It is a story about Dharavi, Mumbai’s most famous slum, a seething hive where perhaps as many as a million people live in 60,000 structures on an area smaller than central park. Not surprisingly, in every alley, there are scenes of appalling poverty:
The streets smell of sewage and sweets. There are not enough toilets. There is not enough water. There is not enough space. Laborers sleep in sheds known as pongal houses, six men, maybe eight, packed into a single, tiny room—multiplied by many tiny rooms. Hygiene is terrible. Diarrhea and malaria are common. Tuberculosis floats in the air, spread by coughing or spitting. Dharavi, like the epic slums of Karachi, Pakistan, or Rio de Janeiro, is often categorized as a problem still unsolved, an emblem of inequity pressing against Mumbai, India’s richest and most glamorous city. A walk through Dharavi is a journey through a dank maze of ever-narrowing passages until the shanties press together so tightly that daylight barely reaches the footpaths below, as if the slum were a great urban rain forest, covered by a canopy of smoke and sheet metal. (For an even more vivid view of Dharavi, don’t miss Adam Furguson’s wonderful pictures that accompany the story.)
But Dharavi also has something else: A GDP estimated at as much as $1 billion. Nationmaster lists 24 countries with GDPs smaller than that.
“Dharavi is Dickens and Horatio Alger and Upton Sinclair,” writes Yardley. It is also Friedrich Hayek. One of Hayek’s most famous concepts was spontaneous order—the idea that people could organize themselves on their own, by interacting with those around them and making use of local knowledge, more effectively than they could be organized by central control. Spontaneous order is a flock of starlings swooping in formation, a flow of traffic on a highway, or a market economy. Dharavi is spontaneous order on steroids.
The secret of Dharavi’s economy? “A skilled labor force, as well as cheap costs for workshops and workers, and informal networks between suppliers, middlemen and workshops.” The networks include labor exchanges, supply chains, sale and leasing of real estate, finance, recycling, you name it. All of it spontaneous, none of it top-down.
Hard as life is in Dharavi, people come there voluntarily. They stream in from villages where life is even harder. Karl Marx, in the Communist Manifesto, famously called it the escape from “the idiocy of rural life.” They come, they raise families, and they do everything they can to enable their families to move on:
Sylva Vanita Baskar was born in Dharavi. She is now 39, already a widow. Her husband lost his vigor and then his life to tuberculosis. She borrowed money to pay for his care, and now she rents her spare room to four laborers for an extra $40 a month. She lives in a room with her four children. Two sons sleep in a makeshift bed. She and her two youngest children sleep on straw mats on the stone floor.
“They do everything together,” she said, explaining how her children endure such tight quarters. “They fight together. They study together.”
The computer sits on a small table beside the bed, protected, purchased for $354 from savings, even though the family has no Internet connection. The oldest son stores his work on a pen drive and prints it somewhere else. Ms. Baskar, a seamstress, spends five months’ worth of her income, almost $400, to send three of her children to private schools. Her daughter wants to be a flight attendant. Her youngest son, a mechanical engineer.
Could life in Dharavi be better? Sure it could. In fact, it is improving. Not long ago, it was dominated by stinking tanneries (not that its open sewers now smell exactly sweet) and violent gangs. Now its crime rate is lower than the rest of Mumbai. People are too busy working to commit crimes.
Perhaps the biggest threat to Dharavi is not the pollution and the tuberculosis, deadly though they are, but the risk of well-intentioned government intervention:
A sweeping plan approved in 2006 would provide free apartments and commercial space to many Dharavi residents while allowing private investors to develop additional space for sale at market rates. Many Dharavi civic and business leaders endorsed the plan, even as critics denounced the proposal as a giveaway to rich developers.
For now, the project remains largely stalled, embroiled in bureaucratic infighting, even as a different, existential debate is under way about the potential risks of redeveloping Dharavi and shredding the informal networks that bind it together.
The bottom line: Do you want to understand markets? Do you want to understand capitalism? Do you want to understand why so many people think Hayek had a better grasp of economics than Keynes? Take a few minutes of your New Year’s Holiday to read the story of Dharavi.