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Posted by Dipankar Basu June 2, 2007 at 1:32 pm in Economy, India
1. The Indian economy is currently undergoing a boom, a moderately long boom for a less developed economy: “between 1999-2000 and 2006-07, the gross domestic product (GDP) in constant prices increased at an average annual rate of nearly 7 per cent. And for the past three years, the economy has been growing at 8 per cent.” This boom is a profit-led boom, where surging profits of the Indian corporate sector is leading the growth in savings and investment. This seems to be a far cry from the general economic “stagnation” in the “semi-colonies” predicted by the classical theories of imperialism. Of course, this growth is accompanied by growing inequality; capitalists are gaining more than workers and big capitalists are gaining more than the small-sector capitalists. This is a situation which had occured in Argentina, Brazil and Chile (and Mexico and Iran possibly) about four decades earlier and continues to this day; this is what has been called “dependent development”: dependent, to take account of the continued operation of imperialism (through various channels) and development to take account of the non-trivial industrial development (as opposed to the earlier periods of general economic stagnation and no industrial development). Would this (the move from semi-colonial stagnation to dependent development) change the agenda for radical social transformation?
2. A mark of the recent trend in the Indian economy are the new economic kings, the new capitalist moguls whose wealth (in purchasing power parity terms) would equal those of the richest in the First World. Here is a typical example of the rising wealth of the new capitalists. It is important to reiterate that these are capitalists and not feudal lords, and they are (or will, in the near future, be) calling the shots in India. Is it not capitalism, dependent capitalism to be sure, that is the dominant mode of production in the Indian socio-economic formation?
3. One area of the Indian economy which is going to see a lot of turmoil in the coming months is the retail sector. Recall that the retail sector directly employs about 8 percent of the workforce; the indirect employment is probably much larger. Most of the “firms” in this sector are what are called the “mom-and-pop” shops; these are small family-owned and managed businesses, often employing very outdated technology (transportation, storage, etc.). Big corporate entities, both Indian and foreign, have already started entering this market which is estimated to be around $250 billion! Two interesting things can be expected to happen here. One, big corporate entities entering and wiping out the mom-and-pop shops will considerably increase the technological level of the retail sector; it will lead to a huge growth of the productive forces. Two, Indian big capital, represented by Reliance, is going to fight for this huge market against the Walmart-Bharati enterprises combine which is a foreign capital led alliance. Given these two facts, how will the revolutionary forces consistently oppose this development while (a) accepting the primacy of the development of productive forces for social transformation and (b) adhering to their anti-imperialist stance.
4. I want to return to Marx’s famous letter to Vera Zasulich in relation to the question of the socialist revolution in Russia. In the draft letter to Vera Zasulich, Marx had specifically mentioned that the Russian peasant commune could be used for the development of a higher form of social ownership and labour, i.e., socialist labour and that defending and deepening the communes should be an express task of the revolutionary movement of the working class. In the preface to the second edition of the Communist Manifesto, Marx and Engels added a crucial condition for this possibility to materialise.
“The Communist Manifesto had, as its object, the proclamation of the inevitable impending dissolution of modern bourgeois property. But in Russia we find, face-to-face with the rapidly flowering capitalist swindle and bourgeois property, just beginning to develop, more than half the land owned in common by the peasants. Now the question is: can the Russian obshchina, though greatly undermined, yet a form of primeval common ownership of land, pass directly to the higher form of Communist common ownership? Or, on the contrary, must it first pass through the same process of dissolution such as constitutes the historical evolution of the West? The only answer to that possible today is this: If the Russian Revolution becomes the signal for a proletarian revolution in the West, so that both complement each other, the present Russian common ownership of land may serve as the starting point for a communist development (Source). ”
If we juxtapose this assertion to the debate about the possibility of building socialism in one country then we come up against an inconsistency. Let me elaborate.
It is well-known that the Bolsheviks gave a call for a socialist revolution in Russia in 1917 with the express recognition that the Russian revolution could only be sustained if it “becomes the signal for a proletarian revolution in the West, so that both complement each other”; the Bolsheviks were especially anxious about the outcome of the German revolution. Thus, both the call for the socialist revolution and the movement for the strengthening of the peasant commune (to be used as a springboard for the construction of a higher form of socialized labour) rested on the hope of support from proletarian revolutions in the West. The Bolsheviks gave the call for a socialist revolution but did not give a call for strengthening and deepening the peasant communes. Why?
5. This is a nice picture of the enduring (and possibly growing) strength of the anti-capitalist strand within the anti-globalization struggle.
Posted by Dipankar Basu May 12, 2007 at 11:42 pm in Agrarian Question, Economy, India
The first thing that probably needs to be clarified in the study of agrarian structure in India (and other parts of the periphery) is to understand agrarian structure as an articulation of various modes of production under which socially necessary labour is being undertaken. The concept of socio-economic formation, as an articulation of various modes of production, but distinct from the concept of mode of production itself might prove useful here. I feel that this is a very important point that is often ignored in much Marxist theorising.
Once we agree to understand agrarian structure as an articulation of various modes of production, several questions immediately arise. One, what are the various modes of production that are articulated in various forms in India today? Capitalist and pre-capitalist modes. That much is clear and widely agreed upon.
The next important question, of course, is this: which is the dominant mode of production in this social formation, in this complex reality formed by the articulation of the capitalist and pre-capitalist modes of production? Which, in other words, is the mode that is dominating the others, shaping the others so as to fulfill it’s own needs of reproduction? Which is the dominant and which is the dominated mode of production? In this regard, the tentative hypothesis that I would like to advance is the following: contemporary Indian reality suggests that the capitalist mode of production is the dominant mode. It is capitalism, decidedly of a dependent variety, that is calling the shots in India today. All vestiges of pre-capitalist modes are articulated to the capitalist mode and are serving its needs in various ways. But it would be a mistake to allow the vestiges of these pre-capitalist modes to define social reality in rural India, its agrarian structure.
The question that will naturally follow is this: how to explain the stagnation in Indian agriculture? How to explain the rising rural distress? This is an extremely important question, but I don’t think it is necessary to take recourse to semi-feudalism to explain rural stagnation and distress. Dependent capitalism, of the type that has developed elsewhere in the periphery of the world capitalist system, is precisely a capitalism which entails stagnation, pauperisation and distress for the majority while a small minority grows at a very high rate. That has happened in Brazil, Argentina, Chile and is now happening in India. This is another tentative hypothesis that I would like to advance.
A very close friend of mine, who has been studying agrarian relations in Punjab for some time now drew my attention to three very important characteristics of rural reality in Punjab. These are: (a) the intrusion of ideological factors like “social pride” into the process of mechanization of agriculture (he informed that the possession of tractors in contemporary Punjab is more a matter of “social pride” of the peasantry than any capitalist incentives arising from production conditions); (b) the existence of a class of middlemen who procure agricultural product from peasants and also function as money-lenders, thereby givng rise to partially interlinked markets; and (c) the widespread use of migrant labour in agriculture.
What are the implications of these three characteristics for our understanding of agrarian structure in contemporary India? I would tend to interpret these three characteristics as the many factors, among others, which reproduce capitalist stagnation; I do not see this as providing evidence of the presence of semi-feudal relations in rural India.
The question that immediately came to mind regarding the first charateristic is this: What is the material basis of the “social pride” that comes from the ownership of tractors? An answer suggests itself almost naturally. The tractor manufacturer would gain enormously from the widespread existence of such “social pride”. Let us recall several campaigns by the local capitalist class (for example the “hamara Bajaj” campaign) where ownership of scooters and motorcycles and four-wheelers and tractors are given other, social meanings (like national pride, etc.)? Could something like that be in operation in Punjab too?
Existence of a large class of middlemen is important but does not really lend support to any semi-feudal thesis. The class of middlemen, to my mind, are representatives of mercantile capital; a class which makes profit by buying cheap and selling dear. It is important to remember that they have come up under the shadows of a partially paternalistic State and the pressure of rich and middle peasants for minimum price policies. Through them mercantile capital is getting accumulated in rural India. The fact that the credit market is partially interlinked to the product market through this class reminds me of the “putting out system” during the early phases of the industrial revolution in England. But, this system, I am told, has made a comeback through various kinds of “contract farming” in other parts of India too. For instance, Pepsi Co, HLL, Procter and Gamble and many other companies often do the same. They provide credit and other inputs to the farmers and the contract is that they will buy the product at pre-arranged prices. So, even though markets are getting interlinked, it is in a context that is very different from those studied in the early 1970’s by Amit Bhaduri and others. In this case, the capitalist character of many of the participants is beyond all reasonable doubt. So, instead of understanding this as an instance of semi-feudal relations of production, it is probably more helpful to see this as the specific manner in which the articulation to dependent capitalism takes place.
The importance of migrant labour, as my friend pointed out, can hardly be denied. But as I have suggested earlier, while it is important to understand the articulation of modes of production, it is equally important to identify the dominant mode? Moreover, the existence and growth of migrant labour, footloose labour according to Jan Breman, also seems to suggest that the various kinds of bonds that tied down labour to a particular plot of land or village or area is loosening. Doesn’t that gradually erode the semi-feudal basis of power in the rural areas?
Another related question that often comes to mind is this: are big and powerful feudal landlords left in India today, other than in small pockets? Does social, economic and cultural power in rural India reside with the class of feudal landlords? I have serious doubts that it does. I think, instead, that the social and economic power of the landlord class has been largely eroded. Rural power now rests in the hands of the middle and rich peasants, not in the hands of landlords. To a minimum that seems to be the case in large parts of India: Punjab, Haryana, Western UP, TN, Andhra, Karnataka, Kerala, West Bengal, Gujrat, Maharashtra. Therefore another question arises immediately: does this define the character of rural India or do the remnants of semi-feudal power in pockets of Bihar, Orissa, Eastern UP, MP, Chattisgarh, Jaharkhand define rural India?
Posted by Radical Notes May 4, 2007 at 10:28 am in Labour, Economy, India
Soumitra Bose
Prologue
SEZ. Special Economic Zone. There is a lot of speciality within this Zone -an area that is especially distinct and yes dis-entangled from the tentacles of the REST. The attitude is Seclusion. Secluded Expropriation Zoo - where human beings will be ushered in day in day out to get expropriated of all the juice and elixir and then let out at the end to get replenished from the Other that is the REST. That human body - the packet, will be filled- up to be juiced out again the next day. Quotidian extracting of human labour processed into Capital generation [do not read formation- it is far more technical and restrictive] SEZ- a perfected machine of Global colonization to churn out ready Capital only through Super-profit.
It is Marx and yet much Beyond Marx. The generation of Super-profit here does not precede any kind of Profit through normal market mechanism. It is simply an Enclosure where all kinds of non-market and non-exchange mechanisms will have full reign to bring out the wealth that will never bother, care or mind any market anywhere real or virtual and yet would generate profit- this kind of Super-profit is beyond Marx. Marx conceived of Super-profit as Rent. Marx did also conceive of absolute ground rent, even by stretching the connotation of “ground” to any labour producing space, we still cannot relate to Marx with the logic of our SEZ- here we have a space where the “owner” holds the nominal title of land, labour and yes many a times or, why not, most of the times Capital and still the rentee enjoys the occupation and very funnily extracts rent from the renter. Aha! This is colony-logic. You give, you pay, you own in paper and I own in real terms and I enjoy. The Master [read colony master] extracts labour power, transforms it into Capital, repatriates it, throws away the used parts to be replenished by the renter and then makes the renter pay for the whole transformation process. You own, you replenish, you provide, I take out the Capital, you get only one thing - a metric for your books called GDP. What will the renter do with it? None of rentee’s botheration. This is a Secluded Extraction Zone for him- the rentee. Rentee is the Master here- the owner is the slave. In old age colonies the Master invested the armed forces to subjugate and yes was responsible or (ir)responsible for the governance, administration and to a lot extent the up-keep [ or “up-unkeep”] of the space, here they don’t. They are (ir)responsible for nothing, and yet rewarded the profit- just because they chose to come here and increase the book value. Super-profit, Rent or Super-Rent, Marx or beyond Marx SEZ now is the Zeitgeist of what we all are elated to roll the read carpet for - DEVELOPMENT. A third world now is measured by a number and a volume- SEZ!.
How many SEZs will it take to call a nation-Developed?
The answer my friend is getting archived in the documents! The answer is touted in lectures!
Numbers: Arithmetic of SEZz
The government has now paved the way for immediate notification of formal approval for as many as 54 SEZs. Another 29 SEZs just await clearance from the Law Ministry, while 88 applications are now passing through the stage of verification. Then there are 162 SEZs that have already secured in-principle approval and only formalities remain to be completed. And then there are 350 new applications waiting for approval. Add up all these categories and the total is already close to seven hundred! If the average size of an SEZs is assumed to be 2000 hectares or 5000 acres,[Please note the highest stipulated limit for a single SEZ is 5000 acres and there is no bar if a space is subdivided and sub-divided into many named SEZs placed side by side] seven hundred SEZs would occupy around 1.4 million hectares or 14,000 square kilometres! And this is all prime land - agricultural or otherwise - in the vicinity of India’s major urban centres.
A Great Scheme indeed! Please note the (un)text between the lines:
· A SEZ need be as much contiguous as possible
o For the sake of ease and usability of course
· It needs to be near the metros, highways and beside the best navigable roads
· It needs to be prime agricultural spots as
o Previously used up [ or fouled-up-and-now-abandoned] barren spaces are too cumbersome to handle due to litigations and otherwise.
Well, here again the condition and definition includes an assumption and of course a provision- the best of the infrastructure the OTHER or the hapless provider [ read the native country] can provide. Add up the SEZ area and you will find a sixth of West Bengal, more than a third of the Kerala state- a small(!) price indeed to pay for India to scurry up the development ladder.
· Collateral damage (?) –
Another little price to be paid goes along.
· Loss of production (?) –
Oh yes, another minor one – to insignificant to note (sic!)
· Loss of environment and climate (?) -
Grow up! And let us lot spill good breath over serious money matters
· Loss of history, culture, neighbourhood (?) -
Oh! Development is serious and emotion does not have any scope here, let us keep those off for films and novels, that we would enjoy and sell again.
· Loss of livelihood of people (?) -
These poor lazy bums would have died anyway and anyhow, why pamper them and appease them- slaves and peasants are cankerous sores. Let us “civilize” them or “proletarianize” them and make them “responsible” wage earners.
The baggage: what comes along?
SEZs come along with a baggage, or rather packets to make the baggage, of different types, some of exclusions and others inclusions. The attitude of seclusion makes more of exclusions than of inclusions. The inclusions comprise
o Occasional housing for the leaders and officials who would run the show
o In some cases some provisions for these officials to take care of their familial chores like schools and crèches for the kids
o Power house to serve the enclosed zone
o Luxury facilities to be enjoyed by them
o And of course a system to preserve and thrive the corporate culture.
All these of course are only available to a selective few- exclusion here too! The principal Mantra is Exclusion! You exclusion more to thrive here! You reject more than you accept and that is how you belong to the “chosen few”.
Now let us peruse through the exclusions:
o Law of the land:
SEZ will be a space outside the realm of any kind of law of the land. The authority of the SEZ [read the rentee- the occupier] would decide which selected few laws of the land they will comply with and the host others they would not.
o Labour law:
Besides ordinary civil or criminal procedures, labour laws that affect any labour within the country will be summarily suspended. The authority of SEZ will have their own whims, they are even not obliged to lay down their own set of fixed rules or laws, they are free to do anything at any point of time with the labour.
o Labour provisions:
Remunerations and labour provisions and conditions of work do not apply within SEZ. The authorities are free to fix or unfix or even keep variable the minimum wage for the labour and any maximum time they deem fit for the labour to work.
o Labour arbitration:
The employees or the labourers will not necessarily be going through any kind of negotiation in legal formats as within the SEZ law of the land or law of any other country does not apply.
The employees may or may not have any negotiating right or mechanism to talk or deal with the authorities. The authorities will have full freedom in deciding the mores and modes of dealing with the labourers.
And therefore there is no question of a third party arbitration that will in any way be binding upon the authorities.
o Single authority:
While discussing these provisions we must not harbour any illusion that every single SEZ will necessarily have one single regulating or monitoring or managing authority. A SEZ can have multiple enterprises within and each enterprise is absolutely free to decide its mode of operation and modes of acts by themselves without the presence of any third party or intermediary.
The SEZs will as an empirical rule be provided with the maximum RESERVATION and SUBSIDY. The upcoming and “progressive entrepreneurs” will recruit working hands and labourers without any specific guideline to follow and are free to choose anyone they feel like from within the host country and the host society and yet are often very vocal about what they know term as “merit” and doing away with “reservation” but would enjoy all kinds of subsidies and reservations for themselves, let us go through those subsidies that they would enjoy to be provided by the native country:
· Tax Holiday:
The SEZ authorities will be given a long tax holiday, state taxes, state excise and even in some cases even central excise is exempted.
· Free electricity:
The state will provide free electricity or electricity in less than nominal rate for the production system.
· Free water supply:
The state shall provide free water and will allow the authorities to tap as much as free ground water as they feel and wish without any restriction to type or volume.
· Free road infrastructure:
The state or lay down proper road to the facility from the most important metro and other important facility points.
· Free of other regulatory payments:
The state will not impose any taxes that are generally levied on to the enterprises outside the SEZ area.
In addition to these the state or the province will ensure every kind of navigability and support structure so that the work within the SEZ can run with ease and at a growing pace.
The state will be bound to take care of any security concern of the people, mostly the officials of the SEZ, the general “smooth” running of the SEZ and the no disturbance or tough going within or outside the SEZ.
The banks. Financial institutions and service sector institutions nearby the SEZ will be providing service at the speed, time and other service requirements of the SEZ authorities - all these to ensure smooth extraction of profit and repatriation abroad or outside.
Who stands to gain?
The Stakeholders of the SEZ operation will be the owners of the means of production. They will produce and sell at their chosen market at their chosen price in their chosen time. These will then have the full freedom to stash the profits wherever and whenever they can. They will definitely be a chosen few to gain. Another big and privileged and yet subsidized and appeased class of billionaires or at least multi-millionaires will be created. Already India is a country with more than 100 top Asian billionaires where almost a billion or so are below the poverty line. We talk in billions now- both I terms of wealth amassed and in terms of numbers who slip down the wealth ladder - a little every minute.
There is another group of people who will never be within those enclosed spaces and yet will ever be benefited by those spaces. They are the realtors and the realty industry hommies. If there is one single boom in a industry it is the construction industry- the suppliers, the builders, the promoters, the middlemen, the musclemen, the mafias and of course the party apparatchiks who make people comply with the SEZ construction.
Marx talked about primitive accumulation of Enclosed spaces in eighteenth century England where Capitalism got its cheap fodders from for the sake of industrialization. Today the entire other-than-SEZ is such a space. The form is different rather just the opposite. The enclosed space is extracting out everything from the vast un-enclosed space for the present day neo-modern accumulation. The essence is the same the point of incidence has been swapped.
We will have enclosed spaces where production process would use the automation developed for a different nation and a different perspective copied and pasted out of context in this native time and space. The Mantra again is high productivity. But here the definition of productivity is very restrictive. Apparently it shows that output per unit of human labour is important but then it goes on to implement the maximum output with minimum factor input in terms of labour cost, this is buttressed and cheesed up by the minimum amount of variable capital input. These SEZs will deploy a very high and disproportionate organic composition of capital or fixed capital and there it will reap the benefit by fast depreciation of the values of the assets in the books and paying no Capital taxes. The factor investment per unit of variable capital, either in terms of increasing the skill of the labourer and/or the betterment of the working condition and of course connected with the no or minimal pay rise, will be put down to the bare minimum. The profit thus obtained is not the one realized from market restructuring or reorganization but simply by de-skilling of the labour power.
Who falls flat to lose?
All others! Yes that is exactly the description!
· The employees
o In terms of real wage and real negative growth
o In terms of de-skilling
o In terms of share of the production process and to the final product
o In terms of job guarantee and tenure
o In terms of loss of planning power for their future because they would not know what is coming next
o In terms of saving and investment plan anarchy increasing because of this uncertainty.
o In terms of social and cultural life
o In terms of leisure time for every worker
· The state:
o In terms of less and less earning as the years pass by
o In terms of providing real wealth and natural wealth
o In terms of decelerating rate of employment growth as these companies will either create job-less growth or job-loss growth
o In terms of a dwindling base of the consumer economy, as less and less people will have access to proper purchasing power.
o In terms of loss of agricultural produce
o In terms of loss of water resource and replenish-able natural storage resource
o In terms of increasing expenditure to employ more and more security personnel who do not add to any value.
o In terms of mal-distribution of the public utilities and distribution system.
o In terms of growing enmity and acrimony in the society between the miniscule beneficiaries and huge mass of deprived ones.
o In terms of less and less amount of amassing of small savings to provide for further investments.
· The common people:
o In terms of dwindling of available natural resources
o In terms of the real wealth getting siphoned to provide for the SEZ.
o In terms of increasing inflationary pressure in the quotidian prices of commodities.
o In terms of shooting up of prices of service products like medical, educational etc.
o In terms of their collective culture and life-style getting shattered through the demonstrative effect.
· The nation-state or the country:
o In terms of loosing sovereignty
o In terms of broken democracy or body politic
o In terms of social and political unity and cultural identity as these SEZs will be culturally, socially and psychologically islands of the metropolitan west inside the native land.
Infrastructure: To whom you belong?
Infrastructure is for all the people. For the whole nation! It is like the common pool from where different people take their need and use it differently. It is provided publicly, with public cost and maintained by the public authorities on behalf of the public. The income if any from any infrastructure facility is to be ploughed back for the public cause.
Even in terms of capital’s need public investment reduces unit level private investment. With highly developed infrastructure the private enterprises would rush anyway to invest. The huge cost of acquiring new business, that of communication, that of maintenance, that of travel, that of distribution, that of maintaining the supply chain and that of the ease and mobility of the work force are taken care by advanced infrastructure. This cost is huge and if the onus is taken away any investor would rush to reap the profits with only concentrating on the capital and variable cost.
The reason why SEZ needs prime motorable places near to metros is to avail of all the facilities a society can offer and thereby to mitigate the risk of production by fixing he uncertainties. Had the government invested in infrastructure development and subsidized their build up we would have seen a flood of private investors with their new concepts and they would not mind paying the work force a little extra something with a guaranteed job tenure with a steady increment to ward off the inflationary pressure. Our government is doing exactly the opposite. It is the tail that wags the dog here ! The government should have geared up the infrastructure and then let in the investors in the terms laid down by the government and now we see that the government is interested in preparing infrastructure to serve the capitalists by serving under the terms laid down by the capitalists. This is the destiny of mediocrity, of not comprehending the rules of society and even the market and that of economy and the algebra of Capital formation. When you fail to understand the science you drop out and become a mafia. The rule is true in individual real life and in the society or governance as well.
Development: thy name is Displacement: thy soul is eaten.
Every such development brings along Displacement. Displacement from the livelihood, from the history, from the surroundings, from the culture, from the human civilization! It creates a massive roving band of refugees- the people become a permanent refugee. A nation or society does not remain that of the domiciles but turn into one of refugees. They do not belong, they do not owe, they do not own, they drift! Drifting becomes the part and parcel of life in globalization. Oldies lament with “family values”, people lose their social values. Values are never created, as they do not stay to be registered or take root- they drift. Values drift because society drifts; society drifts because people drift collectively. One is not known, as one is never identified. One is not characterised; one is simply a number. A number is dispensable and therefore is not distinguished: a number is simply disposable. When a living and creating thing becomes a number, one becomes substitutable - a Robot. A number is the biggest anathema to creation and to life. A drifter is anti-artiste, he does not produce, if at all there is some thing there is anti-creation, anti-artefact, anti-product that actually annihilates previously produced artefacts. The basic piled up knowledge pool that accumulated to create are eaten up, diminished, and marginalized by anti-artefacts and anti-produces. One such anti-artefact is the weapons of mass destruction, that of mass-delusion, that of mass-deception, that of mass-depression and thereby mass-defection, mass-non-compliance leading to mass-anarchy. Drifters form the bedrock of mass-anarchy, not of any education, nor of any value, nor of any promise, nor of any plan.
Development mobilizes towards incessant mobility. People get mobile, they do not settle, not belong, not love, not share, not sacrifice for any cause or dream, they simply fight to survive, snatch to grow and kill to live for the next moment. It does not DEVELOP; Displacement inhibits Development! Civilization thrived on settlements, on taking roots and on creating histories and societies. Displacement nullifies, annihilates, and decimates all those. A roving band of charmers do charm the kids out of their abodes and invariably leads them to deep sea or hell fire… Our highly “mobile” value system does not promise or assure; it immobilizes any journey, any progress. The nomadic communities did not upgrade or change they remained nomadic, they actually remained in their un-remained state of no progress, no change, no development no paradigm shift. The fallacy of this drifting is the dialectic logic of immobility- the immobility of no change of nothing new- the same old.. same old.. drift and drift and drift your way along achieving nothing to show, to say, to boast, to be proud of, to be remembered. SEZ is the track of doom, of immobility, of dark unchanged hell! One gives birth to lifeless, value less disposable structures and bodies with no memory. Displacement is memocide in its finest and thus SEZ is civilization-cide. If there is any meaning of INQUILAB ZINDABAD, then after the physical demise and immortality of Neruda - it means now Change is the only changing thing, only certainty at the same time and only meaningful phenomenon. SEZ tries to halt this change through its facade of over-change - behind the facade is its nemesis - opposite called death— if INQUILAB ZINDABAD has to stay SEZ goes!…that is the mantra re-established in the centenary of the most famous war cry by Bhagat Singh!!!
Posted by Pratyush Chandra April 7, 2007 at 9:27 am in Europe, Imperialism, International Relations, Economy
Pratyush Chandra
Joseph Stiglitz is counted as one of a few dissenting economists in mainstream academia, and for some time now his dissent has been attracting quite a number of activists. He is officially invited by the “Another World is Possible” people to their meetings. Naturally he will think himself authorised to tell people how another world is possible, and what will be that world. He precisely does this job in his March column, “The EU’s Global Mission” distributed through Project-Syndicate:
“Another world is possible. But it is up to Europe to take the lead in achieving it.”
So the revolutionary project already has a vanguard, the only job left for the foot soldiers is to convince him/her/it to lead. How insightful! Any pessimism in this regard is ill-founded as
“the European project has been an enormous success, not only for Europe, but also for the world.”
Of course, like our Indian monkey-god Hanuman, Europe lacks ready self-confidence and needs a bear bard for encouragement. Stiglitz’s article does that job. Questioning the economistic common sense, he tells Europeans not to feel unconfident before the warlords in the US, as their competitors’ supremacy is baseless and phoney -
“…while GDP per capita has been rising in the US, most Americans are worse off today than they were five years ago. An economy that, year after year, leaves most of its citizens worse off is not a success.”
Moreover, the European Union’s mission is distinct, which are not laws, regulation, or phoney prosperity, but “long-lasting peace”, “greater understanding, underpinned by the myriad interactions that inevitably flow from commerce”. And “The EU has realized that dream” - “neighbors live together more peacefully”, “people move more freely and with greater security”. Stringent immigrant laws for and policing of the people from the South (this identity is very broad since it includes Black and Arab French, Muslim Europeans…) etc are perhaps aberrations, or may be the Southerners are racially ‘uncountable’ “within a new European identity that is not bound to national citizenship”.
Furthermore, Europe has mastered the competitive art of giving, and has surpassed the US -
“Europe has led the way, providing more assistance to developing countries than anyone else (and at a markedly higher fraction of its GDP than the US).”
Do we need to tell our Nobel laureate the economics of Aid, even AIDS?
Stiglitz too feels (not unlike Bush) that the world has changed during the past six years. However, he finds “democratic multilateralism” being challenged, human rights abrogated. Obviously he ignores all the contributions in grounding Bushism that earlier US governments made, especially Clinton’s, of which Stiglitz himself was a part. What if NATO was not less active earlier, Iraq too was continuously bombarded…
Stiglitz feels the need for multipolarity, and that Europe
“must become one of the central pillars of such a world by projecting what has come to be called “soft power” - the power and influence of ideas and example. Indeed, Europe’s success is due in part to its promotion of a set of values that, while quintessentially European, are at the same time global.”
Does it really matter if this whole discourse of “a set of [quintessentially European, but universal] values” seems hardly any different from Bush’s? Moreover, what are these values? First is “Democracy” - not just elections, “but also active and meaningful participation in decision making, which requires an engaged civil society, strong freedom of information norms, and a vibrant and diversified media that are not controlled by the state or a few oligarchs.”
Which formally democratic country officially denies these, and how many countries, including the EU members, provide safeguards against corporate-state monopoly over information and media? Further, the whole logic of the European monetary integration was to insulate strategic financial and economic institutions from any “active and meaningful” democratic influence, as it was considered external and an economic nuisance.
“The second value is social justice”, which is just individualism, however realized “only if we live in harmony with each other”. Does Bush deny this? The issue is rather who will establish the rules for that “harmony”.
What else?
In Stiglitz’s dream, the White Man’s burden definitely changes shoulders, but it remains the white man’s burden all the same -
“For the sake of all of us, Europe must continue to speak out - even more forcibly than it has in the past.”
Back to the old world - while the “world” remains the same - a white man’s world.
Posted by Pratyush Chandra March 26, 2007 at 8:52 pm in Latin America, Economy, India, Politics
Pratyush Chandra
James Petras has been criticised for his “ultra-leftism”. Petras doesn’t need my defence, if any at all. But since some comrades have raised concerns about ultra-leftism of the leftist critique of the sarkari left in India, I thought it pertinent to use my defence of Petras as a personal exercise in understanding this ultraleftophobia gripping these genuine comrades.
In criticising Petras, what is generally put forward is a list of few statements that he made while critiquing some of the progressive regimes in Latin America, which were ‘apparently’ proven wrong. His oft-quoted statement is about Chavez in his post-2004 referendum note, where he indicated at “the internal contradictions of the political process in Venezuela”, while simultaneously asserting that Chavez’s support “was based on class/race divisions”. Petras showed the flipside of the contradictions - while considering Chavez’s referendum win as a defeat of imperialism, he asserted,
“But a defeat of imperialism does not necessarily mean or lead to a revolutionary transformation, as post-Chavez post-election appeals to Washington and big business demonstrate…The euphoria of the left prevents them from observing the pendulum shifts in Chavez discourse and the heterodox social welfare–neo-liberal economic politics he has consistently practiced.”
He also stated that referendum results showed “that elections can be won despite mass media opposition if previous mass struggle and organization created mass social consciousness.” Differentiating Chavez from other national-populist leaders in Latin America, Petras said,
“In effect there is a bloc of neo-liberal regimes arrayed against Chavez’s anti-imperialist policies and mass social movements. To the extent that Chavez continues his independent foreign policy his principle allies are the mass social movements and Cuba.”
In his apparently pessimistic assessments about Lula, post-referendum Venezuela and now about Morales, Petras’ main focus has always been to critique the euphoric assessment of these regimes and put forward a political economic perspective of the developments. Retrospectively, one might assert that his pessimism with regard to Venezuela was not well-founded, but the fact that something did not happen is not a sufficient critique of the prognostication of what could have happened.
Petras’ pessimistic judgement and his optimistic ground engagement with various revolutionary movements in Latin America and throughout the world are two sides of the same “radical” coin - “pessimism of the intellect, optimism of the will”. His optimism allows him to see revolutionary potential within a particular situation, while his pessimism forces him to deconstruct the situation into various tendencies, class forces, class balance etc that may enhance or scuttle the realisation of that potential. For him as for other Marxists, history is not linear - at any given moment of time, there are various tendencies, countertendencies and social variables operating that synthetically determine the future - there is no single cause, and there is no single effect. Isn’t it a normal Marxist exercise - to identify this synthetic dynamics, while indicating possible “futures”? Isn’t it better to see the danger, which eventually may or may not realise into any mishap, and guard oneself against it, rather than not seeing any, and lead oneself willingly and with all enthusiasm to a dead-end? Another scholar-activist involved in Latin American transformation who never tires to talk about ‘contradictions along the path’ is Michael Lebowitz, when others are rolling drunkenly in optimist euphoria:
“The problem of the Venezuelan revolution is from within. It’s whether it will be deformed by people around Chavez.”
Lebowitz and Petras differ in their discursive tenor because of the differences in the loci of their political engagement, but they come from the great tradition of Marxists who have utilised Marxism to understand the day-to-day developments in global class struggle, without slipping into journalistic tinkering with appearances.
It would have been a different matter, if Petras had stopped short of presenting the revolutionary direction and started talking like radical fatalists and sectists. For them it is enough whether a leader or organisation has decried Stalin or not, whether s/he reads Trotsky or not, how many times s/he utters the word “imperialism” etc. For some of these people, allegiances to a particular sect, ideology is enough - a bible in one hand, and cross in another, drives away all counter-revolutionary devils around. What else are these convictions, if not “cabinets of fossils”! On the other hand, “metropolitan” leftists - Western (including many Non-Resident Third Worldists (NRTs)), Eastern, Southern…- who suffer from the guilt of unable to do anything concrete at the place of their being, celebrate every tokenism that fits into their utopia of progress, justice, democracy… In good faith (with a tinge of self-hatred and superiority complex), they think it’s their duty to “patronise” the Other, in most of their forms, of course only if these fit into their educated (non)sense.
Petras’ understanding of the Bolivian and Brazilian developments is from the point of view of the self-organisation and assertion of the working classes - urban and rural. The issue for Petras, even in his past assessment of Chavez, has been whether the political-parliamentary impact of the movements (accommodation of sections of their leadership in state formation) is enhancing and channelling the class capacity of the working class or it is simply institutionalising these movements and transforming them into representative lobbies, reducing class struggle to clashes of interest groups. The peculiarity of the new situations in Latin America, which also underlines their contradictions, to some extent derives from the statist component. The fact that the progressive governments are being constituted within the frame of bourgeois democracy poses new challenges for the popular movements and their relationship with the State. This situation makes it all the more urgent to recognise that, “We now have a state [which is not even formally workers-peasants state, like the Soviet] under which it is the business of the massively organised proletariat to protect itself, while we, for our part, must use these workers’ organisations to protect the workers from their state, and to get them to protect our state” (Lenin), while simultaneously heading towards a fundamental transformation of the state’s character. In this scenario, it becomes a primary task of the intellectuals organically linked to the working class to be extra vigilant and identify the various contradictions and tendencies affecting its movements, while delineating the possible directions that these movements can take in a perpetual ideological class struggle within. Petras in his critiques does exactly this.
Reading Petras in West Bengal
Petras in his recent article on Morales enumerates the implications of development strategies that “progressive” governments follow to “stabilize the economy, overcome the ‘crisis’, reconstruct the productive structure”, instead of recognising the fact that they are empowered “because of the crisis of the economic system” and their task should be “to change the economic structures in order to consolidate power while the capitalist class is still discredited, disorganized and in crisis.” Interestingly what is happening in West Bengal today is precisely this, where the Left Front government is indulging in reconstruction of the productive structure the way the Indian ruling class wants. However, definitely the internalisation of the hegemonic bourgeois needs within the Left Front (LF) is completer because of its 30 years rule in comparison to the newly elected governments in Latin America. Further, the Indian LF’s political cost for not following the neoliberal policies could have been far less, as it could have lost power in a fragment of the Indian state, where it does not have any sovereignty, while gaining political leverage throughout the country.
According to Petras, the stabilization strategy “allows the capitalist class time to regroup and recover from their political defeat, discredit and disarray”, while the working class is left on the receiving end to suffer the “costs of reconstruction and crisis management”. Also, “[b]y holding back on social spending and imposing restraints on labor demands and mobilization, the regime allows the capitalists to recover their rates of profit and to consolidate their class hegemony” Clearly, the left front’s repression of the trade union and peasant self-organisation especially since the 1990s have consolidated the capitalist class hegemony - material and ideological, while demobilising the exploited classes.
The industrialisation policies of the West Bengal government have weakened its popular social base”, strengthening “the recovery of its class opponents”, and thus are creating “major obstacles to any subsequent effort at structural change”. Its “policy revives a powerful economic power configuration within the political institutional structure which precludes any future changes. It is impossible to engage in serious structural changes once the popular classes have been demobilized, the capitalist class has overcome its crisis and the new political class is integrated into consolidated economic system. Stabilization strategy does not temporarily postpone change; it structurally precludes it for the future”.
Further, to think that if a progressive “regime ‘adapts’ to the regrouped capitalist class” it can be stabilised is just an illusion, “because the capitalist class prefers its own political leaders and instruments and rejects any party or movement whose mass base can still exercise pressure.” Aren’t these some basic lessons that we must learn - in Bolivia, West Bengal and everywhere?
Posted by Dipankar Basu March 26, 2007 at 11:40 am in Economy, India
Dipankar Basu
The debate over economic “reforms” in India has been going on for quite a long time now. This long and heated debate has been centred around the effects of what has been called “economic reforms”, a sharp change in the policy regime governing the Indian economy. It might be useful to recall that the policy regime in India gradually started changing right after Rajiv Gandhi came to power towards the end of 1984; of course the change was considerably accelerated after Manmohan Singh, the current prime minister, became the finance minister in the Congress government in 1991. Since then there has been no looking back; whether it is a coalition government led by the centrist Congress or led by the right-wing Bharatiya Janata Party (BJP), economic reforms have continued apace. In fact, consensus about the necessity and desirability of reforms is evident across the whole political spectrum, ranging from the right-wing BJP to the social democratic communist parties, CPI and CPI(M). Of course there are subtle differences in emphasis and speed of implementation, with the social democrats trying to play an oppositional role at the federal level while adopting those same policies in the states under their rule, notably West Bengal. It is as an attempt to forcefully impose this policy regime on the people of West Bengal, where a broad coalition of social democratic forces has been in power for the last three decades, that we must try to understand the recent brutalities of the State in Singur and Nandigram.
The main thrust of the policy change comprising “economic reforms” was a move towards according greater role to market forces in the economy and came in many guises. For instance it meant the lowering most tariff and non-tariff barriers to promote the trade of goods and services across Indian borders; it meant liberalizing many legal procedures related to investment, corporate taxation, trade, commercial banking, stock market activity and most importantly the hiring and firing of labour; it meant the disinvestment of public assets like public sector units, which in most cases meant selling off public assets built with tax receipts over the years at below-market prices to private capital; it meant an uncritical adoption of “fiscal fundamentalism”, i.e., paying especial attention to the balancing of the budget or at least making some serious efforts at reducing the government budget deficit; it meant the gradual entry of foreign capital into the Indian economy (both as FDI and as portfolio investment); it meant a gradual retreat of the State from the provision of social services like health and education and also meant the simultaneous encouragement of private capital to enter into these areas and many more similar changes. Compared to even the pseudo-socialist policy framework that had been established after the British departed in 1947, the new policy regime meant a massive swing in the direction of unfettered capitalism. And this could not but generate debate, vigorous and heated debate.
The debate centred around the effects of such changes; and since the effects of these policy changes would become clear only after some years, the debate almost wholly concerned itself with predictions, with the future. The crucial question was whether this new set of policies would benefit the economy as the proponents asserted or would lead to disaster as the critics pointed out. Ranged on both sides were the who’s who of the Indian economics and policymaking community. Arguing for the reforms were noted economists Jagdish Bhagwati, T N Srinivasan, Montek Ahluwalia, Manmohan Singh, Arvind Panagariya, Bibek Debroy, Surjit Bhalla, Shubhashish Ganguli and many others; on the other side of the table were equally distinguished economists like Prabhat Patnaik, C P Chandrashekhar, Jayati Ghosh, Praful Bidwai, Ashok Mitra, Amiya Bagchi and others.
Most critics of the economic “reforms” had argued that the adoption of the above set of policies would be disastrous for the Indian economy. They had argued that opening up the Indian economy to trade would lead to “deindustrialisation”, i.e., foreign goods would flood our markets and displace locally produced goods leading to closing down of local industries and thus increasing unemployment in the Indian economy. This, they had argued, would lead to a fall in the growth rate of the Indian economy (once the pent-up consumption expenditure boom was over) and lead to a fall in the economy’s overall productivity. They had argued that the poverty rate as measured by the head count ratio (the proportion of the people whose annual consumption expenditure fall below the poverty line) would increase and that income and wealth inequality would also increase dramatically. They had argued that the investment rate in the Indian economy would drop and lead to a shrinking of the capital goods sector. The proponents had, on the other hand, argued exactly the opposite; they had argued that the new policy regime would lead to growth in the economy and reduction of poverty.
Fifteen (or twenty if we start from the mid 1980s) years down the line, the evidence is at best mixed; if anything the empirical evidence seems to bear out the proponents’ claims more than the critics’. The growth rate in the Indian economy (as measured by the growth rate of the per capita income) has certainly increased over the last two decades; opening up the economy has not led to deindustrialisation (in fact our exports have increased as also our imports). The Indian economy does not have a large current account deficit which means that we have not been flooded with foreign capital. In fact, over the last few years, outward FDI from India has increased rapidly and in 2006, the Indian economy was a net outward FDI originator. Savings and investment rates have also dramatically increased. And probably most importantly, the poverty rate has consistently declined over the last twenty years; the rate of decline had itself declined in the nineties before picking up again in the last six years. But along with this we also have increasing income inequality, acute rural distress, a degrading environment and most importantly a stagnation in some of the most important indicators of well-being (like the infant mortality rate, the maternal mortality rate, the life expectancy at birth, the primary and secondary enrolment rates and many others).
The process of economic growth and development is more complex than either the well-known proponents or the critics would have us believe; both present only half-truths. When proponents of “reforms” ask us to look at the facts, they want us only to see that the poverty rate (as measured by the head count ratio) has declined; they do not want us to see that this decline has not been accompanied by an improvement in the measures of social well-being, they do not want us to understand the reasons behind the acute rural distress that has led to farmer suicides on such a large scale. The overemphasis on economic growth and the head count ratio by the proponents tries to discount years of research that has drawn our attention to the inherent limitations of this rather narrow measure of development and poverty.
Equally dishonest, I feel, are the intellectuals associated with the official, social democratic left. Faced with evidence that goes against their earlier pronouncements, they continually shift their stands without as much as acknowledging possible problems in their formulations. Notice how they have shifted their discourse on poverty: from poverty decline they have gradually moved onto the rate of poverty decline. Recall that most of them had started the debate by asserting that poverty would increase; once empirical evidence shows that it has not, they have started talking about how the rate of decline has itself declined! Recall also that they used to never focus attention on the indicators of social well-being that they find so important now; issues like education and health were looked at with little more than derision, matters for the “development economists” and not for radicals. Radicals indeed.
To put the whole debate in proper perspective it is important to realize that at bottom, the process of economic development is broadly a matter of increasing the productivity of social labour; and this, we know since Adam Smith and the classical political economists, can be best achieved by increasing the division of labour. Institutions which can support an extended division of labour will lead to increasing labour productivity and thus create grounds for general prosperity in the economy. I think there is much of relevance in classical political economy that can shed light on current debates and let me make a small digression into the writings of Adam Smith. Duncan Foley’s recent book, “Adam’s Fallacy: A Guide to economic Theology”, contains an extremely lucid, well-informed and critical introduction to classical political economy and I will borrow briefly from Foley’s account to motivate the point that I want to highlight.
What makes a nation prosperous, asked Adam Smith at the beginning of his inquiry into the causes of the wealth of nations. His answer is profound because of its stark simplicity: the extent of the division of labour. Not the abundance of natural resources, not the amount of precious metals like gold and silver, but the extent of the division of labour within a country determines the potential prosperity that it can offer its citizens. Behind this assertion lies the understanding - shared by all classical political economists - that the ultimate source of wealth is the labour that goes into the process of social production. The extent of the division of labour, by determining the productivity of that labour, ultimately determines the potential wealth of any nation.
In Smith’s account, the division of labour refers to “the breaking down of useful production into a series of separate tasks, each of which can be accomplished separately from the other”. It is important to realize that Smith sees the division of labour occurring at two very different levels, one at the level of the enterprise and the other at the level of society as a whole. The first, which Smith calls the detail division of labour, refers to the process by which production within a firm is broken up into separate tasks; it is the detail division of labour that finally creates the conditions for the introduction of machinery into the production process. But the division of labour also occurs at the aggregate or societal level; this is what Smith refers to as the social division of labour, which is the process by which “parts of a complex production process can be separated into different points of production, which may be located in different firms, or even different geographic regions”.
Smith’s account of the causes of the wealth of nations is completed by positing a positive feedback loop between the division of labour, labour productivity and the extent of the market; this link, when and where it can take hold, operates as a positive feedback loop. Widening extent of the market (i.e., growth in effective demand) supports an increasing division of labour, which increases the productivity of labour, leading to falling prices and rising real incomes. Growth in real income increases the extent of the market in turn, completing the virtuous spiral.
Notice how, in narrating this story of economic development, Smith the political economist has almost imperceptibly melted into Smith the theologian of capitalist social relations; this is the critical point that Foley helps us understand. For hidden within his “objective” description of the workings of a capitalist economy are two implicit value-laden propositions. First, that the process of technological progress and economic growth - the virtuous spiral of economic development - is beneficial for all members of society, i.e., it is autonomous and class-neutral: how else could it be morally justified? And second, that the defining institutions of capitalism - private ownership of the means of production, and markets - are the only ways to support a society-wide, complex division of labour with its attendant benefits in terms of high labour productivity.
To my mind, this is where the critique of economic “reforms” should really be located, not where the social democratic left has placed it. If India manages to establish the institutions of capitalism properly, then there is no doubt that this can lead to technological progress and economic growth. This growth will also lead to a decline in the poverty rates, much like that has happened in Korea and is currently happening in Vietnam or China. If this is true then why oppose economic reforms? This is a legitimate question which the social democratic left does not even attempt to answer. To my mind, the opposition to economic reforms lies in opposing the claim that capitalism is the only way to support an economy-wide complex division of labour. It is to take account of the cost of economic development alongside the benefits. It is to assess the class-nature of these costs and benefits in an already class-divided society. We must ask ourselves: will we oppose a development path that reduces poverty rates but only at the cost of increasing inequality? Economic development through capitalist industrialization (whose logic is, what Marx famously called, “Accumulate, accumulate! That is Moses and the prophets!”) will lead to dislocations of millions of lives in the medium and short run, though in the long run, the economy-wide poverty rate might go down. The question really before us is this: are we ready to ignore these medium and short-run costs for the long-run benefits which might materialize only in decades or even longer? Are we ready to accept a dispensation where the costs of economic development are disproportionately borne by those who will rarely, if ever, get to enjoy the benefits of that development?
The author is associated with Sanhati (www.sanhati.com), a solidarity forum for resistance to neo-liberalism in West Bengal, India.
Posted by Radical Notes March 25, 2007 at 3:03 pm in Latin America, Economy
James Petras
While the number of the world’s billionaires grew from 793 in 2006 to 946 this year, major mass uprisings became commonplace occurrences in China and India. In India, which has the highest number of billionaires (36) in Asia with total wealth of $191 billion USD, Prime Minister Singh declared that the greatest single threat to ‘India’s security’ were the Maoist led guerrilla armies and mass movements in the poorest parts of the country. In China, with 20 billionaires with $29.4 billion USD net worth, the new rulers, confronting nearly a hundred thousand reported riots and protests, have increased the number of armed special anti-riot militia a hundred fold, and increased spending for the rural poor by $10 billion USD in the hopes of lessening the monstrous class inequalities and heading off a mass upheaval.
The total wealth of this global ruling class grew 35% year to year topping $3.5 trillion USD, while income levels for the lower 55% of the world’s 6-billion-strong population declined or stagnated. Put another way, one hundred millionth of the world’s population (1/100,000,000) owns more than over 3 billion people. Over half of the current billionaires (523) came from just 3 countries: the US (415), Germany (55) and Russia (53). The 35% increase in wealth mostly came from speculation on equity markets, real estate and commodity trading, rather than from technical innovations, investments in job-creating industries or social services.
Among the newest, youngest and fastest-growing group of billionaires, the Russian oligarchy stands out for its most rapacious beginnings. Over two-thirds (67%) of the current Russian billionaire oligarchs began their concentration of wealth in their mid to early twenties. During the infamous decade of the 1990’s under the quasi-dictatorial rule of Boris Yeltsin and his US-directed economic advisers, Anatoly Chubais and Yegor Gaidar the entire Russian economy was put up for sale for a ‘political price’, which was far below its real value. Without exception, the transfers of property were achieved through gangster tactics - assassinations, massive theft, and seizure of state resources, illicit stock manipulation and buyouts. The future billionaires stripped the Russian state of over a trillion dollars worth of factories, transport, oil, gas, iron, coal and other formerly state-owned resources.
Contrary to European and US publicists, on the Right and Left, very few of the top former Communist leaders are found among the current Russian billionaire oligarchy. Secondly, contrary to the spin-masters’ claims of ‘communist inefficiencies’, the former Soviet Union developed mines, factories, energy enterprises were profitable and competitive, before they were taken over by the new oligarchs. This is evident in the massive private wealth that was accumulated in less than a decade by these gangster-businessmen.
Virtually all the billionaires’ initial sources of wealth had nothing to do with building, innovating or developing new efficient enterprises. Wealth was not transferred to high Communist Party Commissars (lateral transfers) but was seized by armed private mafias run by recent university graduates who quickly capitalized on corrupting, intimidating or assassinating senior officials in the state and benefiting from Boris Yeltsin’s mindless contracting of ‘free market’ Western consultants.
Forbes Magazine puts out a yearly list of the richest individuals and families in the world. What is most amusing about the famous Forbes Magazine’s background biographical notes on the Russian oligarchs is the constant reference to their source of wealth as ’self-made’ as if stealing state property created by and defended for over 70 years by the sweat and blood of the Russian people was the result of the entrepreneurial skills of thugs in their twenties. Of the top eight Russian billionaire oligarchs, all got their start from strong-arming their rivals, setting up ‘paper banks’ and taking over aluminum, oil, gas, nickel and steel production and the export of bauxite, iron and other minerals. Every sector of the former Communist economy was pillaged by the new billionaires: Construction, telecommunications, chemicals, real estate, agriculture, vodka, foods, land, media, automobiles, airlines etc..
With rare exceptions, following the Yeltsin privatizations all of the oligarchs quickly rose to the top or near the top, literally murdering or intimidating any opponents within the former Soviet apparatus and competitors from rival predator gangs.
The key ‘policy’ measures, which facilitated the initial pillage and takeovers by the future billionaires, were the massive and immediate privatizations of almost all public enterprises by the Gaidar/Chubais team. This ‘Shock Treatment’ was encouraged by a Harvard team of economic advisers and especially by US President Clinton in order to make the capitalist transformation irreversible. Massive privatization led to the capitalist gang wars and the disarticulation of the Russian economy. As a result there was an 80% decline in living standards, a massive devaluation of the Ruble and the sell-off of invaluable oil, gas and other strategic resources at bargain prices to the rising class of predator billionaires and US-European oil and gas multinational corporations. Over a hundred billion dollars a year was laundered by the mafia oligarchs in the principle banks of New York, London, Switzerland, Israel and elsewhere - funds which would later be recycled in the purchase of expensive real estate in the US, England, Spain, France as well as investments in British football teams, Israeli banks and joint ventures in minerals.
The winners of the gang wars during the Yeltsin reign followed up by expanding operations to a variety of new economic sectors, investments in the expansion of existing facilities (especially in real estate, extractive and consumer industries) and overseas. Under President Putin, the gangster-oligarchs consolidated and expanded - from multi-millionaires to billionaires, to multi-billionaires and growing. From young swaggering thugs and local swindlers, they became the ‘respectable’ partners of American and European multinational corporations, according to their Western PR agents. The new Russian oligarchs had ‘arrived’ on the world financial scene, according to the financial press.
Yet as President Putin recently pointed out, the new billionaires have failed to invest, innovate and create competitive enterprises, despite optimal conditions. Outside of raw material exports, benefiting from high international prices, few of the oligarch-owned manufacturers are earning foreign exchange, because few can compete in international markets. The reason is that the oligarchs have ‘diversified’ into stock speculation (Suleiman Kerimov $14.4 billion USD), prostitution (Mikhail Prokhorov $13.5 billion USD), banking (Fridman $12.6 billion USD) and buyouts of mines and mineral processing plants.
The Western media has focused on the falling out between a handful of Yeltsin-era oligarchs and President Vladimir Putin and the increase in wealth of a number of Putin-era billionaires. However, the biographical evidence demonstrates that there is no rupture between the rise of the billionaires under Yeltsin and their consolidation and expansion under Putin. The decline in mutual murder and the shift to state-regulated competition is as much a product of the consolidation of the great fortunes as it is the ‘new rules of the game’ imposed by President Putin. In the mid 19th century, Honore Balzac, surveying the rise of the respectable bourgeois in France, pointed out their dubious origins: “Behind every great fortune is a great crime.” The swindles begetting the decades-long ascent of the 19th century French bourgeoisie pale in comparison to the massive pillage and bloodletting that created Russia’s 21st century billionaires.
Latin America
If blood and guns were the instruments for the rise of the Russian billionaire oligarchs, in other regions the Market, or better still, the US-IMF-World Bank orchestrated Washington Consensus was the driving force behind the rise of the Latin American billionaires. The two countries with the greatest concentration of wealth and the greatest number of billionaires in Latin America are Mexico and Brazil (77%), which are the two countries, which privatized the most lucrative, efficient and largest public monopolies. Of the total $157.2 billion USD owned by the 38 Latin American billionaires, 30 are Brazilians or Mexicans with $120.3 billion USD. The wealth of 38 families and individuals exceeds that of 250 million Latin Americans; 0.000001% of the population exceeds that of the lowest 50%. In Mexico, the income of 0.000001% of the population exceeds the combined income of 40 million Mexicans. The rise of Latin American billionaires coincides with the real fall in minimum wages, public expenditures in social services, labor legislation and a rise in state repression, weakening labor and peasant organization and collective bargaining. The implementation of regressive taxes burdening the workers and peasants and tax exemptions and subsidies for the agro-mineral exporters contributed to the making of the billionaires. The result has been downward mobility for public employees and workers, the displacement of urban labor into the informal sector, the massive bankruptcy of small farmers, peasants and rural labor and the out-migration from the countryside to the urban slums and emigration abroad.
The principal cause of poverty in Latin American is the very conditions that facilitate the growth of billionaires. In the case of Mexico, the privatization of the telecommunication sector at rock bottom prices, resulted in the quadrupling of wealth for Carlos Slim Helu, the third richest man in the world (just behind Bill Gates and Warren Buffet) with a net worth of $49 billion USD. Two fellow Mexican billionaires, Alfredo Harp Helu and Roberto Hernandez Ramirez benefited from the privatization of banks and their subsequent de-nationalization, selling Banamex to Citicorp.
Privatization, financial de-regulation and de-nationalization were the key operating principles of US foreign economic policies implemented in Latin America by the IMF and the World Bank. These principles dictated the fundamental conditions shaping any loans or debt re-negotiations in Latin America.
The billionaires-in-the-making, came from old and new money. Some began to raise their fortunes by securing government contracts during the earlier state-led development model (1930’s to 1970’s) and others through inherited wealth. Half of Mexican billionaires inherited their original multi-million dollar fortunes on their way up to the top. The other half benefited from political ties and the subsequent big payola from buying public enterprises cheap and then selling them off to US multi-nationals at great profit. The great bulk of the 12 million Mexican immigrants who crossed the border into the US have fled from the onerous conditions, which allowed Mexico’s traditional and nouveaux riche millionaires to join the global billionaires’ club.
Brazil has the largest number of billionaires (20) of any country in Latin America with a net worth of $46.2 billion USD, which is greater than the new worth of 80 million urban and rural impoverished Brazilians. Approximately 40% of Brazilian billionaires started with great fortunes - and simply added on - through acquisitions and mergers. The so-called ’self-made’ billionaires benefited from the privatization of the lucrative financial sector (the Safra family with $8.9 billion USD) and the iron and steel complexes.
How to Become a Billionaire
While some knowledge, technical and ‘entrepreneurial skills’ and market savvy played a small role in the making of the billionaires in Russia and Latin America, far more important was the interface of politics and economics at every stage of wealth accumulation.
In most cases there were three stages:
1.During the early ’statist’ model of development, the current billionaires successfully ‘lobbied’ and bribed officials for government contracts, tax exemptions, subsidies and protection from foreign competitors. State handouts were the beachhead or take-off point to billionaire status during the subsequent neo-liberal phase.
2.The neo-liberal period provided the greatest opportunity for seizing lucrative public assets far below their market value and earning capacity. The privatization, although described as ‘market transactions’, were in reality political sales in four senses: in price, in selection of buyers, in kickbacks to the sellers and in furthering an ideological agenda. Wealth accumulation resulted from the sell-off of banks, minerals, energy resources, telecommunications, power plants and transport and the assumption by the state of private debt. This was the take-off phase from millionaire toward billionaire status. This was consummated in Latin America via corruption and in Russia via assassination and gang warfare.
3.During the third phase (the present) the billionaires have consolidated and expanded their empires through mergers, acquisitions, further privatizations and overseas expansion. Private monopolies of mobile phones, telecoms and other ‘public’ utilities, plus high commodity prices have added billions to the initial concentrations. Some millionaires became billionaires by selling their recently acquired, lucrative privatized enterprises to foreign capital.
In both Latin America and Russia, the billionaires grabbed lucrative state assets under the aegis of orthodox neo-liberal regimes (Salinas-Zedillo regimes in Mexico, Collor-Cardoso in Brazil, Yeltsin in Russia) and consolidated and expanded under the rule of supposedly ‘reformist’ regimes (Putin in Russia, Lula in Brazil and Fox in Mexico). In the rest of Latin America (Chile, Colombia and Argentina) the making of the billionaires resulted from the bloody military coups and regimes, which destroyed the socio-political movements and started the privatization process. This process was then even more energetically promoted by the subsequent electoral regimes of the right and ‘center-left’.
What is repeatedly demonstrated in both Russia and Latin America is that the key factor leading to the quantum leap in wealth - from millionaires to billionaires - was the vast privatization and subsequent de-nationalization of lucrative public enterprises.
If we add to the concentration of $157 billion in the hands of an infinitesimal fraction of the elite, the $990 billion USD taken out by the foreign banks in debt payments and the $1 trillion USD (one thousand billion) taken out by way of profits, royalties, rents and laundered money over the past decade and a half, we have an adequate framework for understanding why Latin America continues to have over two-thirds of its population with inadequate living standards and stagnant economies.
The responsibility of the US for the growth of Latin American billionaires and mass poverty is several-fold and involves a wide gamut of political institutions, business elites, and academic and media moguls. First and foremost the US backed the military dictators and neo-liberal politicians who set up the billionaire-oriented economic models. It was ex-President Clinton, the CIA and his economic advisers, in alliance with the Russian oligarchs, who provided the political intelligence and material support to put Yeltsin in power and back his destruction of the Russian Parliament (Duma) in 1993 and the rigged elections of 1996. And it was Washington, which allowed hundreds of billions of dollars to be laundered in US banks throughout the 1990’s as the US Congressional Sub-Committee on Banking (1998) revealed.
It was Nixon, Kissinger and later Carter and Brzezinski, Reagan and Bush, Clinton and Albright i who backed the privatizations pushed by Latin American military dictators and civilian reactionaries in the 1970’s, 1980’s and 1990’s . Their instructions to the US representatives in the IMF and the World Bank were writ large: Privatize, de-regulate and de-nationalize (PDD) before any loans should be negotiated.
It was US academics and ideologues working hand in glove with the so-called multi-lateral agencies, as contracted economic consultants, who trained, designed and pushed the PDD agenda among their former Ivy League students-turned-economic and finance ministers and Central Bankers in Latin America and Russia.
It was US and EU multi-national corporations and banks which bought out or went into joint ventures with the emerging Latin American billionaires and who reaped the trillion dollar payouts on the debts incurred by the corrupt military and civilian regimes. The billionaires are as much a product and/or by-product of US anti-nationalist, anti-communist policies as they are a product of their own grandiose theft of public enterprises.
Conclusion
Given the enormous class and income disparities in Russia, Latin America and China (20 Chinese billionaires have a net worth of $29.4 billion USD in less than ten years), it is more accurate to describe these countries as ’surging billionaires’ rather than ‘emerging markets’ because it is not the ‘free market’ but the political power of the billionaires that dictates policy.
Countries of ’surging billionaires’ produce burgeoning poverty, submerging living standards. The making of billionaires means the unmaking of civil society - the weakening of social solidarity, protective social legislation, pensions, vacations, public health programs and education. While politics is central, past political labels mean nothing. Ex-Marxist Brazilian ex-President Cardoso and ex-trade union leader President Lula Da Silva privatized public enterprises and promoted policies that spawn billionaires. Ex-Communist Putin cultivates certain billionaire oligarchs and offers incentives to others to shape up and invest.
The period of greatest decline in living standards in Latin America and Russia coincide with the dismantling of the nationalist populist and communist economies. Between 1980-2004, Latin America - more precisely Brazil, Argentina and Mexico - stagnated at 0% to 1% per capita growth. Russia saw a 50% decline in GNP between 1990-1996 and living standards dropped 80% for everyone except the predators and their gangster entourage.
Recent growth (2003-2007), where it occurs, has more to do with the extraordinary rise in international prices (of energy resources, metals and agro-exports) than any positive developments from the billionaire-dominated economies. The growth of billionaires is hardly a sign of ‘general prosperity’ resulting from the ‘free market’ as the editors of Forbes Magazine claim. In fact it is the product of the illicit seizure of lucrative public resources, built up by the work and struggle of millions of workers, in Russia and China under Communism and in Latin America during populist-nationalist and democratic-socialist governments. Many billionaires have inherited wealth and used their political ties to expand and extend their empires - it has little to do with entrepreneurial skills.
The billionaires’ and the White House’s anger and hostility toward President Hugo Chavez of Venezuela is precisely because he is reversing the policies which create billionaires and mass poverty: He is re-nationalizing energy resources, public utilities and expropriating some large landed estates. Chavez is not only challenging US hegemony in Latin America but also the entire PDD edifice that built the economic empires of the billionaires in Latin America, Russia, China and elsewhere.
Note: The primary data for this essay is drawn from Forbes Magazine’s “List of the World’s Billionaires” published March 8, 2007.
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