How important are Constitutions for economic policies?
China adopted a new Constitution in 1982, four years after Deng Xiaoping began reforming China. The new Constitution was drafted to suit China?s new economic policies. The most striking example was Article 18, which stated: ?The People?s Republic of China permits foreign enterprises, other foreign economic organisations and individual foreigners to invest in China and to enter into various forms of economic co-operation with Chinese enterprises and other economic organisations in accordance with the law of the People?s Republic of China.?
Such a pronouncement would have been hardly noticed in today?s China. But for a country that was still firmly wedded to socialism and had rigid inward-looking policies haunting institutions and mind-sets, the provision was radical. It reflected the extent by which the Chinese authorities were convinced about the role of foreign investment in the economic modernisation of China.
China?s economic priorities in the Constitution were also symbolised through the emphasis on family planning in Article 25: ?The state promotes family planning so that population growth may fit the plans for economic and social development.? Article 25 underpinned China?s efforts to control population and justified the one-child policy that was introduced in the 1980s and in vogue till today.
Over time, the Chinese Constitution began reflecting national economic priorities even more clearly. As the world slowly began taking note of the Chinese economic miracle, China institutionalised its development model as that of a ?socialist market economy?. The 2nd Constitutional Amendment introduced in March 1993 first plugged the phrase into the Constitution (Article 15) paving the way for its entry in global economic jargons and the literature on emerging markets and developing countries. The 3rd Amendment (March 1999) legitimised the concept further by planting it in the Preamble. The same amendment also declared ?individual, private and other non-public economies? as ?major components of the socialist market economy? (Article 11).
However nebulous ?socialist market economy? might be to theoretical purists, the Constitutional veracity of the concept is undeniable. Socialist market economy has greater Constitutional sanctity than India?s celebrated ?mixed economy?, which has no mention in the world?s longest written Constitution. While both advocate co-existence of private and public ownerships of production, mixed economy, due to lack of Constitutional mention, is likely to be remembered more as a vision emanating from individuals, as opposed to the socialist market economy, which would be a state vision.
More modifications introduced in the 4th Amendment (March 2004) reflected China?s intention to align the Constitution more closely with economic changes. The key changes introduced in the latest amendment included protection of rights and interests of the private sectors, guaranteeing the right to inheritance of private property and establishing a social security system. While encouraging private enterprises and protecting rights to private property and its inheritance, ironically, the same Amendment also established the State?s right to expropriate private property in public interest, while compensating individuals for expropriation. The dichotomy reflects the dilemma that China has been encountering for years between granting private property rights and the demand for ensuring adequate supply of land for abetting industrial expansion.
While the Chinese Constitution is quite contemporary in its economic content, given that its writ Constitution runs over a humongous federation comprising 22 provinces, five autonomous regions, four federally administered municipalities and two specially administered regions, it is surprisingly short and uncomplicated. With only 138 Articles and four Chapters, it is minuscule compared with the Indian Constitution spanning across 395 Articles in 22 Parts, along with 12 elaborate Schedules. There are several economic dimensions of the federation that are untouched in the Chinese Constitution avoids. These include demarcation of powers and authorities between the Centre and states, particularly for raising taxes and sharing revenue proceeds. The Chinese Constitution does not allow for any central or state finance commissions like the Indian Constitution. It also does not specify the functions and responsibilities of sub-national local governments like municipal districts, cities and townships.
Has a less-detailed, shorter and contemporary Constitution served China?s economic priorities and objectives better than a more detailed and nuanced Constitution has for India? Unlike China, the Indian Constitution hardly outlines economic priorities and objectives except some wish lists in its Directive Principles. It also does not provide any clue on modern India?s economic vision.
While there is, of course, no compulsion to follow the Chinese example and adjust the Constitution according to current economic thinking, those following India?s current economic policies often wonder why the Constitution does not reflect these economic thoughts. Particularly why ?reform?, which occurs frequently in tandem with ?opening up? in the Chinese Constitution, is mentioned only as part of the rather extinct ?land reforms? in the Indian Constitution!
The author is head (Partnership & Programme) and senior research fellow at the Institute of South Asian Studies in the National University of Singapore. Views are personal. He can be reached at isasap@nus.edu.sg
