Strategies for the battle

Published : Jan 31, 2003 00:00 IST

The Asian Social Forum analyses the nature of neo-liberal economic policies, highlights their adverse impact on people, and suggests alternative paradigms of economic progress and development.

in Hyderabad

AT the end of the Asian Social Forum, a journalist, worrying over the peg for his next story, asked: "What have Medha Patkar and Sitaram Yechury in common, to come together on a single platform? What can these discordant voices achieve?" But if he had followed the sessions more closely, he would have noticed that this was precisely what key speakers at the numerous sessions at the forum saw as offering hope. They stressed that the onslaught of neo-liberal globalisation, associated with a set of identifiable economic and social policies, provided a focal point for unity among diverse communities, nations and peoples across the world, because of their shared sense of suffering. This unity among seemingly discordant voices and unrelated elements was, in fact, seen as something that offered hope, in the fight to reverse neo-liberal policies. Indeed, the feast of plurality of viewpoints on offer at the forum - perhaps unprecedented on an Indian platform of mass organisations since Independence - was a key highlight of the event.

Trade unions, organisations representing peasants, Dalit and tribal peoples, social advocacy groups and non-governmental organisations (NGOs), all engaged in mobilising people on a range of causes, spoke in one voice at the forum, urging the dismantling of an unequal social and economic system.

Three elements of the plurality of dissent against neo-liberalism stood out at the ASF. First, there was a convergence of views that the standard set of policies associated with neo-liberalism, applied uniformly on a world scale, had affected the popular base of organisations espousing a variety of causes. Second, there was unanimity among these organisations that they were ranged against a common enemy. Third, there was consensus that an alliance of organisations was a necessity because the neo-liberal onslaught raised problems that had many dimensions. There was the realisation that the paths of mobilisation pursued by these organisations intersected on several issues because of the multi-dimensional nature of the problems. It was felt that on several major issues, the policies worked in ways that affected the target communities and societies of these organisations so fundamentally that a successful reversal of neo-liberalism demanded an alliance of organisations.

For instance, in his address at the opening plenary at the ASF, Prabhat Patnaik, Professor of Economics at Jawaharlal Nehru University, New Delhi, referred to the paradox of "hunger stalking the land" even as the government held 60 million tonnes of foodgrains rotting in government godowns. Addressing a session later, economist Jean Dreze, who is closely involved with the national campaign for the right to food, related the food security issue to the functioning of India as a democracy. Articulating the possibility of building a popular movement, Dreze said, "The fight for basic rights, such as those for food, is a step forward in the path against neo-liberalism." Still later, health activists and doctors gathered under the All India People's Science Network (AIPSN), an umbrella group with a wide-ranging agenda for activism in diverse fields, related the Indian food security situation to the growing evidence of malnutrition in India. Specifically, they pointed to the fact that the evidence on growing malnutrition among the adult population - India already has very high levels of malnutrition among children - indicated the possibility of a dangerous situation developing in the immediate future. They pointed out that the problem was systemic and not one that was drought- or water-shortage-specific in the country.

In his address, Patnaik outlined the key elements of what constituted neo-liberal policies. Setting the background in which such policies have become the standard equipment of governments across developing countries, he pointed out that the "globalisation of finance" had laid the basis for such policies. "Globalised finance," he said, "does not want an active state", one which was a "welfare providing entity". Instead, the state took measures that resulted in the contraction of national economies, particularly focussing on undermining welfare measures and reducing development expenditures, he said.

The issue of debt and its relationship to development figured prominently at the ASF. Neo-liberal policies, closely associated with the Structural Adjustment Programme (SAP) of the International Monetary Fund (IMF) and backed by its sister institution, the World Bank, were perceived as being basically deflationary in nature. The growing debt burden of developing countries was seen as a key instrument of "enslavement" of the countries of the South. The policies, aimed at protecting the interests of lenders in the North, result in the contraction of the economies of the borrowing countries. The main policy instrument used to achieve this was the reduction of public expenditures of governments, it was noted. They resulted in cuts in subsidies for the marginalised and the poor, which essentially reflected the abrogation by the state of established and constitutionally guaranteed social contracts. On the trade front, elements of the SAP include the increasing export-orientation of national economies, the dismantling of tariff barriers to imports, the linking of the local currency to the international markets and the privatisation of nationally owned assets. In India these policies have resulted in a severe contraction of public expenditures - which got halved in the liberalisation era - and, therefore, in widespread unemployment, and a fall in the incomes of a large segment of the population. It is this that is reflected in the mounting foodgrain stocks in the hands of the government and the stagnation in industrial production, reflected by widespread industrial sickness.

TYPICALLY, neo-liberal policies require that countries maintain a high interest rate - in real terms, that is, netting out the effect of inflation - so that the currency is maintained at high levels. Although countries may be able to attract investments in the short term, the inflows also increase the value of the local currency, making exports costlier. This, in turn, exerts pressure on the balance of payments accounts of nations following such policies. Other elements of the "package" include a squeeze on public investments of any kind, whether on account of welfare measures or owing to the government's role as an economic agent.

The issue of what constitutes globalisation - or what constitutes the elements of the world economy and the way it is linked - was discussed at several sessions of the ASF. However, there was a remarkable degree of unanimity among organisations that debunked the generally accepted, and simplistic, notions of globalisation. The dominant account of globalisation presents it as a new phenomenon in which countries and markets are linked, almost inevitably; that nations have no choice in the matter of linking with the rest of the world, particularly because of the growing importance of trade among nations; that modern technologies, particularly those in the realm of communications and information, have reduced the world to a "global village"; and, that if only governments follow "reasonable policies" that are attractive to foreign investors, particularly in a situation in which capital is mobile, they could be on the road to economic development.

However, these notions of globalisation were repeatedly spiked at the ASF. For one, though it is true that international trade, as a proportion of the size of the economies of the industrialised West, has increased, they are only as large as they were about a century earlier. Seen in the background of a longer historical time-frame, therefore, the current march of globalisation appears decidedly less spectacular. And, as far as the claims about the massive transfers of investment are concerned, they are even less impressive. For instance, even in the United States, foreign direct investment (FDI) accounts for a small proportion of the economy. Moreover, as has been pointed out many times over, substantial proportion of FDI invariably goes not to finance tangible production but for mergers and acquisitions.

A more reasoned approach to understanding globalisation contends that though globalisation has always been a key feature of capitalism, globalisation in the current epoch is not merely more of the same of what has already happened in history. It suggests that the fundamentally new characteristics of what is new are to be found not in the way trade or production is organised on a world scale, but in the clout that international finance has come to wield over the international economic system. The roots of the neo-liberal policies are thus to be found in the new elements associated with finance capital that govern the global economic system. This also explains the one-size-fits-all approach that countries are being asked to adopt in order to attract foreign investors. Indeed, this also explains why the movements ranged against such policies have come together on a global scale, billed as the "globalisation of resistance".

The dominance of finance capital requires that finance be not only allowed to enter and leave national economies at will but that their interests be protected by suitable policy measures. The growing pressures on national governments to privatise state companies engaged in productive activity, or operating in sectors that have a crucial impact on the well-being of large sections of people, has led not only to massive scandals because state assets have been sold to private companies at throwaway prices, but also the exclusion of large sections of the poor who were serviced by these companies. Under increasing pressure from finance capital, governments in developing countries are being asked to sell not only companies engaged in industrial activity but also utilities such as water and electricity.

The issue of privatisation figured prominently at the ASF. Activists from across the world highlighted the predatory nature of privatisation, that is, the handing over of state-run enterprises to private companies at throwaway prices. The more disturbing aspect of the issue, the sale of rights over natural resources such as water, was also highlighted. Vinod Raina, associated with the AIPSN, referred to the looming crisis in the shortage of water, particularly in developing countries. He pointed out that the supply of water, which is generally a part of "municipal services", is in danger of being sold to private companies. Happening in the context of the "finite availability of sources of water", the privatisation of water is already threatening social unrest across the world.

Oscar Olivera, a machinist in a shoe factory in Bolivia and a hero of a successful movement that reversed the privatisation of water services in Cochabamba, a province in Bolivia, livened audiences at several sessions during the ASF. Both Raina and Olivera stressed that the initial move towards privatisation did not draw popular resistance because the state-run institutions had lost their moorings in the communities they served. Privatisation, they pointed out, could not be reversed unless these institutions were made accountable to the people they served. Only genuine participatory democracy, which will ensure the community's control of these institutions, can be the "real alternative", according to them.

Kjeld Jakobsen, from CUT (Central United Workers), Brazil, said that privatisation in Brazil started in 1990, soon after a civilian government was elected. The context for privatisation was set in 1986 when Brazil renegotiated its external debts, planned under the stewardship of the IMF and the World Bank. In successive waves of privatisation, state assets in the telecom, electricity, water supply, railroads, ports and several other sectors, were sold to private interests, many of them owned by overseas investors. Jakobsen also pointed out that the scale of privatisation had been so great that about half of the FDI that flowed into Brazil was used to buy state-owned assets. In response to the groundswell of hope expressed at the ASF about the transformational possibilities in Brazil after the election of Luiz Inacio Lula da Silva of the Workers' Party (P.T.) as the country's President, Jakobsen said that the new Left government would be "under pressure" to protect the interests of the large masses of the working people who had elected it.

A striking feature of the debate at the ASF on alternatives to neo-liberal globalisation was the perception that there can be no real change unless the policy regime that tied countries as unequal partners to the global economic system was snapped. The widespread acceptance of the suggestion that the countries of the South "delink" from such a system, would have appeared "far too radical" some years ago, indicating the distance the "anti-globalisation" movement has travelled in the last few years. Patnaik pointed out that an alternative to the present system was "not only possible, but necessary, for our very social survival". There was consensus on the view that any alternative must first bridle the flows of capital into countries. Trade regimes must also be regulated so that they do not cause "deindustrialisation". There must also be a step-up in public expenditures, which could be used to create jobs, and incomes and promote the welfare of large sections of the people. However, the tax structure must also be altered significantly so that resources can be mobilised for financing these expenditures. Patnaik referred to the fact that the tax-GDP (gross domestic product) ratio in India had declined dramatically during the era of liberalisation; he pointed out that the Indian state would have mobilised at least Rs.30,000 crores more if it had refrained from offering tax sops, which basically went in favour of the rich.

The alternatives on offer at the ASF were not in the nature of quick fixes to the problems that globalisation posed. Speaking at the opening plenary, eminent political economist Samir Amin pointed out that "social progress and economic development are synonymous" (see interview). But this, he said, hinged crucially on the regulation of markets. He said that bringing markets under social control was a prerequisite for a genuine alternative. However, refusing to accept autarky as an alternative to the current dominant vision of globalisation, Amin said that countries must negotiate their inter-dependence with the rest of the world. This, he said, necessarily meant breaking out of the clutches of imperialism, represented by the U.S.-led "triad" (its other members are countries of Western Europe and Japan).

Speaking at a session on alternatives to globalisation, Amin said that though the fight had a global dimension, the arena in which popular forces had to contest neo-liberalism was within the confines of the nation-state. However, he pointed out that popular forces had to form alliances with others on the global stage because the "solidarity" among the nations of the South had the potential to lay the basis for an alternative means of economic inter-dependence among nations, one which had the capability to offer genuine mutual benefit to the nations of the world.

THE irony in the ASF and the Confederation of Indian Industry (CII) holding their meetings in Hyderabad at the same time could not have been starker. One was a meeting of about 25,000 delegates. Of course, the Indian component was predominant, but more than 750 foreign delegates from 42 countries, covering all the continents, were present. More than 760 organisations - some of them platforms for as many as 60 to 70 organisations - participated in the ASF. Coming from all over the world, men, women and even children, dressed in vivid colours, met at over 140 seminars, conferences and workshops spread over six days. They also sang and danced during the festival that held Hyderabad agog.

The "other" world gathered in the comfort of five-star hotels, for the Partnership Summit, where foreign investors, heads of governments and captains of Indian industry heaped praises on Andhra Pradesh Chief Minister N. Chandrababu Naidu for having implemented the very neo-liberal policies that the ASF was protesting against. The fact that hundreds of farmers in the State had committed suicide precisely as a result of the neo-liberal policies, gave concrete shape to what the ASF was up against.

Former President K.R. Narayanan, freed from the tight protocols that he was earlier circumscribed by, appealed to the State government to release about 300 delegates who had picketed the venue of the CII event. He said: "Those who have been arrested represented people from all over the world who were engaged in the fight for human rights." Waving enthusiastically to the crowd, he said: "It is exhilarating to see such a massive gathering of people."

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