In ‘Free to Choose,’ Milton Friedman—the poster boy of free markets and the favourite punching back of the left—makes an interesting comparison between India’s 30 years after independence and Japan’s 30 years after the Meiji Revolution.
At these respective moments in time, both countries were similar in terms of their rigid feudal/caste structures, limited natural resources, and low industrial base. In fact, the scales were tilted in India’s favour. India was exposed to international ideas, its leaders were Western educated, British institutions provided a solid base, a nascent industrial base existed and international resources flowed into the country. Japan, on the other hand, was emerging from centuries of international isolation and had no international capital investments except for a vibrant silk trade.
However, Japan worked to dismantle the feudal structure while India’s caste systems remained (and still remain) as rigid as ever. But the real clincher, in Friedman’s words was:
What then accounts for the different experiences of Japan from 1867 to 1897 and of India from 1947 to date? We believe that the explanation is the same as for the difference between West and East Germany, Israel and Egypt, Taiwan and Red China. Japan relied primarily on voluntary cooperation and free markets—on the model of the Britain of its time. India relied on central economic planning—on the model of the Britain of its time.
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