BY the turn of the second millennium, the Humpty Dumpty of neoliberal capitalism had climbed atop a high wall at great risk, enjoyed sitting there for a while feeling like “I am the monarch of all I survey”, and then, inevitably, had a great fall. That was in 2007-08. All the Kings’ (there are many across the world today) horses and all the Kings’ men tried and tried, but could not put Humpty Dumpty together again.
The modern-day horses and men – the IMF and World Bank, the OECD and G 20, the US Federal Reserve and European Common Bank, in our case the RBI and the Ministry of Finance – are, however, desperately continuing with their efforts to put their disparate neoliberal models of growth back in shape. The outcome so far has been contradictory.
On one hand, just as modern medical technology has acquired the expertise to make an old, ailing person apparently on deathbed walk again (albeit with difficulty and for a limited period) so imperialist states and international financial agencies have been able to use their enormous economic resources, accumulated over centuries of exploitation and plunder, to somehow manage the crisis and save the system – without solving the nagging problem of recession, and at the cost of losing much of its intellectual-moral hegemony and political legitimacy. Having accomplished this historical feat, however, global financial capital has further consolidated its brutal domination on world economy at least for the time being.
On the other hand, the very partial success and the worrisome “side effects” of the treatment have already started generating, even among establishment economists in the West, a belated recognition of the need for some partial course correction; even as popular resistance against austerity measures – on the streets in various forms and at the hustings – go on across the world.
We have ventured to capture this entire development in a trilogy on the global economic crisis, of which the present pamphlet is the third. The first was brought out in February 2009, when the catastrophic financial crisis had just hit the capitalist world order and was quickly metamorphosing into a stubborn global recession. Titled Capital in Crisis: Causes, Implications and Proletarian Response, it was an introduction of sorts, explaining the intricacies of money markets and the actual course of the financial near-meltdown and its aftermath. We outlined a basic Marxist explanation of the proximate as well as fundamental long-term causes and implications of the crisis and drew attention to the popular struggles engendered by the economic turbulence.
The second in the series, published in October 2012, and titled Crisis of Neoliberalism and Challenges before Popular Movements, sought to show that global experience in the age of imperialism, which Lenin defined as moribund monopoly capitalism under the domination of finance capital, brilliantly confirms and enriches the Marxist-Leninist explanation of business cycles and capitalist crisis. Here we examined the current turmoil as a specific case and concluded that it was not a ‘normal’ recession as part of the usual business cycle, but an epochal structural crisis in the sense that the basic structures and strategies of capitalist accumulation in the current neoliberal mode are in crisis, are permanently failing to deliver the way it did since 1980s. This is why we named it more specifically as a crisis of neoliberalism. We also discussed the lessons of the crisis-class struggle interface, since the great depression and right up to the contemporary movements, in somewhat greater detail.
The current pamphlet – the third and final one in the present series – focuses the spotlight, as the title suggests, on the Indian theatre of the global crisis.
With GDP growth rate down to 4.8% in the third quarter of 2013-14, less than half of the peak rate (9.9%) attained in 2010-11; the Indian rupee, which stood equal to the American dollar in 1947, plummeting to an alarming Rs 65 to a dollar before recovering just a little; skyrocketing prices and rising unemployment, mounting trade deficit and foreign debt, the Indian economy is evidently back to where it stood before the reforms of 1990s were launched. A couple of lost decades – a world record of sorts achieved by the Congress-UPA and BJP-NDA governments that ruled the country over these years!
Why does consistent and inclusive growth always elude us? Is not our country rich in resources, natural as well as human? Yes it is, but the point is what our system does with these resources. Much of our bauxite, iron ore and other minerals are routinely exported to other countries rather than being used here for manufacturing goods and generating jobs. Indian scientists, professionals and intellectuals have earned international acclaim in literally every field, but scarcely do they find here the opportunity or atmosphere to serve the nation. We are supposed to be an IT superpower, but cannot manufacture a computer without importing the crucial components from China or Malaysia. We boast of a demographic dividend, but cannot properly employ our energetic youth including those with higher education. Our industrialists are increasingly investing abroad, in spite of huge concessions doled out to them, because the overwhelming majority of the huge population are so poor that there is not enough ‘market’, i.e., purchasing power, in this country.
Where is the problem?
The stock official reply is that the problems are inevitable fall-out of the global recession and will be overcome pretty soon. The economic fundamentals are quite strong; all that we need is to free economics from politics and go in for yet another tranche of big ticket reforms. This stance allows the Indian government to deny the abject failure of its policies and to use the crisis as a pretext for adopting the global panacea: more austerity for the working people, more concessions (‘incentives’) for big business, foreign and indigenous, and more rigorous market fundamentalism with further withdrawal of the state from its responsibility of providing the citizens with the bare necessities of life (election stunts like the Food Security Bill notwithstanding).
But we cannot blindly buy this theory peddled by a pack of thoroughly corrupt, selfish, insensitive and inefficient politicians and the economists and bureaucrats doing their biddings, especially when their recipe for recovery are clearly turning out to be counter-productive. We need to develop an independent understanding of our own, proceeding from the premise that while the economic woes of our country are to be analysed in connection with the global crisis of neoliberalism, it is perhaps more important to grasp the domestic structural and policy factors responsible for the Indian crisis and to search for a solution primarily in the national context.
To this end, we have tried in the pages that follow first to measure the actual magnitude of the unfolding crisis (chapter I), then to analyse its major dimensions and causes in a historical perspective (chapters II -IV), followed by an analysis of the official ‘solution’ (chapter V) and finally broad outlines of a radical Left alternative (chapter VI).
We have demonstrated that the last couple of decades have brilliantly confirmed Marx’s observation as summarised by David Harvey in the “Introduction to the 2006 Verso Edition” of his book Limits to Capital (originally written in 1982): “In Volume 1 of Capital, Marx shows that the closer a society conforms to a deregulated, free-market economy, the more the asymmetry of power between those who own and those excluded from ownership of the means of production will produce an ‘accumulation of wealth at one pole’ and an ‘accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole’.”
While the general public are groaning under the impact of the slowdown and recession, cronyism and corruption flourish at an unprecedented pace and the rich and powerful continue to amass enormous wealth by overt and covert means. To be sure, this is neither fortuitous nor a result of bad governance alone. The fact of the matter is, the growth trajectory followed since independence has made India into an emerging economic power without eradicating our feudal-colonial hangovers, that is to say, without challenging the backwardness and distortions structured into our society.
The cruel contrast between a tiny top that revels in conspicuous consumption and a massive foundation that produces all the wealth but remains mired in the dark depths of deprivation is the outcome of an absolutely unjust social order and a highly skewed development strategy where agriculture, still the source of subsistence and employment for the vast majority of our people but weighed down by the preponderance of a semi feudal small peasant economy and caught in a perennial crisis, is allowed to decline; most traditional industries stagnate while sectors catering to export markets, overseas interests or elitist consumption generally tend to thrive; and speculative activities and real estate sectors are prioritised as engines of growth while our natural and human resources are increasingly subjected to corporate-imperialist plunder.
To dismantle this entire policy regime, which can only be done in the face of violent resistance of the class forces whose interests it serves – and move over to a new model of balanced, egalitarian, eco-friendly, people-centric and sustainable development – such is the only way to end the crisis and build up, brick by brick, a prosperous people’s India. The present pamphlet seeks to clarify for activists and concerned citizens the basic economics of this urgent political discourse/movement.