A continuum of sleaze

Print edition : July 04, 1998

The Pathology of Corruption by S.S. Gill; HarperCollins Publishers India, New Delhi, 1998; price Rs. 295.

S.S. GILL does not seek to write a treatise which locates the phenomenon of corruption in a sociological setting, though the title of his book might suggest such an intent. Instead, he has chronicled a saga of sleaze that stretches from the basic scriptures of Indian culture to the current day. He has examined many of the notable cases of political corruption in recent years. Yet his book covers a span of history which necessarily imposes certain constraints on the depth of detail that can be laid bare.

The initial excursus into the social and cultural context of corruption is not integrated into the rest of Gill's book by any rigorous logical reasoning. He cites the scriptures to suggest that Indian culture, which exalts the renunciation of worldly comforts, has contrarily also been far more permissive in its attitude towards lucre than the Judeao-Christian tradition. It is an interesting argument, though perhaps incomplete, and for that reason, oversimplified. It shows little awareness of the sociological treatment of Western enlightenment and its particular ethic of the connection between material enrichment and spiritual redemption.

Gill sees a reflection of the dichotomy between the Judeao-Christian and Indian traditions in the contrasting attitudes of two of the founders of the modern Indian polity, both of unimpeachable personal integrity. Jawaharlal Nehru, the Westernised intellectual, was disdainful of material enrichment, and premised his entire political strategy on neutralising the enclaves of wealth in the country. Mahatma Gandhi, in contrast, was steeped in the Indian tradition of renunciation, though he was far more comfortable and trusting of the wealthy in his political dealings.

The collapse of all sense of probity and accountability has engendered a sense of nostalgia for some golden age past, when corruption was absent. For those afflicted by this sense of longing, Gill administers the appropriate antidote. For reasons partly originating in his cultivated sense of disdain for wealth and his own unshakable faith in the power of an enlightened world-view, Nehru proved less than vigilant and discreet in his choice of political associates. Gill cites the case of V.K. Krishna Menon in particular, and the multitude of murky defence contracts he tied up while in London as India's High Commissioner. Nehru used his own political prestige and his sense of personal faith in Krishna Menon to overwhelm both parliamentary and judicial processes of scrutiny.

This pattern of behaviour was repeated in several other cases, with Nehru putting his personal prestige on the line, rather than deal with an errant Minister. India's first and undeniably greatest Prime Minister summed up this attitude of political paternalism in words that have justly become famous: "Either this Parliament believes in the personal integrity of members of the government as a whole, or my personal integrity, or it does not: if it does not, it has a right to say so and even remove me from office."

Effectively, this enabled a corrupt Minister - if he was in favour with Nehru - to hold to ransom the entire Cabinet, rather than submit to any notion of parliamentary accountability. The dangers inherent in this doctrine may not have emerged in full public glare in Nehru's time. But his political and dynastic heirs have adapted and utilised it in various ways to legitimise the rampant growth of corruption in subsequent years, as also to partake personally of its fruits.

THERE is a fascinating continuum in the growth of graft that Gill seems obliquely to suggest. Nehru provided immunity to certain of his personal favourites from institutional scrutiny as far as allegations of corruption were concerned. Indira Gandhi institutionalised corruption itself, by putting in place a regime of quotas, permits and licences that subjugated all economic activity to the gratification of the political establishment. Rajiv Gandhi, in turn, subverted the institutions themselves by bending them at will and forcing them to acquiesce in his own rampant malfeasance. The culmination came during the Narasimha Rao administration. In the institutional vacuum that was the legacy of the Rajiv Gandhi years, various Ministers under Narasimha Rao conducted themselves in a manner which suggested that their portfolios were little else than lucrative sources of personal enrichment.

This continuum would enable one to draw out the linkages between corruption as a political phenomenon and the institutional health of Indian democracy, which is universally acknowledged, in the golden jubilee year of Independence, to be less than sound. Yet this is a linkage that Gill is unable to perceive because of two kinds of distractions. First, he tends to be altogether too trusting of the personal probity of the leaders involved. Despite all the evidence to the contrary - some of which he himself summarises - Gill tends to look at the Bofors scandal as "a story of inept handling and crass bungling". Rajiv Gandhi's involvement itself remains, in his reading, a "matter of conjecture".

The second infirmity is the undue sense of caste loyalty to the cadre that he served with distinction for many years - the Indian Administrative Service. The IAS, Gill avows, has not suffered the taint of corruption to the same extent as various other services, since it does not "belong to a specific area of administration". The IAS has too vast a spread for any kind of generalisation about its level of corruption. In certain specific cases that he takes up, Gill seems to allow his own personal proximity to the officials involved to influence his reading of their compulsions and motivations. The reader is enjoined to accept these almost as an act of faith.

Unfortunately, this detracts from an objective and dispassionate evaluation of the phenomenon of corruption. The IAS cadre has been home to the best and the brightest in Indian public service. It has also, over the years, evolved into what has been described as the "world's best organised trade union". What in Gill's perception is regrettably a "diffused spread" of IAS officials, could in others' evaluation be the pervasive influence of the cadre. Starting with local administration, through the State Government and ending with the vast administrative Ministries at the Centre, the IAS cadre has a decisive influence on the quality of governance.

GILL'S chapter on the control of corruption devotes a large part of its treatment to electoral reforms. His rationale is the reading that correctives for the affliction of corruption "can only come from the political class which is the final legislative and executive authority in a parliamentary democracy." This prescription seems to give away the initiative precisely when the search for a suitable antidote is beginning. To accept that a "political class" exists in a democracy is to concede that certain kinds of vested interests should be guaranteed pre-eminence, irrespective of the consequences for other sections of the nation.

It is a truism that bears repetition that the only cure for corruption lies in strengthening and deepening the processes of democratic participation. Indian democracy went into a phase of involution shortly after its birth, when local initiative was superseded by the administrative powers of a vast bureaucracy. This bureaucracy, in turn, developed an accommodation of mutual convenience with local centres of power and patronage, which alone were afforded the latitude to develop and grow in the years of the planned economy.

Excluded sections could gain entry if they could pay their way through. Others sought to bludgeon their way in, using methods that are today described as criminal. The collision between the newer forms of criminality and the earlier forms, more subtle but entrenched variants, has created a spectacle of violent and ultimately futile political contestation. The shake-out, when it comes, would have to deal with the issues of corruption, political participation and equality of opportunity as connected parts of a whole. Piecemeal interventions, however well-intentioned, would seem to have little or no relevance for the magnitude of the crisis facing the Indian polity.

And the bust did come C. T. KURIEN

Asian Currency Turmoils and WTO Issues by Arun Ghosh, Centre for Study of Global Trade System and Development, New Delhi, pages vi+47.

IN a recent review of a book on the rapid growth of South-East Asia's newly industrialising countries ("Boom before bust", Frontline, June 19, 1998) the conditions that facilitated their 'miraculous' performance for a decade from 1985 were brought out. The present monograph provides an account of the bust itself and tries to indicate the factors responsible for it. The treatment is rather terse with frequent, but easily avoidable, statements of what the monograph is not about. (Those who wish to have a more detailed account may wish to consult V. V. Bhanoji Rao, "East Asian Economies: The Crisis of 1997-98", Economic and Political Weekly, June 6-12, 1998.)

The monograph deals with three sets of issues: the Asian currency turmoil itself (pp. 3-16); the role of international institutions, especially the International Monetary Fund (IMF) and the World Trade Organisation (WTO) (pp. 16-37); the world of finance capital (pp. 38-42). The concluding pages have a discussion on the implications of the Asian currency crisis for Third World countries in general and India in particular.

A striking and puzzling feature of the Asian currency crisis is that it came suddenly to economies whose 'fundamentals' were quite sound. For a while the Asian countries concerned - Japan, South Korea, Taiwan, Thailand, Malaysia and Indonesia - followed what has come to be described as "the Flying Geese paradigm". A flock of wild geese flying in formation, it has been estimated, can fly some 70 per cent further by taking advantage of the air currents streaming off the wings of the birds flying ahead. In the Asian economic context the "flying formation" led by Japan, followed immediately by South Korea and thereafter by Thailand, Malaysia and Indonesia, it is claimed, was importing industrial goods, manufacturing in the country, exporting manufactured goods to other countries and finally shifting manufacture to other countries via the export of capital. (The book reviewed in the June 19 issue of Frontline acknowledged the significance of the regional factors in the development of South-East Asian countries, but insisted that what happened was not a blind imitation of the pattern set by the leaders.)

If the phenomenal growth of Thailand, Malaysia and Indonesia in the second half of the 1980s and the first half of 1990s could be attributed largely to the above pattern, it is possible to find a single factor that can explain their subsequent collapse also. According to Ghosh, these countries "depended heavily on short-term investments... (but), there was a sudden and precipitate capital flight which has now left all these countries totally devastated, at the mercy of international financial institutions, in particular the IMF ..." Thus the three themes of the monograph - the Asian currency crisis, global finance capital and international financial institutions - are brought together.

Finance capital, rather than trade in goods and services, is the chief ingredient in the contemporary globalisation in the economic sphere. The total volume of cross-country movements of short-term capital in any given period such as one year now is over 50 times the volume of world trade. This is significant in itself. But there are two other, and more important aspects of finance capital. Unlike capital that goes into productive activity which, therefore, makes profit only over a long period, the movement of finance capital is prompted solely by considerations of quick profit. Hence it operates in buying and selling assets, stocks, enterprises and real estate. Secondly, and following from the first, it seldom stays put. Indeed, the lightning speed with which capital can get into and out of any asset or any country is the prime operational requirement of contemporary finance capital: freedom of movement is what it wants most.

Those who play the finance game globally are private bankers, stock brokers, financiers - practically all those who take the garb of transnational corporations (TNCs) and who have, from a variety of sources, large funds at their disposal seeking placement for profits. While these are essentially private bodies with limited obligations of public accountability, they are powerful enough to find patronage from their national governments (mainly the leading wealthy nations) and through them to penetrate international institutions of finance and trade. Ghosh brings out the many ways in which private financial operators succeed in imposing their agenda on international institutions.

The IMF, for instance, which was founded to assist in the stability of national currencies, has now turned out to be the guardian of the global interests of private capital. Where careless lending and reckless spending by private parties (banks in rich countries and firms in developing countries, for instance) lead to a crisis, the IMF converts it into a national crisis and often insists on the devaluation of the borrowing country's currency as the solution to the problem. The WTO first asks for opening up of countries to the free movement of goods in the interest of trade but immediately and vehemently makes "Trade Related" Intellectual Property Rights (TRIPS) and Investment Matters (TRIMS) the major items on its agenda using the economic clout of private financiers and the political power of rich countries to force open Third World countries to the domination of foreign capital.

On the basis of such analysis, the monograph concludes with two sets of warnings to Third World countries. The first is that there is no unique model of development and so every country should find its own development pattern, and the resources to pursue its development. Foreign capital can be put to good use only within such a well-thought-out pattern of development.

Second, 'financial sector reforms', including convertibility of the country's currency on capital accounts, patterns of borrowing and the opening up of the banking, credit and insurance sectors to external private financiers, should be done with great care and caution. For, these are the routes through which trouble penetrates even economies with sound fundamentals.

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