It is difficult to review a collection of essays in a book. One may not be fair in giving equal space to each eminent author. All the authors here adhere to a Marxist framework, difference being only in what aspects are highlighted. The book is a festschrift for Prabhat Patnaik, to acknowledge his contribution to the intellectual tradition, his wide-ranging interest and his efforts to find answers to questions he considered relevant. He was more open in his views on the relevance of Marx, as Ashok Mitra says in his praise of Patnaik—that he was more liberal among the liberals, despite being a strong adherent to Marx as the torch bearer of the classical political economy. This book comes at a time when we are witnessing the reversals of our earlier attempts to build a more egalitarian society that got fractured under the so-called reforms of the 1990s when India was opened up to global forces. This happened initially out of a financial crisis of mounting debts and the pressure from international financial agencies to do so—what is known as the Structural Adjustment.
In this context of the triumphal march of global capitalism, it is important to recall Piketty’s Capital In The Twentieth Century (2014). Capitalism, he argued has an inherent tendency to generate an explosive spiral of increasing inequality of wealth and income. This inegalitarian dynamic of capitalism is, he argued, not due to market failures or failure of economic institutions but due to the fundamental characteristic of capitalism. His thesis is built on long historical data relating to Europe and the USA. He extends Marx into the twenty-first century, by extending Marx’s functional distribution of income between capital and labour to personal distribution of income and wealth—especially to the tremendous concentration of wealth at the top centile whereby the 1% of the distribution control 35% of total wealth in the US to near zero for the bottom 50% of the distribution. Capital, he says, includes not only productive capital but personal assets inherited or accumulated by individuals through savings and investment of their labour income, including real estate. This means as the rate of return to all kinds of wealth exceeds the rate of growth of the economy, the stock of capital (or wealth) in the economy will increase and the share of capital in the national economy will go up. As that stock and income from capital increase is relative to total income in the economy, those who own capital and those who inherit some of it, need only reinvest enough of it to grow wealthier.
Let us see where we stand. The labour sector in India is marked by the size of its workforce. Out of 423 million workers according to the Economic Survey 2007–2008, those in the informal sector constitute 93%. They have lower wages, seasonal employment, lack of social welfare, denial of worker rights. Of the 423 million, 395 are women workers. The sector contributes 50% to GDP but most workers in this sector lack literacy, or skills. Every year 12.8 million youth enter the workforce but only 2.5 million have vocational training compared to 60-90% in developed economies.
After India embraced a capitalistic path more openly, the present data on inequality in India proves this result. A recent paper by Piketty and Channel (2017) shows growing inequality in India since 1922. The share of income accruing to the top 1% of income earners is now at the highest level. The top 1% in the 1930s had less than 21% of total income but dropped to 6% in the 1980s under an earlier regime of ‘import substitution’ that restricted foreign trade. Now it has risen to 22% after liberalizing trade. Since India opened to international trade, tax rates and tariffs were reduced and wages set by government enterprises declined with more privatization. Compare this with Europe where after World War II, distribution became more equitable. Nancy Birdsall (2014) says Piketty’s analysis is about inequality of outcomes and ignores inequality of opportunity. His solution is progressive income and wealth taxes. Using taxes and state regulation to finance public goods and to enforce regulatory standards would require, most of all, an effective state. It is precisely the failure of the state to play this fundamental role that increases concentration of income and wealth. What led to the present scenario in India is the nature of politics where privatization led to private gain and the manipulation of the state through corruption. After the last election, the regime that came to power at the Centre was pro big business, having relied on its support to come to power. Much has been made of the promotion of Hindutva, but this critical political support by big business is not given its true significance. Drawing from some of the comments of Arun Kumar (2014), we can see where the wind blew. The national income began to shift in favour of high savers who are the property owners, resulting in the slowing of mass consumption. Poverty estimates in terms of only income does show reduction but this hides the absence of availability of basic needs for a healthy life. Many policies have created distress for the people dependent on agriculture. Land acquisition in favour of urbanization and industrialization through amending laws, without proper compensation meant that many farmers lost their primary source of livelihood. In India, we have given enormous power to public officials. The more distant the government is from the citizen, the harder it is to hold them accountable. Arun Kumar recommends more focused decentralization, greater transparency, more information and empowerment of citizen groups. We can recall earlier attempts for citizen mobilization—that of Anna Hazare and Aam Admi party. Both failed.
In this context, Osmani (2008) offers some clues as to how we can evaluate the goodness of any action, rule or institution. This is to see what are the consequences that flow from any action. Sen however disagrees with this formulation as a purely an instrumental view. Sen’s approach quoted above by Osmani dealt with three related questions: i) what should count as an appropriate space of outcomes in the evaluation of consequences; ii) how can we take adequate note of both consequences and relevant non-consequences in the process of evaluation? iii) what principles of aggregation should be employed? Sen’s system of evaluation offered three propositions:
‘Evaluation of any state or actions leading to it, must take note of consequences for individuals in terms of their advantages and disadvantages as measured by the opportunity they have to lead the kind of life they have reason to value rather than in terms of some mental metric like happiness or desire fulfilment or some nature of opulence such as the nature of material possession’ (p. 15). Having explored some dimensions of how we evaluate any policy, state action and attended economic and political forces, it is time now to come to the book in question.
The Indian economy’s rate of growth has declined since 2010-2011. In the period preceding this decade, the capital intensive nature of investment, that implied induction of more capital to increase output failed to increase employment. Against this background, let us see what the authors of the book have to say.
After Independence, Nehru tried to pursue a more socialist orientation, inspired by the example of the Soviet Union. CP Chandrasekar (CPS) in the introduction remarks on Nehru’s ideas of a planned economy and a socialist pattern are pertinent here to understand what were the constraints in his fulfilment of his goals. ‘Given the character of the Congress that brought together sections with very different interests and ideological inclinations, united by a common desire for Independence from British rule, it was to be expected that when Nehru helped to formulate positions or the government under him its policies, he had to accommodate the views of and make compromises with different sections’ (p. 70). To some extent Nehru did have his own way. CPS identifies that the crux of the issue lies in the disjuncture between the rhetorical commitment to a socialist pattern and planned development. Nehru did not ascribe to a full or dominant public ownership, but only as welfare regime. However, the creation of a Planning Commission and Five Year Plans to organize public investment created the basic infrastructure for industrial development—private investment would not have been able to do this given the long gestation period that is necessary to create a capital goods sector. (Dr KN Raj defined this as the effort to make machines to make machines). But this was done within a mixed economy where private investment was allowed under a license regime. This led to the distortions that took place under the discretionary power given to the bureaucracy. Where Nehru departed from a fully socialist society is the fact that the state was not in full control over the income of private agents and failed to discipline big business. The most significant achievement however was in the creation of diversified, industrial, technological base. Where the policy failed was carrying out land reforms. The lesson we learn from our experience of Nehruvian strategy is, according to CPS, to understand that there are institutional pre-requisites for the successful pursuit of any policy. CPS feels that Nehru was aware of this but given the political weight of the landed section within the Congress, he was hopeful, that the effect of Planning and Public investment, redistribution of assets etc., would eventually take care of the problem.1 Coming to the specific points made by the contributing authors, we take each author to note briefly the analysis presented of what ails our times.
Aizaz perceives a profound transformation in the nature of the capitalist state, where the formal apparatus of liberal governance are kept intact but neo-liberal economic policies are combined with a cacophonic ardour of a xenophobic nationalism accompanied by religious bigotry. As the Left is no longer a party in the struggle for state power, this has made way for the far Right’s ascendancy. He indicts the inability of western Marxism to offer any structurally coherent account to explain what the disappearance of an adversarial state system meant for the extensive new freedoms for the operation of imperialism post 1989, in China. The conditions prevalent at the present juncture, which Aizaz predicts as dangerous are: 1) the economic fallout of World War I followed by the Great Depression in the US led to widespread desperation and social disintegration. 2) The US is still the world’s most powerful economy despite debts and deficits because of the alliance between military power and economic power. 3) The decline of socialist countries. Communism collapsed in S.E. Europe, S.W. Europe and Western Europe. The outcome of these events is the decline in the meaning of ‘political’. A century of attempts to create a society beyond capitalism failed. His agony is that the intellectuals of the Left and the New Left learnt only what not to do. Yet he concludes with the optimistic faith that the revolutionary consciousness and language appropriate for that consciousness that Marxism spawned could be used by all exploited and oppressed people of the world, like anti-colonial movements, the women’s movement, revolts against racism and caste oppression.
Jayati Ghosh further explores the history of imperialism. The disintegration of colonialism in the second half of the twentieth century did not end imperialism. It continued under a new guise through the domination of finance, globally and nationally. A very pertinent point she makes is that imperialism is no longer about getting control of territory but the creation of new markets, new sources of labour, new forms of surplus labour. Multilateral Trade through the General Agreement of Trade and Tariffs (GATT) imposed non reciprocal terms between the developing countries and the developed countries. This affected possibilities of autonomous development for the countries of the South. (I would like to add here to Jayati’s argument the well known international trade theory that the balance of power between the buyers and sellers is conditioned by the so called ‘comparitive costs’. The cost of production of goods in the less developed countries is lower because it is more labour intensive. The seller here is therefore at a disadvantage in getting a fair price for his products while the buyer has more power. The seller in the advanced countries selling technologically more sophisticated, capital intensive products can demand a higher price for their products.2
Many trade related agreements like the one on Intellectual Property Rights were unequal. Jayati mentions other discriminatory agreements like Trade Related Investment Measures (TRIMS) or Non Agricultural Market Access (NAMA) or Agreement on Agriculture (AOA). All these trade and economic partnerships operate at the production stage.3 While earlier basic amenities and social services were provided as public goods, these have now been privatized.4 There is a growing weight of China in international trade.5 Biswajit Dhar recalls that the Doha round of negotiations of WTO (World Trade Organisation) agreed to make positive effects designed to ensure that developing countries share in the growth of trade commensurate with their needs. It laid down the mandate that ‘special and differentiated treatment for developing countries shall be an integral part of all elements of negotiation and shall be embodied in the schedules of the conscious commitments as appropriate in the rules and disciplines to be negotiated so as to be operationally effective and to enable developing countries to effectively take account of their development’ but mega regional bodies stalled these decisions by allowing market distorting policies. Hence new challenges emerged to the multilateral trading system because WTO could not monitor these trading blocs and bring them under discipline.
Prakash Karat’s piece ‘Neo Liberalism. Authoritarianism And Contemporary Polity’ sees India’s development as having taken place within an incomplete democratic revolution. Faced with global changes with the hegemony of finance capital, the capacity of nation-states to defend national interests got eroded. On the one hand, for all political parties, there is the compulsive need to respond to popular aspirations for a better life, and on the other hand the reality of the nexus between business and politicians makes them Janus faced. Additionally, the importance of Parliament has declined. The emergence of identity politics combined with neo liberalism is a potent mixture which the Left6 should confront.
Teesta Setalwad sees the rise of the RSS as inducing shifts in policy towards a free market accompanied by an over emphasis on public outlays on corporate subsidies while outlay on rural employment, health education and other social sector allocations were cut. We all know the story of non-performing assets of national banks, where the heavy borrowings of the corporate sector were not repaid. They could be condoned while the many small enterprises were without access to reasonable credit. Micro Finance organizations charged interest as high as money lenders. Teesta notes the composition of our MPs. Our parliament has 545 seats. MPs with assets worth 10 million each occupy 353 seats. The Left has 12 seats (from Kerala, West Bengal, Tripura).
We see a convergence of corporate, political, media interests. Labour movement is in abeyance after economic reforms. She ends with this anguish: the CPI(M) has one million votes. Where do these votes go? The challenge for the Left today is to look for strong, progressive alternatives of form, language and approach. (Is Teesta saying the Left must reinvent itself?) To quote her concluding remarks: ‘It is the abdication of the working class from active involvement in the discourse on socio democratic politics and the direction of political economy that has contributed to the erosion of parliamentary system of democracy and its transformation into its present day manifestation of majoritarian electoral politics’ (p. 173). Here one should go beyond Teesta to analyse why the trade union movement in India declined. In one sense the ‘uorganized sector’ is by definition not ‘organized’ but dispersed. Secondly, the organized sector used methods of outsourcing to these units. A famous example that comes to my mind is the practice of Bata Shoe Company. The shoes are made by local cobblers but the Company does the finishing and stamps its brand name.
Zoya Hasan also bemoans the emergence of Hindu nationalism with BJP in power. The Indian National Congress’s share in parliament got reduced to 44 out of the 545 seats. The Left parties were nowhere. Zoya makes the point that dubbing it as merely Right Wing (like the Tories in the UK) misses the uniqueness of the BJP. What is now commonly understood is why the National Progressive Alliance-NPA) lost after two terms in office. The plethora of corruption cases undermined its legitimacy through mounting public discontent and the Congress dug its own grave. Modi mounted a well-crafted campaign, supported by the generosity of the corporate sector, whose major funds flowed to one party—the BJP which made an easy entry. In that sense, the appeal to Hindutva worked mainly because the debacle by the NPA opened the space for an alternative. The BJP’s patron was the RSS which had 45,000 nationwide branches with loyal cadres. Modi’s accent on ‘development’ obscured the violence that is the Hindutva adherents’ creed. The corporate sector’s bonanza was the reduction of the state’s role in the economy. While secularism has been integral to India’s democracy for the past seventy years, during the last two decades or more it evinced a decline. Her concluding remarks are worth remembering: secularism is not an option, but an absolute necessity in the context of India’s diversity and plurality. I would like to add that the BJP’s notion of Hinduism goes against the grain of Hinduism as it has existed—as S. Radhakrishnan propounded: Hinduism has no one doctrine, no one founding prophet, no congregation. It is one country which hosts all the religions of the world. ‘Hindutva’ is not really about Hinduism but a political rallying point on ethno-religious ideals. A significant point which Zoya makes is something we need to attend to: reform our electoral system. Under our present the first past the post system, a party with just 35% of the votes can come to power.
Praveen Jha, Sam Moyo and Paris Yeros refer to Marx’s formulation of labour reserve created by capitalism. The models of competitive economy proposed by heterodox tradition while they acknowledge the presence of substantial labour reserves, do not visualize their presence as intrinsic to capitalism. They accept Immanuel Wallerstein’s notion of Core (the metropolitan advanced economies) and Periphery (the economies of countries less advanced) and how labour from the periphery becomes a labour reserve to be drawn upon when needed. For four hundred years, the onset of capitalism created a mode of production that helped to colonize, which under decolonization led to the preservation of a Core and a Periphery. The agricultural population moves to urban areas and performs the job of a labour reserve. In the long march of capitalism globalization was an uneven process embracing three phases; a) imperial domination, b) regulated capitalism on a global scale and c) neo-liberalization. While it led to industrialization in our initial years and a diversified industrial structure, because of the missing dimension of land reforms, the development of a home market was severely compromised. East Asia did better by instituting land reforms before an export led growth. There is a high proportion of wage and salary workers in Europe and the USA. Wages and salaries there account for 80% of labour income with only 9% of own account workers. In comparison, wages/salaries make up 60% in Latin America and the Middle East,7 East Asia has 48%, SE Asia has 36% but South Asia has barely 21%. This has been a setback to the working classes and has led to both unemployment and disguised unemployment. The authors could have brought in the role of the informal sector in India which is the source for the bulk of employment—though irregular, and uncertain even in the USA.8
Michael L said in 2001:
Do we need an alternative to capitalism? Is anti capitalism enough? People develop through their activity and a new society is inseparable from the new ideas they take on, in the struggle to satisfy their needs. We need to return to a conception of socialism as a society in which the full development of human potential is paramount .Who can possibly think today that the full development of human potential is compatible with patriarchy, racism, imperialism and other hierarchies for sources of oppression? Unfortunately these dissenting voices to capitalism today are not as forceful because of the alignment of global economic and political forces.
Back in 1992, Bhargava wrote that egalitarian elements are built into the very idea of socialism. The good life is free, nurtures democratic values and promotes individual creativity. It gives a distinct identity to individuals, where people manage their lives both in the work place and outside it. The distinction between work and leisure where organic links exist between the self and others and where human beings are reconciled to nature. Socialism in the present context remains a distant dream.
What better way to end this review than quote Joseph Stiglitz (2002) in his review of Sores’s article on globalization, that stated categorically, ‘Open society is based on the recognition that we act on the basis of imperfect understanding. Perfect understanding is beyond reach. We must content ourselves with an imperfect society that holds itself open to improvement. The acceptance of imperfection coupled with a constant search for improvement and a willingness to submit to critical examination are the guiding principles of an open society’.
The book is long on problems, short on solutions.
Arun Kumar (2017): Interview with Lucas Chanal in The Hindu. September 9.
Bhargava, Rajeev (1992): The Continuing Relevance of Socialism. Economic and Political Weekly, October 3.
Birdsall, Nancy (2014); Thomas Piketty’s Capital and the Developing World. Ethics and International Affairs. 28, No. 4.
Michael L (2001): Reclaiming a Socialist Vision. Monthly Review, June.
Osmani. S.R. (1998): The Sen System of Social Evaluation. Chap. 2; pp 15-33; in Arguments For a Better World. Ed. Kaushik Basu and Ravi Kanbar. Oxford University. Oxford University Press. Vol. I.
Piketty Thomas (2014): Capital in the Twenty-First Century (English) Harvard University Press, Harvard.
Water, Shelly (2017). After Piketty: The Agenda for Economics and Inequality. Ed. Heather Boushey, Bradford Belong and Michael Stienbaum. Harvard, Harvard University Press.
Maithreyi Krishnaraj, a well known Women’s Studies scholar, was guest editor for EPW for more than three decades. She has published several books and articles. Cambridge Biographical Centre had voted her as the best Women’s Studies Scholar in 1989 &1999. She has been a research consultant to several international organizations like ILO, UNIFEM, UNDP, UN Women. Her forthcoming book is Intellectual History of Women’s Studies (Kali for Women).
1 Gandhi’s approach was more a moralistic one, where he was not against big business, but expected them to play a trusteeship role. He often stayed with the Birlas.
2 The US wanted to patent turmeric product on the plea that India had no patent. It was after all a traditional practice in India. We won the case.
3 WTO has been objecting to our food subsidies despite the fact that Europe and US give 40% subsidy to its agriculture and dairy. Recently non tariff barriers are another contentious issue.
4 Especially dilution of funding for public health facilities has imposed a big financial burden on the poor.
5 China is resource poor compared to India. Iron ore has been smuggled to China, illegally from India. Note on Fascism from Wikepedia-accessed on 18 September. 2017.
6 The use of the terms Right and Left to depict the position in the political spectrum has an interesting history. During the French Revolution in 189 supporters of the king sat to the Right and supporters of the revolution sat on the Left in the National Assembly. Today a more relevant terms would be ‘open’ or ‘closed’.
7 We no longer call it the Middle East but West Asia.
8 Illegal migrants from Mexico are employed by many companies in the USA.