Paresh Chandra

Capitalism and Legality I: Corruption, Ethics and Reification

The notion of ‘corruption’ is an essentially ethical one; the terms in which the issue is judged are ‘good’ and ‘evil’. The problem with raising an ethical issue, as one can guess, is that it stays, as does its solution, within the system that defines ethical standards. Corruption is also, simultaneously, a legal issue. In fact, the legal question is in itself ethical, just as the ethical one is legal – the legal and the legitimate intertwine. In the final analysis, the legal structure of a society is defined in terms of what the socio-political order deems legitimate and what it does not. The obvious corollary being that a legal question, by definition, never goes into a questioning of the law itself. Anti-corruption crusaders are asking for more laws, stronger laws, or different laws. There is a difference between the old and the new law/setup, but they are also, to give the matter a Hegelian twist, identical. Fundamentally the system remains the same. In fact, these changes intend to make the system more entrenched and foolproof.

Such changes, and demands for such changes are not new. In fact we find that people out to change the world in capitalist times repeatedly make demands of precisely this sort: legal and ethical ones. Why is that? What follows is an attempted explanation.

Capitalism is a most confusing entity, so much so that one begins to doubt if it is an entity at all. Right from the beginning it has sent all sorts of well-intentioned reformers chasing after wild geese. Things have not changed much and trying to find a reason for the problems of our existence we still end up latching on to the first ‘big problem’ that appears. This first problem, it will be argued, is invariably an ethical one. The social order that we live in covers our eyes with blinders that ensure that we see only that which does not make our very existence within it difficult. Horses were made to wear blinders so that they did not get alarmed while they traveled on dangerously crowded roads. They only saw what they ‘needed to see’, ditches for instance, that need to be avoided, but never the carriage ahead that they could crash into. Similarly, we see ethical problems that need to be avoided, and can be avoided without upsetting the capitalist cart we pull. The archetypical ethical issue that gets in the way of a genuine questioning of the system has been that of money.

Money is, as Marx demonstrated in Capital, Volume I, the embodiment of the contradiction between use value and exchange value. When in a situation where an individual X has something that another, Y, wants and Y has something that X wants, and the two do not make an exchange, it is because although the two are not interested in the use-values of their respective commodities, they are interested in their exchange values. But a simpleton reformer, say Sir Thomas More, does not see this contradiction, and thinks the problem is that the two are interested in money. So blaming money for the corruption of communities he wants to abolish money.

Simpleton says money is evil. In other words, he makes an ethical judgment. What he does not see is that money is not the problem, not the producer of a contradiction, but merely the embodiment of one. Money is not a ‘singular, complete’ entity at all, but actually a duality in one body. The problem is the duality, the contradiction, not the embodiment. But it is always easier to be able to locate one entity, and try to destroy it. Money stares him in the face, and he is looking for something like money to attack. In other words money is not only a ‘medium of exchange, store of value etc’, but also ideology, a red herring to misdirect attempts that set out to solve the contradictions of capitalism. “The obsession with money as cause and disease alike condemns us to remain within the market system as such, the sphere of circulation, as the closed horizon of our knowledge and our scientific questions and explanations.” (Jameson 2011: 46)

The name Marxists have given to this problem of misidentification is ‘reification’, or alternatively ‘fetishism’. Something mediating between the subject and the object becomes ‘reified’ and begins to posit itself as the object itself.

“In thought, mediation is nothing but a word subject to all the most damaging anti-dialectical objections; in reality it is a mystery that blocks thinking altogether.” (Jameson 2011: 9)

As we saw in the earlier example, this is what happens in the case of Simpleton and money. The case of an ethical question like that of corruption, or for that matter of any ethical question can be understood in the same way; one can draw a structural correspondence, or a homology. An ethical problem is always the first appearance of a more fundamental contradiction (the duality implicit in the word ‘contradiction’ is important). To be unable to move beyond it is to reify it and remain at a distance from raising a truly political question. In capitalism this question can be understood in terms of the contradiction between use value and exchange value, or concrete and abstract labour, or simply, labour and capital.

Capitalism and Legality II: Corruption and ‘Monopoly’ Capital

Sometimes, in order to give ‘political economic’ explanations to ‘superstructural’ phenomena, there is an inclination to jump to quick conclusions that leave out too many levels of mediation. If the problem we explored in the previous section was the problem of being trapped by mediations, here we see the problems that emerge when we try to get to first causes without taking mediations into account. For instance: Anti-monopoly laws seem to be becoming stronger internationally, including in India, despite the fact that the neoliberal rhetoric of free market continues to dominate. But do these laws intend to counter the processes of concentration and centralisation of capital (or monopolisation) which are fundamental to capitalist accumulation?

Just because these laws are being strengthened we cannot say that the process of monopolisation has ceased to operate; in fact, growing instances of acquisitions and mergers are daily reported in financial publications. So what do these laws exactly do? Monopolisation is an inevitable effect of competition between diverse particular capitals, and competition is the life and blood of capitalism. But the strange thing about capitalism is that its own processes are fetters to its existence. Capital creates barriers to its own expansion. The intensity of immanent processes poses hurdles to capitalist accumulation. The collective will of the capitalist class is definitely produced through the dialectic of competition and monopolisation, but it needs an externalised State and its laws to represent it when anarchic competition and its implications seem to destroy the systemic coherence of capitalism.

Bourgeois economics itself recognises that monopolisation curbs the rate of accumulation, however without acknowledging it to be an inevitable tendency. Anti-monopoly laws are designed as a result, to regulate this inevitable concentration of capital, so as to keep the rate of accumulation from slowing down. This is one among many attempts of capitalism to reform itself, and circumvent its own fundamental contradictions. But this is also one among many such attempts that have failed and continue to fail.(1)

Now we come to a direct connection between the sort of corruption that we saw in the ‘2G Scam’ and monopoly. Essentially, what is this corruption but a sort of favouritism shown by the state and state officials (on being bribed of course)? Which among the various monopolies will grow, which will gain greater access to raw materials etc. is decided like this. So, by bribing state officials, large corporations can get out of problems that laws like the anti-monopoly law may put in their path, as well as gain an advantage over their competitors. In other words, bribes are a price that a corporation pays to grow.

A question that we must ask ourselves is that why is this issue of corruption being raised at such a large scale now? Is it only because the CWG scam and 2G scams were so big? Leaving aside the pointlessness of conspiracy theories (though they are not false) about who is funding Anna’s movement etc, we must nonetheless ask why large corporations are supporting the movement in such a big way.

Capitalism, it can be demonstrated, has a sort of homeostatic range within which it can handle issues like corruption and, say for instance, inflation (issues which it also incidentally produces). Once the upper limit is crossed problems arise. One cannot empirically prove when the limit is reached. The only way of it being reached is not rise in corruption. Another way is that the upper limit may come down. When regimes of accumulation change, state structures, the politico-legal ‘superstructure’ slowly tries to harmonise itself with the changed infrastructure. This may be why the said limit may have come down. The capitalist class, that was earlier bribing officials and parliamentarians left, right and centre, now does not want to throw its profit like this. This, as we shall see, is connected to the development of capitalism, and hence to the centralisation of capital, in India.

Capitalism and Legality III: Corruption and the Expanded Reproduction of Capital

Marx’s analysis of the ‘expanded reproduction of capital’ allows us to understand this phenomenon in a systematic manner. An initial sum M is invested into machinery, variable capital (labour power), raw materials etc., which together comprise C, and after the production process (P) one ends up with a commodity C’ which is sold for an amount M’.

M – C…P…C’ – M’

M’ is supposed to be greater than M, or one ends up with an overall loss.

M’ > M

M’ can now be further divided into the amount that was invested initially, M, and will need to be put in again to sustain production at this scale, and the surplus m.

M’ = M + m

The surplus (m) can be divided further into capitalist consumption (c) and investment (m’), which goes back to expand production.

m = c + m’

This is what the equation should ideally look like. But as we should know by experience these equations never exist without irregularities. The amount paid as bribes is basically money that comes out of m’. If this amount is c’ and what is left after bribes have been paid is m”, i.e. if,

m’ = m” + c’

then

m = c + c’ + m”

We know that m’ is the sum that is supposed to be reinvested to expand production. The money that is paid as bribes to private individuals basically falls into the category of consumption or unproductive use. Which is to say, that corruption, in the long run becomes a cost that siphons out money from m’ and does not allow it to re-enter capitalist investment. Till a point capitalists accept such siphoning, but after a point the homeostatic limit mentioned earlier is reached.

The obvious question then: at what point is this limit reached? To get into this part of the argument I will make use of an essay by MH Khan called “Corruption and Governance” that was published in 2006. In this essay Khan draws a connection between underdevelopment and corruption. He argues that in underdeveloped or developing countries, where accumulation is still ‘primitive’, or by extra-economic means, and resources are still being grabbed by brute force, corruption is inevitable. This corruption is not a result of the intention of corrupt officials. In these countries while pre-capitalist processes of production are no longer viable, production is still so low (and so is, as a result, surplus accumulated), that the capitalist class cannot pay to protect a new set of rights/laws that would legitimise all capitalist processes. The amount of revenue coming from tax on surplus, that can be redistributed transparently and legally to social groups and sections in order to maintain stability, is not sufficiently large.

In this situation any attempt to fight corruption, or taking any anti-corruption measures will be futile. In fact in nations where conditions are such, there is no will to fight corruption. Anti-corruption policies work in countries with stable capitalism and high production. In underdeveloped countries the apportionment of resources to capitalists happens through clandestine patron-client relations. As a result, certain sorts of individuals get involved in politics and hold power. In underdeveloped countries, as Khan points out,

“The modern sector of the economy that can be taxed to redistribute to others is small. At the same time, the political conflicts faced are often more serious than those in an advanced country. In many cases, the taxes collected are insufficient even for paying the salaries of bureaucrats. Capital expenditures in the development budget often depend on aid and other foreign capital inflows…[T]he survival of the regime requires that powerful groups are accommodated.”

As surplus increases, slowly the economy begins to stabilise and legal methods for this apportionment can be found. It is only after this point has been reached that corruption can be decisively tackled. But here too popular pressure would be needed to bring this about.

Because in under-developed countries fiscal transfers cannot happen, they are replaced by the exercise of brute power. But in advanced capitalist countries, the allotment of transfers and subsidies happens legitimately, like through legalised lobbying etc (as in the United States).

“In advanced capitalist countries, political stabilization is typically organized using fiscal transfers through the budget. This process is legal, and the rent-seeking (or influence-buying) that it generates is, therefore, also legal typically in the form of lobbying, political contributions and other legal or semi-legal means to influence the allocation of subsidies and transfers. Once again, note that influence-buying and rent-seeking can be widespread in advanced countries. It is only that most of it is legal.” (MH Khan, 214-15)

Because of such legalisation c’, which was till now part of consumption and was leaking out of the cycle, now gets re-injected, via the state into the economy. What in a developing nation goes to politicians and public officials in their capacity as private individuals now goes to the state in its capacity as an institution of bourgeois power. Overall, this transformation implies an increment in the profit being generated. The moment it is realised that an economy is becoming advanced and stable, capitalists prefer to move away from illegal means like corruption to legal means of getting hold of the same resources and services. We should not be surprised then, if the institution of strong anti-corruption measures, should this happen in India, is followed by an increasing amount of pressure on the state for it to legalise lobbying etc.

Anti-Corruption, Public Employees and the Left

It is hard to deny the absurdity of a situation in which alleged Leftists call a protest problematic because it is extra-constitutional. In effect then, they argue that Left politics at its social-democratic worst, when it tries to ensure the smoothing out of the contradictions of capitalism, is the only possible revolutionary alternative. A strike, or a protest, or a movement becomes unconstitutional the moment it enters into a fundamental questioning of the system. This is not to say that the Anna Movement entered into such a questioning at any point – far from it. Nonetheless, such statements from the Left only go to show the degree to which it has been accommodated within the system and its discursive milieu.

However, by this I do not mean to imply that all Left interventions that affirm the anti-corruption movement are more radical. To intervene is important, of course, but are these interventions touching the realm of the ‘political’, and raising the question from a ‘working class/revolutionary perspective’? Or are they still caught in the discourse of legality and ethics, which the bourgeois vision of the Anna movement cannot even think of going beyond?

Every social question can be raised in two ways. Till a question is raised in the realm of ethics or legality, or till a struggle remains ‘economic’ it is essentially bourgeois in tendency. But this does not mean that it cannot go beyond this embourgeoised status. Every economic struggle has immanent political content, and the task of a working class organisation is to facilitate the emergence of the immanent. But do the current Leftist interventions in this movement amount to this? Did campaigning against corruption in “working class areas” contribute to the radicalisation of the working class? Or did it merely convince more people to release their frustrations with the system making use of the giant pressure release valve that the anti-corruption movement is (in addition to being a need of capitalism at this point in India)? Absolutely nobody seems to have made an attempt to separate the ‘proletariat content’ in the question of corruption from the ‘bourgeois content’. In the light of this lacuna (or in its darkness), the conspiracy theory like attempts to understand corruption, that some organisations seem to have endorsed, point toward a more fundamental ideological lacuna. Do we have any idea why we are doing what we are doing?

In the previous sections I have already analysed corruption from two perspectives. From one we saw that corruption is the reification of an ethical/legal question that gets in the way of a proper questioning of the status quo. From the other we concluded that after using corruption for a period of time, there comes a point when capitalism begins to see it as a hurdle; and so ‘anti-corruption’ in this regard becomes an issue of the bourgeois class. Now we look at the issue from a third perspective. Till now we had analysed and tried to understand ‘corruption’ itself. Now we will try and understand the problems of the ‘anti-corruption movement’. Here it would be useful to be schematic.

1. A person who has been to anti-corruption rallies and spoken to Anna supporters, or even only read newspapers regularly would know that one major slogan/argument is ‘Babu-Raj nahi chalega’. People seem to want to cut the bureaucracy down to size. The issue they begin with is, of course, corruption. But at some point the attack is also one on a superfluous bureaucracy. When the death knell of the ‘mixed economy’ in India started ringing, some of the first cries concerned the ‘inefficiency’ of the public sector. Some of the final hammer blows that sealed the deal in 1991 were also about inefficiency and corruption in the ‘License Raj’.
2. Ours is an age of incessant privatisation, our country one that is following advanced neoliberal policies. Insurance, banking, transportation, airways, education, all have taken a hit. A major argument for disinvestment in each sector has been inefficiency. When ‘anti-corruption crusaders’ also speak about how the large size of the administration gets in the way of dealing out justice and handling cases, they inevitably, if only implicitly, also end up supporting those who talk about ‘leaning out’ the government and administration. We must understand that this ‘leaning out’ implies loss of public sector jobs. If we look all around, in sectors that are still publicly owned, contractual and insecure jobs are already increasing in number. The point is not to defend those who work in the administration, let alone the idea of a bureaucracy. But one must not lose sight of this very significant fact that these individuals are also public employees.
3. When the question of inefficiency or corruption arises, an oft-mentioned solution is the replacement of permanent employees by contract labourers. The logic is that once the security of a permanent job is replaced by the insecurity of being on a contract that can be terminated at any point, corruption will automatically come down. Contractualisation is at the same time, also a symptom of the same developments in the economy that, as we saw previously, makes corruption undesirable to the capitalist class.
4. One is not trying to say that the Janlokpal Bill is calling for this contractualisation. But looking at the people who are supporting it and the manner in which they are articulating their concerns and demands, the slip into asking for some sort of a dismantling of an administration run by permanent employees is inevitable. The middle class, at this point at least, when capitalism is advancing so fast in India, supports privatisation. The logic behind creating a separate bureaucratic framework to look into corruption is not that far from the one that asks for an efficient, lean administration, made of contract workers.

At this point, when Leftist organisations should put their energies into countering such contractualisation, many, in trying to ride on Anna’s shoulders, are actually supporting a movement whose main interest coincides (if this can be called a coincidence) with the interests of capital, and which will build support for a move toward privatisation and contractualisation; they are being fooled, as it were, by a ruse of history.

At a time when proletarianisation of the masses is increasing at an unprecedented rate, in the form of unemployment, deskilling, lack of job security, eviction from land and so on, we need not, indeed we must not jump into the bourgeois bandwagon. This is what makes an uncritical intervention of Left forces in the anti-corruption movement so problematic. Not only are we not working in any of the areas that we should be working in, but in our lack of direction we are actively contributing to a reactionary project. After all the problems that I have already enumerated, and with the numerical handicap that Left forces suffer from, when compared to the strength of the right wing in such movements, it is hard to imagine any reasonable defense for such Leftist interventions.

Notes:

(1) However, from this we can make an interesting inference that allows us to connect this discussion to the previous section. Sometimes something that is a direct product of the system, may nonetheless not be deemed legal or legitimate by its law. Sometimes the law may gain a direction of its own, which may not always be in sink with that of the social relations of productions and the ways of that particular ‘regime of accumulation’. Anti-monopoly laws are becoming stronger even as the construction of trusts, cartels, and monopolies is only speeding up.

References:

Jameson, F. (2011). Representing Capital. Verso: New York.

Khan, M.H. (2006). ‘Corruption and Governance’, in Jomo KS and Ben Fine (Ed.) The New Development Economics: After the Washington Consensus. Tulika: New Delhi.