Political Economy of Contemporary India

Dipankar Basu and Debarshi Das

Sifting through the divergent viewpoints thrown up by attempts to make sense of the recent political history of West Bengal, one is led to the conclusion that the tumultuous events have taken many, if not most, by surprise. With the benefit of hindsight one can probably say this: a combination of an insensitive state power, an arrogant ruling party, lapping-it-up corporate interests, and cheerleaders-of-corporate-sector-doubling-up-as-media orchestrated a veritable assault – a perfect storm. Yet the peasantry, initially without the guiding hand of a political party – indeed at times against the writ of the party – fought on. Through this episode Indian political economy seems to have stumbled upon the peasantry while it was looking for a short-cut to economic growth through SEZs.

At the level of political practice this serendipity demonstrates lack of an organic link between the representatives of people and those they claim to represent. The Trinamul Congress, whose manoeuvrings range from rightist alliances at worst to unprincipled populism at best, was slow to react; but it learnt the ropes eventually. A nagging doubt remains though, as to whether it would not, at the end of the day, appropriate the movement and sell it off to the highest bidder. The charge is of course more serious against the communist parties. If confusion of politics was not bad enough, the largest party of the state failed to gauge the pulse of the people whose land it was taking. The Congress Party has perhaps been the most rudderless of the lot – veering towards resistance at one moment, getting pulled back by the central leadership at the very next.

At the level of theorisation too, things are in a flux. A case in point is noted political scientist Partha Chatterjee’s article in Economic and Political Weekly[1], which tries to present a novel reading of contemporary Indian reality and a new framework to comprehend it with. We shall present his position briefly and then examine it critically in our own attempt to throw some light on contemporary Indian reality.

Partha Chatterjee’s Analysis

Partha Chatterjee (PC henceforth), by his own admission, used to perceive the Indian peasantry as being endowed with a change-resisting character. External agencies such as the state or market forces were sought to be barricaded away, often successfully. But that has changed over the last twenty five years. Liberalisation of the economy, it’s incorporation into networks of the global flow of goods, services and capital, and more recently events like Singur, Nandigram, Kalinganagar, etc. have compelled PC, and Kalyan Sanyal, whose book he often refers to, to reconsider such a position.

Reconsideration of the earlier position leads him to discover that the state was not that external to rural society after all; that the rural economy has come fully under the sway of capital, and that the rural poor do leave villages for cities due to social, and economic compulsions [2]. These new trends, according to PC, have emerged and consolidated themselves over the last three decades. Another concomitant and noteworthy development is that market forces seem to have gained phenomenal power. The balance of state power between corporate capital and the landed elite has decidedly tilted in favour of the former. The managerial-bureaucratic class, i.e, the urban middle class, has also aligned itself with the interests of big capital. Straddling all these changes and in a sense providing an overarching theme of current economic reality in India is the process of primitive accumulation of capital.

Sanyal however avers, and PC concurs, that the primitive accumulation of capital that is underway in India today is very different from the classical variety of the same process. One of the major differences, according to PC, is that the dispossessed, separated from the means of production, can no longer find gainful employment in industry due to limitations of present day capital-intensive technology [3]. This is bad news for the ruling dispensation as social unrest may break out. Old tactics of armed repression is ruled out, because the globally accepted norm is to provide succor to the victims of primitive accumulation and not shoot them down. Compulsions of electoral democracy, which demands that even voters bereft of livelihood be heard, is an additional constraint. Thus, caught between the pressures of the global discourse on development and the demands of electoral democracy, the State adopts the role of transferring resources from the accumulating economy of corporate capital to the dispossessed masses, thereby reversing the effects of primitive accumulation.

We are therefore left with a curious situation. Corporate capital is dispossessing millions through primitive accumulation, but the dispossessed are neither getting absorbed into industry nor getting socially transformed, as they were supposed to, through proletarianisation. This floating mass of labour, this enormous but shifting population of potential workers have instead become a constituent of what PC calls “political society”. Owners of small capital – PC prefers the term non-corporate capital – along with small and marginal peasants, artisans, and small producers are important constituents of political society.

But political society, according to PC, is different from civil society; corporate capital hegemonises the urban middle class which forms civil society. Its support for pro-capital policies is unstinting. Demand for civil and democratic rights define its political agenda. Political society, on the other hand, is hardly a constitutionally valid entity. Its constituents do not enjoy the rights due to citizens; hence they do not qualify for membership of civil society. The economic precariousness of political society, accentuated by primitive accumulation, forces it to use various ploys to negotiate with the State. For the State, on the other hand, electoral compulsions of representative democracy is a binding constraint. Thus the State often looks the other way when negotiations with political society violates established civil society rules (urban squatters, and street vendors are a case in point, as PC mentions). But in the agrarian economy the degree of political consolidation is lower; therefore dependence on the hand-outs of the State is more pronounced. This does not however imply, PC mentions, that they are incapable of rallying on emotive issues and thereby nullifying the government’s machinations to divide and break. It is in the dynamic interaction between the civil and political society – which often coincide with corporate and non-corporate capital for PC – and in the success of the State in holding the two together through measures of “governmentality” that PC identifies the fate of the present political regime.

Some Comments

There are many points which are commendable about the article: acute observations, theoretical insights, incisive analysis and a crisp clear prose. For instance, some of the important observations worth highlighting and thinking about are: landed elite losing ground vis-à-vis the bourgeoisie, the breath-taking ease with which the urban middle class traded Nehruvian consensus for the Washington consensus, the accompanying depoliticization, and the rising friction between this class and the poor etc. These observations underline the sharp analytical prowess of one of the foremost social scientists of the country. But there are surprises and disappointments too and to these we now turn.

The biggest problem with PC’s analysis, we feel, is the questionable theoretical framework that he works in, a framework that he has borrowed from Kalyan Sanyal (KS henceforth). KS starts his analysis by pointing out that what is going on in contemporary India can be fruitfully understood as the primary (or primitive) accumulation of capital, in the sense in which Marx used that term in Volume 1 of Capital. We fully agree with him here; in fact one of us had argued along those lines some time ago [4]. The defining feature of the process of primary capital accumulation – forcible separation of primary producers from the means of production – is difficult to miss in developments in contemporary India. KS notes that all previous attempts at theorizing primary capital accumulation have been embedded in what he calls a narrative of transition. Thus, primary capital accumulation has always been seen, according to KS, as marking a transition, a transition from one mode of production to another, either a transition from feudalism to capitalism, or “from pre-capitalist backwardness to socialist modernity.” But “under present conditions of postcolonial development within a globalised economy, the narrative of transition is no longer valid”; that is “although capitalist growth in a postcolonial society such as India is inevitably accompanied by the primitive accumulation of capital, the social changes that are brought about cannot be understood as a transition.” And why is that so? This is because it is no longer acceptable, or so KS believes, that people dispossessed and displaced due to primitive accumulation should be left with no means of subsistence. And what makes the destitution and poverty of the people displaced by primary accumulation unacceptable? The current international context marked by the dominance of the discourse of development and human rights.

Alongside the process of primary accumulation, therefore, KS discovers a parallel and related process: intervention of the State to reverse the effects of primitive accumulation. Government agencies, in other words, step in to create conditions for ensuring the “basic means of livelihood” to those who have been dispossessed and displaced by the process of primary accumulation of capital. Thus there is, according to KS, two processes going on in parallel, “primitive accumulation” and a “process of the reversal of the effects of primitive accumulation.” It is the conjunction of these two parallel processes, according to KS, that invalidates the narrative of transition associated with the primary accumulation of capital.

The implication of this assertion, the assertion that the primary accumulation of capital can no longer be understood in terms of a narrative of transition, is stupendous. It means that current political economic processes underway in India will continue indefinitely; historical change, for KS, seems to have been stalled. Since current day reality cannot be understood as a process of transition, this would then seem to imply that Indian reality will remain unchanged in its essentials for a long time to come, if not forever. In more concrete terms, this will mean the presence of the huge mass of working people parked in the no man’s land between agriculture and industry for an indefinite amount of time, a population that has been simultaneously dispossessed by the primary accumulation of capital and provided an alternative “means of livelihood” by the postcolonial State.

As a description of contemporary Indian reality, this account probably has some intuitive appeal. After all it can hardly be denied that one of the most important characteristics of contemporary India is the huge population of what economists have called “surplus labour”: the huge population of working people who find stable, well-paying employment neither in agriculture nor in industry nor in services. Though KS’s analysis apparently attempts to understand this phenomenon of “surplus labour”, by all accounts the defining characteristic of contemporary Indian reality, it is, we believe, seriously flawed.

First: the Indian economy has been characterized by surplus labour for the past two centuries, it is not a new phenomenon; the primitive accumulation of capital was initiated under the long shadow of colonialism and ever since that time dispossession has been going on without commensurate absorption of the displaced labour in industry. In that sense the current scenario has a historical dimension that KS, and thereby PC, completely misses when he (a) locates the beginnings of this process somewhere in the recent past, and (b) identifies the supposed ameliorative interventions of the State in reversing the effects of primary accumulation in the current conjuncture as one of the crucial factors to reckon with.

To be sure, PC, identifies three factors that are different today from the time when Western Europe underwent primary accumulation of capital. First, there were opportunities for international migration of the surplus labour that are totally absent today; second, the technology of the early industrial period was far less capital intensive than current technology and hence had the capacity to absorb far more of the surplus agricultural labour than is possible today; third, the State did not intervene in Western Europe to reverse the effects of primary accumulation as it is doing today in India. Though the first two factors were present in Western Europe and contributed to mitigating the problem of surplus labour, they are not necessary. Japan and the Soviet Union had taken care of primary accumulation, and had industrialized, without having to export surplus labour to its colonies and using much more capital intensive technology that was used during the industrial revolution in Western Europe; South Korea had taken care of primary capital accumulation, and had industrialized, with much more capital intensive technology than Britain had used during its own industrialization and without the assistance of international outmigration of its surplus labour. Therefore, the absence of opportunities for international migration and the use of technologies with relatively higher capital intensity cannot explain the absence of industrialization and the continued existence of surplus labour in India. The answer lies somewhere else, in the domain of capital accumulation. In a dynamic context, the rate of absorption of labour, i.e., the growth rate of the demand for labour, depends on the rate of accumulation of industrial capital. Neither the lack of international migration, nor the increasing capital intensity of technology nor the ameliorative interventions of the State can explain the burgeoning ranks of surplus labour; it is the absence of a sufficiently rapid rate of growth of industrial capital in India that is responsible for the continued existence of surplus labour. This crucial factors is totally missing in KS’s and PC’s analysis

The primacy of capital accumulation becomes obvious once we look back at history and realize that dispossession without proletarianization is not a novel phenomenon. One just needs to recall that one of the principal issues raised by the Mode of Production Debate [5] was why India did not make the transition to capitalism despite being sucked into the global network of trade and commerce with the onset of colonialism. The answer, of course, is now well known. As colonial incursion willfully destroyed the socio-economic fabric of the country, peasants were evicted and deindustrialization, facilitated by the trade policy of the colonial State, exacerbated the pressure on land. But the economic surplus which was being generated in the process was largely siphoned off to the metropolis. Thus, in the colony, processes leading up to the formation of productive capital were conspicuous by their absence. Petty producers who were getting alienated from the means of production were joining the ranks of paupers, not those of the working class. Without a strong capital accumulation process, the excess labour could not be absorbed into profitable industrial activities; that is the historical basis of “surplus labour” in the Indian economy. One may refer to the mode of production in India using any term one wishes, as pre-capitalist, or semi-feudal, or semi-capitalist, or postcolonial, or something else, but the main point remains beyond dispute: absence of the growth of industrial capital and a concomitant growth of the industrial working class.

Somewhat related to this point about “dispossession without proletarianization” is the implicit assumption in PC’s analysis that peasant society had been stuck in splendid isolation till about the beginning of the era of liberalization; this is one of our major points of criticism of PC’s analysis that we wish our readers to ponder. The trend of viewing the peasantry in this manner, especially the middle peasants who are not very much dependent on the labour market for selling or buying labour, owes a great deal to the work of the Russian economist Chayanov [6]. But the putative efficiency of the peasantry sits oddly with the massive and recurrent famines India underwent as colonial rule tethered the country to global commodity markets. This position about the supposed insularity of the peasantry seems even more unconvincing when one recalls the state’s successful promotion of Green Revolution in north and northwest India starting in the mid-sixties. Nor does it seem consistent with Operation Barga in West Bengal, another orchestration of political parties and the state machinery, which was leaving a deep impact on rural Bengal right at the time when Subaltern Studies was undergoing its genesis.

To move on to another major problem in PC’s theoretical framework recall that one of the crucial links in PC’s chain of argument relates to the supposed interventions of the State in reversing the effects of primary accumulation; this, to our mind, is the weakest link in the whole chain of arguments that PC offers in his paper; there are both theoretical and empirical problems with this argument.

First:

PC, and many other scholars (including KS), we feel, seem to have misunderstood the notion of primary accumulation of capital. Primary accumulation of capital, as understood by Marx (in Volume 1 of Capital), is the forced separation of producers from the means of production. Whether this “free”, evicted (peasant) labour gets absorbed in industrial activity is a different question, it is not part of the process of primary accumulation. It depends on the pace of capital accumulation, as we have already pointed out. So, the assertion – implicit in PC’s analysis – that the “classical” pattern of primary accumulation led to industrial development is false. Primary accumulation led to the creation of a class of “free” labourers, period. What led to the industrial revolution and the rapid growth in the demand for labour and the strengthening of capitalism and thereby the absorption of surplus labour, was the rapid pace of capital accumulation and technical progress. Thus, distinguishing between the “classical” pattern of primary accumulation in Europe and the present pattern of primary accumulation in India does not seem be analytically useful.

Second:

PC’s whole analysis seems to be curiously oblivious of the neoliberal turn in the global economy, a fact that is amply reflected in policy changes in India too; we feel this is one of the biggest lacunae in PC’s analytical framework. The fact that radical scholars and activists have spent so much time and effort studying neoliberalism, understanding its genesis, structure and functioning must surely be known to a scholar of the stature of PC; the fact that he has ignored this vast scholarship, experience and political practice and has instead advanced the thesis of ameliorative state intervention is very significant and points towards a deep problem in his theoretical framework. After all, one of the defining characteristics of the State under neoliberalism is its gradual retreat from the provision of public goods and social services, especially those services that might benefit the poor and dispossessed. In the face of this well-known and well-documented fact, when PC asserts that the State has stepped in to do exactly the opposite, i.e., reverse the deleterious consequences of primary accumulation, one is more than surprised, one is appalled. Let us present some empirical evidence to dispel the illusion, if any, of the lately humane State, responsive to the needs of the poor, bowing before the pressure of the international discourse on poverty alleviation.

a. Distribution of subsidised food through ration shops is an old institution – not a device to make the pain of the poor bearable in the era of neoliberalism. During the last couple of decades, the decades of neoliberalism, the universal public distribution system (PDS) has been systematically dismantled; that is the hallmark of post-liberalisation India, not the strengthening of the PDS and increasing its reach. Priority sector lending, another device built by the Nehruvian state to help farming and related activities, is in a sorry state. In the last fifteen year 4,750 rural bank branches have been closed down: at the rate of one rural bank branch each day. During the year 2006 one branch was shutting down every six hours! [7]

b. The tale of microcredit institutions, an example of what PC considers the States intervention to reverse the effects of primitive accumulation, doing the job of offering palliatives has been questioned by many. The interest rates charged by micro credit institutions are often almost usurious. The motivation to harvest the middle ground between low interest rates of public sector banks (which are vanishing) and the exorbitantly high ones of village mahajans seems to be behind the coming together of corporate banks and NGOs in the micro credit venture. This serves two purposes. One, banks earn as much as 25% return, much higher than the organised sector return,[8] with an excellent repayment rate; a lucrative arbitrage channel thus opens up. Two, this credit model is then peddled as people-oriented, and opposed to a bureaucratic public sector model. This is then used to justify withdrawal of the state from its basic responsibilities towards socially and economically vulnerable sections of the population. That someone as perceptive as PC has fallen for the micro credit argument signals that the powers that be have been largely successful.

c. Contrary to the claim of the article, “social sector expenditure” has nosedived over the past few years. In 1996, rural development expenditure as a proportion of net domestic product was 2.6%. During the pre-liberalisation seventh plan (1985 to 1989) the figure was much higher at 4% [9]. From the mid 1980s to 2000-01 public development expenditure as a percentage of the GDP fell from 16% to 6%. The effects have of course been disastrous, especially in the farming sector where strong crowding-in effects of public investment is a well known fact. The growth rate of all crops fell from 3.8% in the 1980s to 1.8% in the 1990s, while total agricultural investment expenditure as percentage of the GDP fell from 1.6% to 1.3% [10]. Using a constant calorie norm of 2200 calorie per day, head count poverty ratio has risen from 56.4% to 69.5% between 1973-74 and 2004-05.

d. Guaranteed public work for the rural poor was attempted to be scuttled from the very top, i.e., by the officials of the State at the very highest levels. Social democratic proclivities of official communist parties, rather than the tactical calculations of the bourgeoisie, saw it through to some extent. To this day the corporate media loses no opportunity in tarnishing the National Rural Employment Guarantee Act [10] as useless, wasteful and distortionary.

In short, any substantial evidence of the State taking steps to make primitive accumulation bearable, to reverse its effects by providing alternative means of livelihood to the dispossessed population, seems to be totally missing. PC seems to be oblivious of the fact that the phase of neoliberalism is characterised precisely by the opposite: withdrawal of the state from the economy and social sectors, not its intervention in favour of the dispossessed.

Third:

The analytical handle of political society did not seem to have served any great purpose. What was meant by this term was essentially what has been called the unorganised sector, the sector of the economy comprising of petty agricultural producers, tenants, village artisans, street vendors, small scale manufacturers, etc. Admittedly they are less equal than the rest but that is a derivative of their economic position in the country rather than being a defining feature of its own. Since this “unorganized” sector employs nearly 92% of the Indian work force, a close scrutiny of its structure and dynamics is long overdue. But did coining a new term serve any goal? Not one that we can see. In the bargain PC, of course, seems to have missed two crucial points.

a. Labour has gone out of the discourse and PC’s analysis seems to endorse this trend. Recall that PC uses the term “non-corporate capital” for an economic representation of political society. Reading PC’s descriptions of it, one cannot help suggesting that “labour” rather than “capital” should have been emphasized. After all nearly 40% of the agrarian population are landless labourers [12]; of the landowners, about 86% come under the category of small and marginal farmers, and they supplement income from land with labour income. Simple back-of-the-envelope calculations tell us that at least 55% of the country’s population could be counted within political society – this is the contribution of agricultural sector alone. To get an idea of the size of political society one needs to add the fast increasing chunk of casual labourers in manufacturing and services, petty manufacturers, and self-employed groups of the service sector. Their income source, as we have noted, owes more to labour than to capital. Hence the term “non-corporate capital” seems inappropriate, both as a matter of description and analysis.

In this context one needs to understand what PC mentions about the resistance to forcible acquisition of land. When land was being taken away, some of the villagers did not participate in agitations while some of them resisted fiercely. But PC forgets to examine who did what. Closer examination of these struggles reveal that peasants with little or no land at all – sharecroppers, farm labourers – were the ones who fought on [13], [14]. This perhaps illustrates that using a class-neutral term may not be very illuminating for socio-political analysis.

b. While describing maneuvers of political society in negotiations with the neoliberal state PC uses illustrations of urban labour: squatters, hawkers, etc. This leads him to conclude that demands of political society mostly fall outside the domain of the legally permitted. But what about demands such as payment of minimum wage, subsidised inputs and credit, support price for crops, right to livelihood, right over resources like forest produce, water? Surely these demands, on which political society has plenty of stakes, are entirely legal. One suspects that the urban bias in PC’s analysis and illustrations has pushed the article to dubious conclusions.

Conclusion:

As landholdings have undergone fragmentation and aspirations for urban comforts have soared, agriculture has ceased to be the site of intense class conflict. For the foreseeable future the big question of political economy will be to understand how corporate capital, with hegemony over the state and civil society, negotiates with the clingers-on of a moribund peasant society. Aside from the shortcomings of PC’s analysis, which we have critically examined, resistance at Singur, Nandigram, Kalinganagar perhaps signals that all is not yet over with the agrarian question. Managing political society through governmentality is hardly an answer. Land remains a vital issue on which livelihoods, and therefore lives, are staked. There are no shortcuts – employments would have to be found for the evicted if corporate capital has to reproduce itself without hitch. Moreover, electoral compulsions of representative democracy need not be met through resource transfer as PC has suggested. In a polity where parties deliver anti-neoliberal rhetoric before elections and do precious little once in power [15], actual transfer of resources is neither necessary nor efficient.

Notes and references:

1. Partha Chatterjee (2008): “Democracy and Economic Transformation in India”, Economic and Political Weekly, Vol. 43 No. 16 April 19 – April 25.

2. PC also hypothesises that the rural poor do not face an exploiter in the village any longer; or that since taxes on land or produce are insignificant, the state is not an extracting agent of the peasantry. Both these claims are questionable, but we shall let them pass.

3. Kalyan Sanyal (2008) “Amader Gorib Oder Gorib” (Bengali), Anandabazar Patrika, May 20.

4. See http://radicalnotes.com/2007/02/07/neoliberalism-and-primitive-accumulation-in-india/

5. Utsa Patnaik (1990) Agrarian Relations and Accumulation: The ‘Mode of Production’ Debate in India, (edited) Sameeksha Trust and Oxford University Press, Bombay.

6. Utsa Patnaik (1979) “Neo-populism and Marxism: The Chayanovian View of the Agrarian Question and its Fundamental Fallacy”, Journal of Peasant Studies, Vol. 6, No. 4, reprinted in The Long Transition, Tulika, New Delhi, 1999 provides a detailed criticism.

7. Sainath (2008) “4,750 rural bank branches closed down in 15 years”, The Hindu, March 28.

8. Mritiunjoy Mohanty (2006) “Microcredit, NGOs and poverty alleviation”, The Hindu, Nov 15.

9. Utsa Patnaik (2008) “Neoliberal Roots”, Frontline, Vol. 25, Issue 06, March 15-28.

10. Utsa Patnaik (2003) “Food Stocks and Hunger: The Causes of Agrarian Distress”, Social Scientist, Vol. 31, No. 7/8, 15-41.

11. Jean Drèze (2008) “Employment guarantee: beyond propaganda”, The Hindu, Jan 11, 2008.

12. There is ambiguity whether PC categorises landless labourers under political society or ‘marginal groups’. He mentions marginal groups are low caste or tribal people. By this count the landless are mostly marginal. But then he mentions marginals do not participate in agriculture; they are dependent of forest produce or pastoral activities. Going by the second stronger criterion we shall include the landless in political society.

13. Parthasarathi Banerjee (2006) “West Bengal: Land Acquisition and Peasant Resistance at Singur”, Economic and Political Weekly, Vol. 41, No. 46, November 18 – November 24.

14. Tanika Sarkar (2007) “Celebrate the Resistance”, Hardnews, April.

15. K C Suri (2004) “Democracy, Economic Reforms and Election Results in India”, Economic and Political Weekly, Vol. 39, No. 51, December 18 – December 24.

Courtesy:Sanhati