Roots of the malaise

Print edition : August 26, 2011

At a cellular phone shop in Hyderabad. The act of primitive accumulation in the 2G spectrum case consisted in the handing over of resources that should have accrued to the public exchequer, and hence to the people, in a proper auction, to a bunch of capitalists on a first-come-first-served basis. - NDAH SEELAM/AFP

The steep rise in corruption is due to the change in the property regime brought about by the freeing of markets and the privatisation drive.

THE recent exclusive focus on corruption has, perhaps inadvertently, diverted attention from the more basic phenomenon which underlies it, namely a process of primitive accumulation of capital. The definition of corruption according to the Prevention of Corruption Act, 1988, which is the starting point of all current discussion of it, refers to the receipt of gratification (not only monetary) by a public servant in excess of his or her legitimate remuneration. This, however, has an odd implication: if as a public servant I allow the appropriation of public property by a private entity and receive no gratification for it, then it is not a case of corruption; but if I do receive some gratification for doing so, then it becomes a case of corruption. The loss to the public exchequer, and hence to the public, in either case is the same, but it becomes a case of corruption only when the public servant concerned receives some gratification for the act of permitting the private filching of public property. What is more, even where there is no direct gratification involved but the public servant receives indirect gratification in more subtle forms, it would still not be considered corruption.

For instance, any public servant who privatises public property at throwaway prices, even when he or she receives no direct gratification for it, is invariably hailed for this act by the corporate media, by the Bretton Woods institutions and by the global financial community as being a visionary, a bold promoter of entrepreneurship and a liberal thinker in tune with the modern times. This brings in its train a host of possible rewards: sundry best Minister in Asia (or similar) awards, lecture tours, World Bank assignments, offers of cushy corporate placements, various remunerative advisory roles, and post-retirement sinecures. None of this, however, will be considered corruption. Corruption, in short, is confined exclusively to gratification received directly as quid pro quo; it does not cover the far more pervasive case of gratification received from the system as a whole. The current crusade against corruption, therefore, by not looking at the system as a whole, misses the wood for the trees. Of course, one should not ignore the trees; and hence legislation against corruption even in this limited sense is important. But missing the wood is unpardonable; and the wood is what Marx called primitive accumulation of capital.

Primitive accumulation refers to the appropriation of the property of petty producers, peasants and the people at large (through, for instance, encroaching on common property or cornering budgetary resources or buying up state property at throwaway prices) by the capitalists or proto-capitalists. It is called primitive accumulation, as distinct from the normal process of accumulation under capitalism, because it entails not the reinvestment of the economic surplus produced under capitalism but a process of filching the property of other non-capitalist segments: the peasants, the petty producers, the state and the community (commons). Now, corruption too entails a process of filching others' property; corruption itself may constitute a form of primitive accumulation of capital, for example, when a public servant demands a bribe from the common man. But big ticket corruption, of the sort that has surfaced of late, is not itself primitive accumulation; it constitutes rather a levy on an ongoing process of primitive accumulation.

Illegal mining

Take the case of the illegal mining in Karnataka. Mine-owners illegally extracting mineral resources and defrauding the exchequer are the ones who have been engaged in primitive accumulation of capital. The then Chief Minister of Karnataka, who is alleged to have connived with the illegal mine-owners in exchange for gratification and hence engaged in an act of corruption, can be charged with appropriating a share of the booty, that is, imposing a levy for himself on the proceeds of the mine-owners' primitive accumulation of capital.

Likewise, the act of primitive accumulation in the 2G spectrum case consisted in the handing over of resources that should have accrued to the public exchequer, and hence to the people, in a proper auction to a bunch of capitalists on a first-come-first-served basis. When the Telecom Minister of the time allegedly got a cut from it, and hence engaged in an act of corruption, he was imposing a levy for himself (and his near and dear ones) from the proceeds of primitive accumulation. The expropriation of the people, however, came not from the act of corruption but from the act of primitive accumulation. Even if the Telecom Minister had not received a paisa of direct gratification, and yet distributed 2G spectrum on a first-come-first-served basis, the public exchequer would have been equally defrauded, the filching of people's property (consisting of the difference between the price at which it was made available and the price that would have been obtained in a proper auction) would have been of exactly the same order of magnitude. Corruption only determined who the beneficiaries of this filching were and entailed the appropriation of a share in the proceeds of this filching.

Focus only on corruption

This is a simple and obvious point; but a most disingenuous attempt is being made, by the stalwarts of both the Congress and the Bharatiya Janata Party, to obfuscate it. Since the mechanism of filching people's property was the adoption of the first-come-first-served route, all political leaders who followed this route are culpable of abetting this filching, whether or not they received a paisa of direct gratification for doing so. This would make several Congress and BJP Ministers who had either preceded A. Raja in the Telecom Ministry and advocated this route, or had concurred with his decision to follow this route within the United Progressive Alliance (UPA), open to the charge of attempting to make private entities defraud the public exchequer. To ward off this charge, a chorus is emerging from both camps that the policy was right but its implementation [by Raja] was wrong. Their focus, like that of many anti-corruption crusaders, is exclusively on corruption, and not on primitive accumulation, that is, the defrauding of the public for which they are responsible and which provides the basic pool from which the proceeds of corruption are drawn.

Primitive accumulation entails a theft of the people's property; it thrives therefore whenever a change in property regime is being attempted. The most brazen example of primitive accumulation in the modern era occurred at the time of the collapse of the Soviet Union, when the privatisation of socialist property also witnessed a massive theft of socialist property, when billionaires sprang up overnight and a whole new capitalist class was conjured out of thin air. Likewise in India, the process of privatisation which has been a part of the neoliberal policy has been accompanied by, and created the conditions for, the massive process of primitive accumulation of capital and the upsurge in corruption that thrives upon such accumulation that we are witnessing today.

The introduction of free markets in lieu of the controls that characterised the earlier dirigiste regime, often derided as the licence-quota-permit raj, was supposed to bring down corruption. This supposition was not far-fetched either: any rationing regime where prices are necessarily lower than what the market will bear creates conditions for those who can afford to do so, to alter the distribution of the rationed goods in their own favour by paying a bribe. The freeing of markets and hence the removal of rationing, while it may be abhorrent because it excludes the poor from access to the rationed goods, should certainly bring down the necessity of such bribes and hence the scale of corruption. If the pursuit of neoliberal policies, which were expected for this reason to bring down corruption, has on the contrary been accompanied by a steep escalation of corruption to levels unparalleled in our recent history, the reason lies in the change in the property regime that has accompanied the freeing of markets, the thrust towards privatisation which has given a boost to primitive accumulation of capital and hence to the corruption that it nourishes.

The escalation of corruption in the recent period is indicative of the fact that the proceeds of the primitive accumulation that has been unleashed by neoliberalism are being shared pervasively by the political class (and the bureaucracy). It is not only the monopolists, the financial oligarchy, the land sharks and the multinational corporations that are raking in the proceeds of primitive accumulation but also the government echelons at the highest level, which are recruited from the political class. But things are even worse. Significant segments of even those elements of the political class which are not corrupt, in the sense that they do not receive any direct gratification for conniving with the primitive accumulation of capital, are nonetheless actively complicit in the process: they belong very much to the system that promotes primitive accumulation and benefit from the indirect systemic gratification mentioned earlier. We are in short institutionalising a regime of primitive accumulation, with the bulk of the political class (barring a few honourable exceptions, notably the Left) being incorporated into this regime.

Primacy of the political

This has serious and disturbing implications for democracy. Democracy, if it is to be authentic, must presuppose the primacy of the political over the economic so that people do not become mere hapless victims of the immanent tendencies arising from the economic system but can collectively intervene through political praxis against such tendencies. (This incidentally is why authentic democracy is incompatible with capitalism, since the latter becomes dysfunctional if its immanent tendencies are frustrated through such popular democratic intervention, as the collapse of the post-war Keynesian-Welfarist experiment demonstrates.) The primacy of the political in turn presupposes a separation of the political and economic realms, a non-incorporation of the former into the latter, so that it can act in an autonomous manner to right the wrongs inflicted upon the people by the spontaneity of the economic system. But if the political realm too is incorporated into the economic, if the separation of the two disappears within a regime of pervasive primitive accumulation of capital, then we have a serious enfeeblement of democracy.

Lenin, following the Austrian economist Rudolf Hilferding, talked of a personal union between the magnates of finance and industry and the leading echelons of the state in the era of monopoly capital. This personal union is carried several steps further when it sustains a regime of primitive accumulation of capital. And such personal union amounts to sucking out the democratic content of the polity. The question is: how can we fight it?

The struggle against corruption is important but insufficient since it looks at corruption in isolation from primitive accumulation, and hence restricts the concept of corruption itself, by focussing only on direct gratification and ignoring systemic indirect gratification. What is more, even the struggle against corruption in this narrow sense will not be successful if it aims only to penalise the corrupt and does nothing against the process of primitive accumulation. Even in China, where, notwithstanding the weight of public property, a process of primitive accumulation has made an appearance, of which illegal mining entailing frequent accidents and loss of lives is an obvious manifestation, the corruption associated with such accumulation has not been eliminated despite capital punishment being meted out to the corrupt. Punitive action alone is never enough. To prevent corruption, the process of primitive accumulation itself must be thwarted.

A FAMILY ON the beach in Visakhapatnam. With the Andhra Pradesh Mineral Development Corporation deciding to sign more agreements with private investors, beach sand will soon be exploited for its minerals.-K.R. DEEPAK

At least three steps, to start with, are necessary for this. The first is anti-corruption legislation. There is no reason why the serving Prime Minister or the higher judiciary should be exempt from such legislation, as is being suggested by the government, though of course the modalities of their inclusion (for example whether the judiciary should be covered under the Lok Pal or a separate judicial commission) should be carefully worked out. The second step is a restriction on the privatisation of public property. The privatisation of state property should be resorted to, if at all, only in rare cases, and every single instance of such privatisation should be subjected to parliamentary scrutiny in all its details. Any privatisation without a fair auction, on the basis of first-come-first-served or other such principles, must be absolutely proscribed. Parliamentary scrutiny must enforce such proscription.

The third step is that the ownership and operation of all exhaustible resources must be with the state. State ownership alone, say of mineral resources, is not enough; if state-owned mines are handed over to private operators, then the scope for illegal mining increases. To prevent this, even the operation of mines must be a state responsibility, which was in fact India's official policy not too long ago. Likewise, there must be not only social control over the use of scarce resources like land but also the monopoly right of the state (through an appropriate state agency) to be the first buyer in any transaction involving a scarce resource, at a fair price fixed on some pre-specified principles. This would help in breaking land speculation, which is a major source of corruption, and also act as a restraint on primitive accumulation via the snatching of land from the peasantry.

The demand for nationalisation of land has a long lineage. George Bernard Shaw, influenced by Henry George, championed it, and it was a major component of the Fabian programme. Friedrich Engels was critical of the Fabians for not going beyond it, but the nationalisation of some portion of land must remain an essential component of any agenda for progressive social change. To restrain primitive accumulation, however, even this may not be necessary. State regulation of land use and state control over land transactions may be sufficient for it, and these can be enforced inter alia through the state having the first right of purchase.

The question may be asked: if state personnel themselves are complicit in the regime of primitive accumulation, then how can such measures be enforced through the instrumentality of the state machinery? In particular, the advocacy of state control and regulation, which makes the same political class that is steeped in corruption responsible for combating it, may appear odd. But we are talking here about a package of measures which also includes legislation against corruption. State control in short is being suggested here together with control over corrupt practices by state personnel.

Ultimately, however, the only restraint on primitive accumulation and the corruption it spawns is intervention by the people. And this ipso facto also constitutes an assertion of democracy which primitive accumulation, by incorporating the political class within its circle of beneficiaries, necessarily undermines.

A powerful popular resistance against primitive accumulation must be built, which alone can provide a bulwark for democracy. Fasts unto death by anti-corruption messiahs who substitute themselves for the people and obviate any need for popular intervention, no matter how well-intentioned they may be and no matter how successful their fasts may turn out to be in drafting wholesome legislation, can never succeed in thwarting either corruption or primitive accumulation.

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