Ways of neoliberalism

Celebrations in Mumbai after the hanging of Ajmal Kasab, the lone terrorist who survived 26/11.-PTI

The neoliberal polity is marked by an effective strangling of democracy; a pervasive practice of identity politics that sustains multiple fascist tendencies; rampant corruption; and the pursuit of policies that impoverish people and roll back the social and political gains made by hitherto excluded groups like Dalits and women, and reduce the minorities to a subservient status.

Neoliberalism is commonly preceived as referring only to the realm of the economy. But the pursuit of neoliberal measures in the realm of the economy also requires an appropriate restructuring of the polity. The reason is as follows.

Neoliberal measures include, above all, an opening of the economy to free cross-border movements of capital, including, in particular, finance capital. In a country that is open to such free movements of finance capital, if the state pursued measures that are disliked by finance, then finance would pull out of the country and move elsewhere; and, since such movements can be quite large, the economy would find itself in an acute crisis. In a neoliberal economy, therefore, the state is forever caught in the attempt to retain the confidence of the investors in the economy (a euphemism for keeping finance capital happy). For this it has to bow to the caprices of globalised finance capital (with which domestic big capital is closely integrated) and adopt only such measures as finance likes, that is, measures that promote its interests.

This fact itself constitutes a negation of democracy. In a democracy the state is supposed to pursue policies that benefit the people, who are sovereign and on the basis of whose electoral verdict the government is formed. But if the government elected by the people must follow policies that are not in the interests of the people but in the interests of finance capital, then we have a negation of democracy. What is more, as long as the economy remains open to capital flows, that is, committed to the neoliberal paradigm, no matter who comes to power, the same policies must be followed to prevent a capital flight and to keep the economy solvent. Hence, when it comes to economic policies that crucially affect their lives, the peoples choice in elections becomes irrelevant, for no matter who they vote for, they get the same policies, whose essence is to keep finance capital happy.

But then why do they not oppose globalisation altogether, the fact of the countrys being caught in the vortex of global financial flows? How, in other words, is this negation of democracy sustained despite the continued existence and functioning of democratic institutions? The answer to this question lies in an entire ensemble of political arrangements that comes into being in a neoliberal economy and that sustains neoliberal policies even in the midst of formal democratic institutions. This ensemble is what I call the neoliberal polity; and what we see in India today is the formation of such a neoliberal polity.

Rise of identity politics

A very important component of such a polity is the prevalence of identity politics, including extremely reactionary variants of it that constitute multiple forms of fascism. A neoliberal economy tends to promote identity politics, which keeps the people fractured, disunited and engaged in a mutual struggle over the ever-shrinking means of livelihood available to them as a consequence of aggrandisement by international capital, rather than in a common struggle to recover their democratic rights and pursue an alternative economic trajectory.

The formation of a pan-Indian national identity, which has lexical priority (to borrow a term from Akeel Bilgrami) over all the other sub-national multiple identities that mark every person, was the product of our anti-colonial struggle. It is not just the struggle which went into the formation of a pan-Indian consciousness; the struggle was premised upon a vision where every Indian would enjoy certain common rights and common freedoms, and this was to define the concept of the Indian. When the 1931 Karachi Congress resolution, which formed the basis of the Indian Constitution, promised every Indian a minimum standard of livelihood, it created through this very promise the concept of an Indian who was to be a dignified member of a fraternity of equals, as distinct from a mere empirical entity belonging to a particular geographical region. The lexical priority demanded by the national identity was in fact predicated upon this fact, namely the coming into being of a new community that was founded upon democracy, equality and a minimum living standard. The secular polity was an offshoot of this vision.

Implicit in this vision were a number of premises: an active role of the state, which, founded by the Constitution, had the responsibility of fulfilling its promise; a restriction on the degree of economic inequality among citizens to ensure that the concept of a fraternity of equals was not undermined; and resistance against any effort by powerful external powers to exercise hegemony over the people, or, in plain terms, resistance against imperialist hegemony.

Neoliberalism violates each of these: leaving things to the market entails an abdication of responsibility by the state; the generation of enormous inequalities in income and wealth violates the formation of a new community as the core of the nation; and making economic policy subservient to the caprices of international finance capital compels people into accepting its hegemony, and hence the hegemony of the powerful states that form its effective base. Neoliberalism, in short, violates the implicit social contract upon which the nation was founded, and hence entails a recession in national consciousness; and with such a recession, multiple sub-national identities once again come to the fore, giving rise to identity politics.

Even at its height, to be sure, the appeal of a national identity had its limitations, for, otherwise, the partition of the country would not have happened. But this appeal, such as it was, suffers a major setback with the advent of neoliberalism. Paradoxically, therefore, the apparent transcendence of the nation in the name of globalisation has the effect not of producing internationalism but of strengthening all kinds of caste, communal, regional and other sub-national identities. Identity politics is an inevitable fallout of neoliberalism. Not that it did not exist before, but the anti-colonial struggles achievement of overcoming it in some measure gets subverted; and a sort of counter-revolution occurs against the progressive movement of society effected by the anti-colonial struggle.

Neoliberalism does not just promote consciousness based on sub-national and potentially divisive identities in the place of the inclusive national identity; it also promotes antagonistic relations between people divided by such identities. The growing unemploymentcreated by the process of primitive accumulation of capital unleashed by neoliberalism, through the expropriation of peasant lands and tribal habitats, and in general through the decimation of petty production (of which foreign direct investment in retail is the latest episode)provides fertile ground for such antagonism. It creates a situation where the unemployed Maharashtrian worker can be told that his unemployment is because the Bihari or the south Indian has taken away his job. Unemployment and distress have always provided fertile grounds for fascism, and the unemployment and distress unleashed by neoliberalism are no exception.

Rampant corruption

A second feature of the neoliberal polity is that it is marked by rampant corruption, which plays a specific role in such a polity. Globalised finance is not just concerned with policy; its concern extends to personnel as well. It prefers to have at the helm of affairs not traditional politicians but technocrats from the world of finance, former employees from the World Bank, the International Monetary Fund (IMF), or other international financial institutions. They understand its needs, talk its language, and belong to the same club as the financial magnates. Finance can trust these technocrats in a way that it cannot trust traditional politicians. When a country gets opened up to the world of financial flows, a shift takes place, therefore, in the personnel of the state, where not just Finance Ministry officials but even political leaders are recruited from among technocrats and bureaucrats from the financial world. From Tansu Ciller in Turkey to Shaukat Aziz in Pakistan to Manmohan Singh in India, the list of such persons is long.

The induction of technocrats into top political positions, however, creates tensions vis-a-vis traditional politicians. To overcome such tensions and to win traditional politicians over to the side of neoliberal reforms, a price has to be paid; and corruption is that price. The transfer of state property to capitalists for a song, the permission to capitalists to expropriate peasants and the tribal people, and to encroach upon common property, all of which constitute primitive accumulation of capital, hand over a bonanza to capitalists. A fraction of this bonanza is made available to the traditional politicians to win them over to the side of neoliberal reforms and to overcome their contradictions with the technocrats superimposed upon the political system.

Creeping fascism

What we see in India today is a creeping fascism. The Hindutva forces, of course, remain the most significant embodiment of the fascist tendency; but the tendency is not confined to them alone. University professors being taken into custody for circulating a cartoon; a man being arrested for asking a question at a public meeting; the leader of a political party openly asking for an ostracism of Dalits; two innocent girls being arrested for making comments on Facebook that were unpalatable to a political outfit; a whole city being shut down by fear in the wake of the death of a local politician known for strong-arm methods; a man who had presided over and possibly winked at a communal carnage being openly touted as the next prime ministerial candidate; a prolonged communal carnage inflicted upon a minority in a border State; and the widespread glee surrounding the hanging of a young man who had indulged, no doubt, in a horrendous act of terrorism but who was a mere minion of little consequence are all symptoms of this creeping fascism. And they involve political parties outside the Hindutva fold as well.

Such creeping fascism, however, does not mean that a fascist state is on the horizon. Indeed, a classical fascist state, involving a terrorist dictatorship at home and external aggression abroad, is hardly feasible in todays world where globalised capital does not want impediments to its free movement through the cordoning off of any territory by such a fascist nation-state. But such creeping fascism comes in handy for creating a neoliberal polity. Such a polity, to repeat, is marked by an effective strangling of democracy despite the continuous formal existence of democratic structures; a pervasive practice of identity politics that sustains multiple fascist tendencies, including the overarching tendency of communal-fascism; rampant corruption; and the pursuit of policies which, apart from the impoverishment they bring to the people and the oppression of the progressive political forces they unleash, also roll back the social and political gains made by hitherto excluded groups like the Dalits and women, and reduce the minorities to a subservient status.

Haste to push reforms

The fact that neoliberal measures are being introduced with extraordinary rapidity at the moment is an indicator not so much of the strength of its promoters as of their desperation. The world capitalist crisis is having a serious impact upon the Indian economy. With exports adversely hit by sluggish world demand and the appearance of protectionist tendencies in the United States, Indias current account deficit has widened sharply. And with finance capital jittery over the eurozone developments, financial inflows into India are beginning to dry up. The rupee, as a result, is on a downward slide, which both accentuates inflation and makes financial inflows even more constricted. Within the neoliberal paradigm, therefore, enticing larger financial inflows through a substantial change in the economic ethos in the country acquires urgency, which is why the neoliberal policymakers are so desperate to hasten reforms, such as FDI in retail, cutting government expenditure by introducing cash transfers (which would mean a de facto reduction of subsidies), and FDI in insurance, all of which are to the liking of finance. If the stock market gets stimulated by such measures, then that would attract greater financial inflows, and possibly even start a new bubble, of the sort that had underlain the high growth rate of the India shining period.

The problem, however, is that such measures, even if they temporarily attract finance, soon lose their effectiveness, which means that like a drug-addict requiring ever increasing doses, finance would have to be offered ever increasing blandishments. This would entail growing constrictions on democracy and an increasing extent of primitive accumulation of capital, to the detriment of the people.

While this scenario is unfolding, the forces of resistance to it appear, as yet, disorganised. The numerous non-governmental organisations (NGOs) which are engaged in fighting on specific issues that arise as a consequence of neoliberal policies lack any perspective of transcending the system. They are hamstrung by this fact, and their resistance, therefore, can go only up to a point and not beyond; they are certainly nowhere near projecting an alternative paradigm of development, even as a transitional programme, before the people. And the Left, which alone can project such an alternative and hence carry the struggle to the point of transcending the system, is caught, like the Left elsewhere, in a theoretical dilemma.

The dilemma consists in this: does modernity come to an underdeveloped country through a rapid development of the productive forces and an upgradation of the technological basis of production, even when this means growing social and economic inequalities, or does it come through the institutionalisation of an egalitarian order, and the development of the productive forces only in a manner that is compatible with the maintenance of such an egalitarian order? In a society characterised by millennia of institutionalised inequality in the form of an oppressive caste system, the route to modernity in my view must be the second one. But until the Left resolves this dilemma satisfactorily and unites all the progressive forces to resist the growing impoverishment of the people and the erosion of democracy, the current bleak scenario will continue. One can only hope that this happens soon.