High caste professionals (or HCPs) such as lawyers, doctors, teachers, and god-men, have two defining characteristics, one, no one knows the quality of their service, and two, they suffer little in case the consumer decides to withdraw. Consequently the key principles that determine functioning of markets are absent. As a consequence societies always regulated them. But traditional forms of regulation were quite different from the new ones.
The Hippocratic oath, bar councils, medical councils, provision by monks and religious leaders are examples of how humanity has traditionally dealt with the failure of the standard market processes in these professions. In the era of Greek and Roman civilizations, for example, legal service fees, practices and norms were regulated by state/regal dictat. In other words, where high caste professionals are concerned, humanity figured early on that they need to be controlled – through ethics, fear of god, regal dictat or whatever means that were known and available to those societies.
The term regulator is these days associated with entities that are given the power to control what industry participants may or may not do. However in a more generic sense, regulation is any form of control that is exercised to prevent the full effect of unhindered choice by industry participants. Appealing to ethics and morals is one form regulation that seeks to use an individual’s sense of right and wrong to control his choices. Religious control uses the fear of god to regulate the behavior of the service provider. Social norms are another form of regulation, as divergence from that leads to universal boycott by consumers. An example is the traditional ayurvedic practitioners who were not supposed to charge for their services, and if at all any payment was made, it was not the result of any explicit demand by the practitioner. And there are multiple other examples.
One could go on and on, but let us put it together. There may be some repetition but please bear with me. There are certain activities – health care, teaching and legal services are among the more important ones, where the effect of the providers’ action is not easily visible to anyone. As a result the payments to the service providers have to be based on guess work. On top of that, the inherent nature of these services is such that the consumer is much more dependent on the provider than the other way round. Consequently, in Marxian terminology the provider has greater power over the service provider. But I don’t like Marxian terminology because people somehow associate it with Marxian solutions. This dependence of the client on the provider for the duration of the service is what I call ‘owning the client’.
The answer lies in regulation and control of such activities no doubt. But what form? And here I come across this great artificial divide, at-least in India. The leftists say that the state must provide these services. But those to the right differ (BTW the term neo-liberal is oft used in India to denote those to the right; I have never understood what that means, but I have this vague feeling that it is intended to be a cuss word.)
Most of those to the right of the economic spectrum would agree that regulation is required in these services. But by regulate they mean regulation that is mandated or overseen by the state. To me that is as good as the state itself. With the same flaws – what is the ownership? Why will the regulator do something better than the bureaucrat or the politician?
All that matters is who regulates? And how do you make the regulator answerable to society?
The more I think about it, the less I am convinced that you need national level regulation for such services. Regulation by the community should be good enough. Each community may have a different set of standards that it requires and wants, and there is no reason why different communities have to necessarily follow a single standard. But how can you run a large state with different regulators mandating different standards? Actually you can, these services are insignificantly traded across boundaries and are not really scalable, and therefore scale economies cannot be achieved even with common standards. So the most important advantage of nationally mandated common standards does not exist. Community level control is all that is required in such services.
And what is a community? Depending upon the type of activity a different form of community may be required – in education the parent teacher association is one community, a city-level medical council can be another community, a court specific bar council is also possible. Purohit’s in the past were known to have a caste and area specific guild-type regulating entity. Panchayat’s are another community. RWAs are yet another form. City councils can also be considered to be a community.
Traditionally societies used morals, ethics and the fear of god to help provide the right environment for high caste professionals. I am not sure whether they work as well these days. But if they did, that’s something worth trying.
There is yet another way. What if the people who provide these services have a different orientation? Monks still provide some of these services globally. There is no reason why religious organizations cannot provide such services. Blasphemy! Both the leftists and rightists will say. Imagine all of education occurring in a madrassa. I maintain this, look into the madrassa system, read its history, and you will see how secular education used to be quite common in Indian madrassa’s until colonial-era regulation edged them out of secular education. And all they had left was the religious domain (read “The Beautiful Tree” by Dharampal for a fascinating account of pre-colonial education in India as seen by the early British colonizers).
Hindu and Muslim children go to Christian schools in the millions. Can Hindu children not go to schools run by Muslims and can Muslim children not go to secular schools run by temple authorities? (Secular education gy religious entities was quite the norm in India till very recently – of my 4 grandparents (all hindus) 3 were taught by a maulvi or went to a madrassa at some point). Why only education. Can each large temple or mosque or church not have a large health clinic associated with it? Unlike the flawed historical research by Ramachandra Guha would have you believe – traditionally the business community did a lot of charity and that charity was many times routed through religious institutions. Perhaps they believed that putting god’s name would help introduce a dose of self-discipline among the providers.
Time to close this. High caste professionals do need to be controlled. Fear of incarceration (state regulation) retribution (legal mechanisms) loss of income (markets) and punishment by god (morals) have been used in the past. It is now time to let communities control high caste professionals rather than depend on markets and state mandated regulators.
[In the next and final part, I will take up education as an example to illustrate why it is important to see education not as a service but a case of forced employment of the client, and how it is important to control teachers and schools through the community and not the market mechanism.]