The Corporate Sector and Primitive Accumulation

WHO are the gainers from Narendra Modi’s signature project?

First and foremost, those stakeholders whom we saw in the previous chapter aggressively batting for the total elimination of cash on a global plane: the various “financial inclusion” enthusiasts, card networks like Visa and MasterCard and so on.

Then you have their kith and kin in India: the recently launched "payment banks", telecom operators (some of which, like Vodafone and Reliance Industries, have also branched into the payments bank sector) internet service providers and electronic wallet firms -- all of which earn profits as intermediaries between buyers and sellers of products and services.

Also there are the commercial banks, which benefited from massive inflow of cash following Demonetisation, because that helped partially refill their coffers looted by cronies like Adani and Mallya, thereby temporarily arresting the drift towards a US style banking crisis. Of course, this is no solution to the non-performing assets(NPA) problem and the banks will be allowed to be looted again so long as the current lending policy prevails.  

Big enterprises in other fields also expect to gain from the decimation of their tiny competitors in the informal sector, but whether such gains will be offset or more than offset by the losses arising from the overall slowdown in the economy remains to be seen.
And who are at the losing end? Obviously the self-employed, the casually employed, those running micro and small enterprises, workers -- especially temporary/casual workers including agrarian labourers who did not find work -- peasants who failed to cultivate and/or took loans at exorbitant rates of interest, small traders and street vendors whose customers migrated to bigger shops with facilities for digital payments, and so on. They are suffering, and will continue to suffer in future: for many, job losses are permanent; peasants, unable to repay the huge loans and interests especially due to fall in prices of agricultural produce, stand on the verge of economic ruin and even suicide; traders who acquire POS machines to stay in business have to bear the additional cost of merchant discount rate (MDR, to be paid to the banks, which proves prohibitive for them though not for the big retailers) and also the burden of handling various technical and accounting issues such as self-declaration and KYC norms … in the informal/unorganised sector it is a story of endless sufferings all around.

Not that the formal/organised sector, which is predominantly the corporate sector, was not hurt. It was, both by disrupted supply chains of raw materials (mostly provided by the informal sector) and reduced demand (caused by not only the cash crunch but also depressed or vanished incomes). Manufacturing, infrastructure and real estate experienced a slowdown that is yet to be over. But while the big enterprises as a rule have the wherewithal to tide over the losses in a period of time, those in the unorganised sector lacks this resilience and often get permanently crippled.

Did not the government and its economic advisers actually have any idea about the enormous barriers which make thorough digitalization an impossible proposition in our country? It is hard to believe that. For in the "Concept Paper on Card Acceptance Infrastructure" published in 2016, the RBI itself provided us with a very good account of such bottlenecks and also showed that given the ground situation digitalization tends to bypass the small businesspersons and caters to the big ones. So there were absolutely no grounds for them to believe that forced digitalization would bring about rapid and inclusive growth. The real economic objective could only be to promote the expansion of the formal sector (especially of its corporate core, and the cronies within that core) at the expense of the so-called 'informal' sector, which is actually the mainstream social and economic lifeline of "we the people of India". And that’s what is being accomplished now: another ghoulish spectacle of what Marx called the primitive accumulation of capital.

In Marx, primitive accumulation refers to both (a) the historical phase which created the preconditions for the rise of capitalism through "a process that transforms, on the one hand, the social means of subsistence and of production into capital, on the other, the immediate producers into wage labourers" and (b) a process that is occasionally resorted to throughout the history of capitalism for purposes of maintaining and reproducing this separation "on a continually extending scale" and transcending the multiple barriers to normal market-mediated capital accumulation in periods of crisis/stagnation.Marx elaborates the different dimensions of primitive accumulation in different contexts in many places in Capital – primarily in Volume I, Part VIII (quotations in this paragraph are from Part VIII) but elsewhere too. His dynamic understanding is highlighted when he observes, "The history of this expropriation, in different countries, assumes different aspects, and runs through its various phases in different orders of succession, and at different periods." While narrating the "Genesis of the Industrial Capitalist", he takes note of some of these "different aspects" or forms/levers of primitive accumulation: " … the discovery of gold and silver in America, the extirpation, enslavement and entombment in the mines of the aboriginal population", slave trade, piracy, pillage of colonies by European powers, "the system of public credit, i.e., of national debts", the "international credit system ", and so on and points out the basic commonality: "... they all employ the power of the state....". At a certain point, "law itself becomes... the instrument of the theft of the people's land" – exactly as it has happened in our country. Over the 150 years that separates us from Capital, numerous new methods of primitive accumulation have appeared on the horizon, giving birth to a rich Marxist literature on the topic.Among these contributions, special mention must be made of David Harvey's formulation of "accumulation by dispossession" – "the continuation and proliferation" of primitive accumulation in very many forms including commodification of land and eviction of peasants, monetisation of exchange and taxation, usury, use of the modern credit system (credit cards, easy loans and instalments, sub-prime housing loans and foreclosures in the USA, etc.). Among the main features of accumulation by dispossession he includes financialisation, which is particularly notable in the context of the present discussion.

We Indians have had to suffer the pains of waves after waves of primitive accumulation in the not too distant past: piracy and pillage by Dutch, Portuguese, Spanish and British East India Companies; the colonial drain during British rule; de-industrialisation of the great Indian handicrafts in unequal wars with the rising British industries; the evictions associated with modern industrialisation and 'development' (building big dams for example) in late British India and then in independent India; and more recently in the era of neoliberalism, the spate of land grab in Dadri, Raigad, Singur, etc. which represented one of those historic moments, as Marx puts it in Capital, "when great masses of men are suddenly and forcibly torn from their means of subsistence, and hurled as free and "unattached" proletarians on the labour market...". The latest – and very unique -- addition to the long list is the Demonetisation-Digitalization onslaught.

Finance Capital and Demonetisation

Exactly 100 years ago, Lenin in Imperialism the Highest Stage of Capitalism talked about "the separation of money capital… from industrial or productive capital", which "reaches vast proportions" under "imperialism, or the domination of finance capital". And he added: "The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the finance oligarchy…"

Since the advent of neoliberalism in the last quarter of the past century, finance capital has further bolstered its dominant position, achieving for itself still greater freedom from state regulations. Under popular pressure some restrictions were put in place in advanced capitalist countries in the aftermath of the crisis that started in 2007; but many of these are in the process of being rolled back. For example, Donald Trump has pledged to drastically water down – if not abolish altogether – the Dodd-Frank Wall Street Reform and Consumer Protection Act. With rapid advances in information technology, fintech firms – such as Microsoft, Visa, Mastercard -- and their associates have taken upon themselves the task of aggressively expanding the frontiers of finance both within and across national economies. The concerted efforts for promoting digitalization, briefly noted in the previous chapter, is a part of this ongoing international initiative.

But the commonality ends here, with the shared vested interests of finance capital and big corporates in pushing for cashless economy as in many other countries. As for the specific form and content of Demonetisation-digitalization in India, it is marked by certain peculiar features.

The Marks of Modi and the Impending Popular Backlash

These salient features are best captured by way of summing up, in three points, what we have talked about so far.
First, unlike the empty talk of Achchhe Din, the vacuous "Make in India" slogan, the bullet train rhetoric or the empty claim of surgical strike on Pakistan, the Note Ban-Less Cash continuum has proved to be a serious, sustained and efficacious measure. The crux of the matter and long term objective (being pursued for quite some time now) is digitalization, which is designed to (a) extend the ongoing process of neoliberal restructuring to the sphere of currency, exchange and finance and (b) permanently tilt the economic balance in favour of the predominantly corporate organised sector vis-a-vis the non-corporate unorganised sector. Demonetisation on the other hand was primarily a political gamble (which partly paid off in the short run) that sought to give a facelift to Modi’s sagging popularity and reflected the frantic urge of a fascist personality to project himself as a ruthless leader capable of doing things others do not dare to dream of; it was also an attempt to forcibly speed up digitalization. The first ‘D’, conforming to a global trend of the times, enjoys full support of establishment economists; the second one, something unprecedentedOver the past century several total Demonetisations have taken place in: (a) countries reeling under hyperinflation, with inflation rates measured on a weekly or monthly (rather than yearly) basis, such as Germany in 1923 following devastation in WW I; (b) countries on the verge of economic collapse, such as Zimbabwe in 2015; and (c) countries in deep economic or political crisis, such as Ghana in 1982, Nigeria in 1984, Myanmar in 1987, Zaire in 1993 and the USSR in 1991. In every case there were some very special, compelling reasons. In Zimbabwe for example the value of a 100 trillion Zimbabwean dollar note dropped to about 35 American cents and forced the government to abandon the troubled national currency for the US dollar. Nowhere was such large scale but partial (86%) Demonetisation attempted, and that too in normal circumstances and on such flimsy pretexts. in world history, has been widely decried by the same group.

Second, Note Ban definitely bears the unmistakable marks of Modi: the theatrics and demagoguery of the 8 November announcement and his subsequent sermons; the way the Prime Minister took such a high impact decision all by himself ignoring elementary norms of responsible governance; the obstinacy and arrogance with which he rubbished all criticism and suggestions on this question; the way all opponents were branded as corrupt anti-nationals; and finally, the cruel refusal to use the budget route for offering a healing touch to the honest, hard-working Indians brutalised by Note Ban. In intent and content, impact and implications, it is definitely a key element in the evolving economic programme of Indian fascism, authored by a worthy disciple of Golwalkar and the first Sanghi to have occupied the top post in the country with a free hand to rule, unhindered by any balls and chains imposed by partners in a coalition government.  

Third, given the stark pro-corporate bias of digitalization, it represents a quantum jump in the ruling BJP's inevitable metamorphosis, which had started years ago, from a traditional bania-based party to a party of big corporates. The programme purports not only to curb tax evasion but, more important, also to enormously strengthen full-spectrum state surveillance and control over individual citizens, firms and other non-state actors. In this way it works for a powerful intrusive state armed with latest techniques of electronic (and, with Aadhaar chipped in, biometric) policing. And surely a strong police state remains – as in the past – a basic prerequisite of fascism.

However, the aggression on the life and livelihood of those who comprise the non-corporate informal sector – the forcible separation of many of them from their "means of subsistence" – is being carried out not in one stroke with brute physical force (as in the cases of land grab for example) but slowly by economic means. Moreover, the whole project is meticulously marketed as the first serious, effective, national attack on black money and corruption. All this prevented an immediate outburst of popular anger and resistance. However, as the hard facts of life start revealing themselves through the fog of confusion created by the RSS-aided government propaganda, as Demonetisation-induced depression takes a toll of the income and livelihood of the millions working in the informal economy and the Modi government dismantles whatever welfare framework had been developed over the years, replacing subsidies with cash transfers and subjecting the people to the intrusive surveillance of the biometric Aadhaar card and the vagaries of the market, the poor will definitely fight back and the megalomaniac despot will be duly punished for his economic war on India.