Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Political Factional Fights

 

Over the last month or so while the cases of the Chinese virus show small signs of abatement, factionalism has reared its head across political parties across the states. The Congress is facing challenges to its Chief Ministers in Punjab and Rajasthan. In Punjab, there are multiple factions that are clamoring for replacement for existing Chief Minster Capt. Amrinder Singh. In Rajasthan, Sachin Pilot group is queering the pitch for the Chief Minister Ashok Gehlot. Meanwhile Gehlot is demonstrating counter show of strength. There are reports of factional fighting in Jharkhand and Karnataka. BJP too is not immune from these fights. From Bengal where they are facing murmurs of dissent partly due to state pressure, they are experiencing factional troubles in different states. They replaced Chief Minister in Uttarakhand, there were reports of fights in Uttar Pradesh. Karnataka is no stranger to factional fights in the BJP and currently witnessing one more round of such infighting.

 

The factional fights per se are not unusual. In the West, political parties often are umbrella or a banyan tree for various shades of opinion to co-exist. India had one such banyan tree in the Congress pre-1947. Even after 1947, for a fairly long period Congress continued to be a party that accommodated various shades of grey. Over a period of time, the ideology gave way to personal loyalties. BJP has been ideologically coherent and has accommodated personalities who subscribed to different shades of the same ideology. There are people who are in favor of extreme degree of Hindutva while there were and are quite a few who subscribe to moderate Hindutva. In fact, it was the tensions between these two groups, and the fact BJP’s choice of falling between two stools led to the disastrous decade of 2004-2014. The Janata Parivar too was itself in its various forms in the 1970s and 1980s till perhaps the late 1990s was a conglomerate of various factions generally rooted in state and caste coexisting for the benefits of economies of agglomeration.

 

The barriers of entry and exit were relatively smooth till the Anti-Defection law came into existence. Parties could be formed and split easily which became difficult. After the 2002 amendment, it has become virtually difficult to split parties. Moreover, many regional formations have developed their independent identities and thus unlikely to surrender the same when the return to the original form becomes very difficult once the surrender happens. Therefore, factionalism is relatively lower in regional parties all of which are dominated by personalities. The leadership is undisputed and to those disagree it is either accept the reality or leave the party. The same does not hold good in varying terms in the national parties. For varying reasons, there would be many people accommodated in various positions and at least at the state level would have ambitions at seeking top positions. In the Congress, the central leadership is relatively settled barring a split, something that cannot be ruled out in the current context. BJP is seeing a settled question at this moment.

 

In the state unit, when the factional fights emerge, there is a possibility of cracking down if there exists a strong central leadership. A central leadership often emerges to mediate and formulate a compromise. At times it might result in replacement of Chief Minister, some other occasions it might result in ministerial reshuffles or expansions, there would be reshuffles within the organization on some other occasions while there would be stick in full flow on certain occasions. In the current environment, these might work in the states where BJP is in power. Yet, in states where Congress is in power, there would be difficulties in formulating compromises without being damaged politically in the process. To the BJP with a strong central leadership, the dissidents might be kept on a leash. Yet to the Congress leadership which itself is struggling with discontents it would be very difficult to resolve the issues at the state level. For instance in Punjab, the Capt. Amrinder seems powerful and is no mood to accommodate the dissidents. The dissidents are determined to have their way irrespective of the long term damage. The leadership which is relatively weaker would find it difficult to resolve the issue and perhaps at the end would result in the party getting split. It then becomes what game theorists would call minimax strategy.

 

The same fate awaits in Rajasthan. Ashok Gehlot over a period of time has become more powerful and isolation of Pilot is complete. At this moment, it is unlikely that any change would be acceptable to Gehlot. He would be determined to finish the challenge of Pilot once for all. The other states are witnessing the discontents encouraged by the helplessness of the High Command in these two states. The issues in states like Karnataka might get resolved but for the weakness of the High Command. To add to the woes is the fact that Congress is extremely weak and hardly in a position to challenge Modi in 2024. It is more likely that a non-Congress front might challenge Modi more effectively than the Nehru-Gandhi family. To many of the party leaders at the state level, it would be an indication of the prospects of their own future. Sachin Pilot would more likely think of defection if not getting adequately recognized by his party. The same would hold good for many leaders in Punjab who might look to Akalis or AAP. In fact at some level, the rise of farmer protest can be viewed as Capt. Amrinder’s agenda of preemptively preventing the BJP from gaining the foothold in the state and closing the options to the dissidents.

 

Factionalism is inherent to politics and political parties. There would be multiple power centres at various levels and they would seek in upstaging the other. The motivations of factional leaders would be very different from the high command and the motivations of the workers would be different from the faction leaders. There would dichotomy in the conflict and thus there would exist agency costs. It would be erroneous to view factional fights from the perspective of splits but they do have a potential for damaging at least one election cycle if there were no remedial interventions. In fact, that damage to one electoral cycle is what the dissidents too want without exception.

 

 

 

 

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