Sunday, May 25, 2008

Ideology of the Cancer Cell...

It was in the early 70s, when the environmentalist Edward Abbey had coined the World Environment Day slogan:

"Growth for the sake of growth is the ideology of the cancer cell"

Amit Bhaduri's article (Economic & Political Weekly, April 19, 2008) on India's Predatory Growth (Hat Tip: A Reader's Words) is a good exposition of this principle. It also shows how in recent two decades years, India's Economic Growth has been happening at the expense of India's Economic Development.

The full text of the article can be found here

Some excerpts:

"Over the last two decades or so, the two most populous, large countries in the world, China and India, have been growing at rates considerably higher than the world average... (leading to) a clever defence of globalisation by a former chief economist of IMF...

...ordinary people are not persuaded by statistical mirages and numbers, but by their daily experiences. They do not accept high growth on its face value as unambiguously beneficial. If the distribution of income turns viciously against them, if the opportunities for reasonable employment and livelihood do not expand with high growth, the purpose of higher growth would be widely questioned in a democracy. This is indeed what is happening, and it might even appear to some as paradoxical. The festive mood generated by high growth is marinated in popular dissent and despair, turning often into repressed anger...

A central fact stands out... that the growth in output and in inequality are not two isolated phenomena... This pattern of growth is propelled by a powerful reinforcing mechanism... by which growing inequality drives growth, and growth fuels further inequality...

...in contrast to earlier times when less than 4 per cent growth on an average was associated with 2 percent growth in employment, India is experiencing a growth rate of some 7-8 per cent in recent years, but the growth in regular employment has hardly exceeded 1 percent. This means most of the growth, some 5-6 percent of the GDP, is the result not of employment expansion, but of higher output per worker. This high growth of output has its source in the growth of labour productivity. According to official statistics, between 1991 and 2004 employment fell in the organised public sector, and the organised private sector hardly compensated for it. In the corporate sector, and in some organized industries productivity growth comes from mechanization and longer hours of work...

The manifold increase in labour productivity, without a corresponding increase in wages and salaries becomes an enormous source of profit, and also a source of international price competitiveness in a globalizing world. Nevertheless, this is not the entire story, perhaps not even the most important part of the story. The whole organized sector to which the corporate sector belongs, accounts for less than one-tenth of the labour force... the remaining 90 per cent of the labour force also contributes to the growth in labour productivity... Growth of labour productivity in the unorganized sector... comes from lengthening the hours of work to a significant extent, as this sector has no labour laws worth the name, or social security to protect workers. Sub-contracting to the unorganized sector along with casualisation of labour on a large scale become convenient devices to ensure longer hours of work without higher pay....

Ruthless self-exploitation by many of these workers in a desperate attempt to survive by doing long hours of work with very little extra earning adds both to productivity growth, often augmenting corporate profit, and to human misery.

However inequality is increasing for another reason... The increasing openness of the Indian economy to international finance and capital flows, rather than to trade in goods and services, has had the consequence of paralysing many pro-poor public policies... India’s comfortable foreign reserves position, crossing 230 billion U.S dollars in 2008, is mostly the result of accumulated portfolio investments and short term capital inflows from various financial institutions. To keep the show going in this way, the fiscal and the monetary policies of the government need to comply with the interests of the financial markets... Similarly, the idea has gained support that the government should raise resources through privatisation and so-called public-private partnership, but not through raising fiscal deficit, or not imposing a significant turnover tax on transactions of securities. These measures rattle the ‘sentiment’ of the financial markets, so governments remain wary of them... the burden of such policies is borne largely by the poor of this country. This has had a crippling effect on policies for expanding public expenditure for the poor in the social sector. Inequality and distress grow as the state rolls back public expenditure in social services like basic health, education, and public distribution and neglects the poor, while the ‘discipline’ imposed by the financial markets serves the rich and the corporations...

...According to the Forbes Magazine list for 2007, the number of Indian billionaires rose from 9 in 2004 to 40 in 2007, much richer counties like Japan had only 24, France had 14 and Italy 14... This 60 per cent increase in wealth would not have been possible, except through transfer on land from the state and central governments to the private corporations in the name of ‘public purpose’, for mining, industrialisation and special economic zones (SEZ). Estimates based on corporate profits suggest that, since 2000-01 to date, each additional per cent growth of GDP has led on an average to some 2.5 per cent growth in corporate profits. India’s high growth has certainly benefited the corporations more than anyone else.

...India of the twenty first century has the distinction of being only second to the United States in terms of the combined total wealth of its corporate billionaires coexisting with the largest number of homeless, ill-fed, illiterates in the world...

The growth dynamics in operation is being fed continuously by growing inequality. With their income rapidly growing, the richer group of Indians demand a set of goods, which lie outside the reach of the rest in the society (think of air conditioned malls, luxury hotels, restaurants and apartments, private cars, world class cities where the poor would be made invisible)... more than 3 in 4 Indians do not have a daily income of 2 U.S dollars. They can hardly be a part of this growing market. However, the logic of the market now takes over... Its logic is to produce those goods for which there is enough demand backed by money...

The production structure resulting from this market driven high growth is heavily biased against the poor... We have state-of-the-art corporate run expensive hospitals, nursing homes and spas for the rich, but not enough money to control malaria and T.B. which require inexpensive treatment. So they continue to kill the largest numbers. Lack of sanitation and clean drinking water transmit deadly diseases especially to small children which could be prevented at little cost, while bottled water of various brands multiplies for those who can afford it. Private schools for rich kids often have monthly fees that are higher than the annual income of an average unskilled Indian worker, while the poor often have to be satisfied with schools without teachers, or class rooms.

There are insidious consequences of such a composition of output biased in favour of the rich that our liberalised market system produces. It is highly energy, water and other non-reproducible resources intensive, and often does unacceptable violence to the environment. We only have to think of the energy and material content of air-conditioned malls, luxury hotels and apartments, air travels, or private cars as means of transport. These are no doubt symbols of ‘world class’ cities in a poor country, by diverting resources from the countryside where most live. It creates a black hole of urbanization with a giant appetite for primary non-reproducible resources. Many are forced to migrate to cities as fertile land is diverted to non-agricultural use, water and electricity are taken away from farms in critical agricultural seasons to supply cities, and developmental projects displace thousands. Hydroelectric power from the big dams is transmitted mostly to corporate industries, and a few posh urban localities, while the nearby villages are left in darkness. Peasants even close to the cities do not get electricity or water to irrigate their land as urban India increasingly gobbles up these resources....

The composition of output demanded by the rich is hardly producible by village artisans or the small producers. They find no place either as producers or as consumers; instead, economic activities catering to the rich have to be handed over to large corporations who can now enter in a big way into the scene. The combination of accelerating growth and rising inequality begins to work in unison... The vocal supporters of industrialisation never stop to ask why the very poor who are least able, should bear the burden of ‘economic progress’ of the rich.

It amounts to a process of internal colonisation of the poor, mostly dalits and adivasis and of other marginalised groups, through forcible dispossession and subjugation. It has set in motion a social process not altogether unknown between the imperialist ‘master race’ and the colonised ‘natives’. As the privileged thin layer of the society distances itself from the poor, the speed at which the secession takes place comes to be celebrated as a measure of the rapid growth of the country... If this process of growth continues for long, it would produce its own demons. No society, not even our malfunctioning democratic system, can withstand beyond a point the increasing inequality that nurtures this high growth...
"

2 comments:

gaddeswarup said...

Coincidentally, there is abook"The Predatory State" by Jamie Galbraith reviewd here:
http://economistsview.typepad.com/economistsview/2008/05/the-predator-st.html
However, There is a slightly more 'optimistic' article by Patha Chatterjee "Democracy and Economic Transformation in India" in the same issue of EPW in which Amit Bhaduri's article appeared. I wonder whether Partha Chatterjee is a bit closer to the actual situation.

Madhukar said...

Prof Swarup

Thanks for reference to Partha Chatterjee's article.

I find it more a thesis that the Marxist analysis cannot be used to explain and understand today's India. He may be right too (though I would not entirely agree with him).

However, he seems to be quite off the mark when it comes to facts (or his observations). For instance, yes, the government's provisions of basic services to the rural India have increased since 1950s, but they have not really penetrated to a large section of masses. The five points about the improved role of Govt in the lives of rural masses, on which he bases his thesis, is not very accurate. For instance, the statement that ".. the possibility of peasants making a shift to urban and nonagricultural occupations is no longer a function of their pauperisation and forcible separation from the land, but is often a voluntary choice, shaped by the perception of new opportunities and new desires." completely ignores the statistics that in India there are at least 30-40 seasonal distress migrants/ annum, and about 20 millions of DIDs - Development Induced Displaced (which together would be one and half time the number of Indians who can read, write and speak English). Similarly, he makes observations about the erosion of the traditional class structure, about availability of credit, education, healthcare, etc., to masses - all of which don’t match the data of Govt of India or UN (Human Development Index)

Inspite of these, in his summary (page 10/62) he does repeat the same point which Amit Bhaduri has made. To quote:

"With the continuing rapid growth of the Indian economy, the hegemonic hold of corporate capital over the domain of civil society is likely to continue. This will inevitably mean continued primitive accumulation. That is to say, there will be more and more primary producers, i e, peasants, artisans and petty manufacturers, who will lose their means of production. But most of these victims of primitive accumulation are unlikely to be absorbed in the new growth sectors of the economy. They will be marginalised and rendered useless as far as the sectors dominated by corporate capital are concerned. But the passive revolution under conditions of electoral democracy makes it unacceptable and illegitimate for the government to leave these marginalised populations without the means of labour to simply fend for themselves. That carries the risk of turning them into the “dangerous classes”."