China and India, two of the world’s oldest and greatest civilizations, are in the early laps of a long-distance race to catch up to the United States as the leading economic superpower. This race is not a zero-sum game—China’s growth should increase India’s prosperity, and vice versa—but the winner will reap extra rewards.

Which of them will be the swiftest?

Party-run China can act more quickly than India, and its society seems more orderly. But this may be a faux stability achieved only by suppressing dissident lawyers, ethnic minorities, information, transparency, and disruptive innovation. Corruption and cronyism are endemic in both countries, but may be even worse in China, where there is no free press or political competition to hold it accountable.

As important as physical, human, and financial capital are, it is legal capital that may ultimately determine the winner. Beyond a uniquely diverse civil society and a participatory, decentralized politics, India boasts a proud tradition of due process and independent courts, strong property rights, a robust press, and an autonomous legal profession.

But for now, India is squandering its precious reserves of legal capital. As China rapidly upgrades its legal institutions, India is allowing its own to languish and atrophy. India’s three core legal institutions—the judiciary, the legal profession, and the law schools—urgently need repair.

The Judiciary. The Supreme Court of India is often considered the crown jewel of the nation’s governing institutions. This is not saying much in a country where people widely despise their politicians—in 2008, The Washington Post reported that almost a quarter of the 540 members of the Indian Parliament faced criminal investigations for corruption—and deride their powerful and also notoriously corrupt bureaucrats.

With such weak institutional competition, the court and its state-level “high courts” have gained elite esteem, partly through a series of far-reaching rulings in so-called public interest litigation (PIL). Authorized by India’s constitution, PIL has created remarkably expansive (and expensive) constitutional rights to food, shelter, healthy environment, and many other social goods that hundreds of millions of Indians lack. As an abstract matter, one cannot disagree with these goods, but everything depends on the definitions (what does dignity—the touchstone of many PIL rulings—require?), the details (how much will an additional unit of dignity cost and from where will the resources come?), and the process by which they are provided (politically accountable officials or unaccountable judges?). Under PIL, the taxpayers who must pay for these rights and the officials who must somehow implement them, by shifting resources away from other social goods, have no say in the matter.

The constitution protects the justices’ independence, as it should, but their mandarin status can remind one of China’s privileged party leaders. A self-perpetuating elite, the justices select their own colleagues and successors with little or no input from the public and its elected representatives. Their nominal salaries are modest, but their entitlements—palatial mansions, many servants, official cars, and other free perks—place them among the most privileged. Recently, they exempted themselves from the financial disclosures required of other senior officials under the new freedom of information law. They sometimes use their contempt powers to silence critics, like the writer and activist Arundhati Roy. Some lawyer groups are protesting these abuses.

India’s lower court judges present the opposite problem: They are bureaucrats on a prescribed career track with low prestige, salary, and morale, and little in-service professional training. Like their state high court superiors, they can be arbitrarily reassigned if they get out of line.

The Bar. Today’s profession lacks the stature and vision of Mahatma Gandhi, Jawaharial Nehru, Bhimrao Ramji Ambedkar, Vallabhbhai Patel, and the other lawyer-founders of democratic, independent India. The vast majority of lawyers practice alone in the lower courts under dismal conditions with few opportunities for professional growth. Continuing legal education is virtually unknown, and there is little intercourse among law firms, individual practitioners, law schools, courts, and bar groups. Some of India’s best, upwardly mobile lawyers go to the U.S., England, and elsewhere at great personal expense, to seek advanced training abroad for a more globalizing profession.

The picture is brighter in the major cities, where some large law firms and boutiques handle sophisticated legal work and can afford to upgrade their young lawyers. Major companies like General Electric Company and The Goldman Sachs Group, Inc., hire some of the best and brightest Indian law graduates for their in-house legal departments, and foreign law firms are now outsourcing some of their routine work to qualified Indian lawyers. Top-tier-firm salaries can now exceed what top technology graduates can expect to earn. A fine arbitration bar has emerged, and many lawyer-staffed NGOs work on environmental, women’s rights, and other complex issues. But the profession as a whole is parochial and protectionist. The Bombay High Court, a highly influential body because of that city’s concentration of companies and business lawyers, has largely closed the door to most foreign lawyers.

The formal institutions of the bar neglect needed legal reform. This situation may change with the recent election of Gopal Subramanium, the talented solicitor general of India, to lead the Bar Council of India. He has his work cut out for him. In recent decades, the organized bar has done little to educate India’s vast illiterate population about its legal rights, to promote pro bono activities by the elite firms, to reform the country’s ineffective and inaccessible legal institutions, or to upgrade the quality of lawyers and judges.

The Law Schools. India’s most talented high school graduates now gravitate toward medicine, engineering, and high-tech industry; law is pretty far down the list. Young Indians are inspired less by the lawyer-heroes who built the nation than by the storied capitalists of Tata Group of Companies, Wipro Limited, Infosys Technologies Limited, and Reliance Industries Limited.

Law schools abound (approximately 1,000 of them), but the vast majority have very low standards. During the last decade, legal reformer Madhava Menon managed to persuade the government to fund 14 “national” law schools in the country’s major cities to train high-performing high school graduates. (As in the United Kingdom, law is an undergraduate subject.) These top-tier schools have raised the quality of legal education, but their classes are large, their poorly paid faculties are far below Western standards, and government funding and influence create rigidities and inefficiencies. Student cheating is epidemic. And these small, selective institutions graduate only about 1,200 students a year in a country of 1.2 billion people with a burgeoning economy.

A new entry into this parochial environment is the O.P. Jindal Global University, the first private, nonprofit university in India. (Disclosure: I chair Jindal’s international advisory board and recently taught at its law school.) Modeled on top U.S. law schools, Jindal pays higher salaries, charges higher tuition, gives generous financial aid, and draws much of its internationally trained, multidisciplinary faculty from the U.S. and Europe. Only in its second year, Jindal has already added a business school, a master of laws program, and—next fall—a school of international affairs. Its student-faculty ratio compares favorably with most U.S. schools. Applicants must take the same Law School Admission Test mandated for American law students rather than the traditional, rote-oriented entrance exam required by other Indian law schools. Whether this fresh breeze will succeed in stirring change throughout the system remains to be seen, as does the effect of new legislation to allow some foreign educational institutions to open campuses in India.

Even the best elements of India’s legal establishment, however, are at best small islands in a vast sea of mediocrity (as Prime Minister Manmohan Singh recently put it, referring to the law schools). Meanwhile, China is preparing for a more demanding legal future—for example, by launching the Peking University School of Transnational Law, which is led by the former president of Cornell University, and by renovating its legal codes (even as it punishes human rights lawyers). If India is to enlarge the legal capital accumulated by its visionary founders more than six decades ago, it must move with greater urgency to improve the quality of its judges, lawyers, law professors, and law students. In its competition with China, India’s creaky legal infrastructure is a wasting asset.

Peter H. Schuck teaches law at Yale University and New York University and is a contributing editor of The American Lawyer.