic policy of the government is. The only governmental actions are expansion of already large government enterprises, unchecked growth of an already obese bureaucracy, and more bureaucratic regulations. Steel mills, those prestige investments of the 1960s into which earlier Indian governments poured very large chunks of the country's scarce capital resources, are becoming the white elephants of the 1970s and 1980s. The development decades of the fifties and sixties worshiped capital investment. Productivity is whatever generates the highest overall yield from an economy's resources of capital, labor, physical resources, and time. There can be no small manufacturer in a large market, whether that of the United States or of India, unless there is a large assembler or a large retailer, an IBM, a GM, a Sears Roebuck.
