A perspective on foreign capital

EVER since the dismantling of the Soviet Union and the regime changes in the socialist bloc countries, the Communist Party of India (Marxist) has been trying to evolve policy and tactical approaches on the new, emerging world situation marked by globalisation and neoliberal economic policies. The effort had a special significance for the party, because it was participating in elections within what the party calls a bourgeois set-up, and had the responsibility of running State governments, including the West Bengal government which has completed a record 28 years in power.

The governments led by the party were confronted with several questions relating to the pursuit of neoliberal policies within the larger structure in which they were functioning. Hence, evolving the correct tactical approach was of paramount importance. This effort took a concrete shape at the 18th party congress with the release of the document "On Certain Policy Matters".

The document made it clear that "the struggle for an alternative socialist order has to be based on revolutionary transformation of the existing order" and that this requires "an engagement of the revolutionary forces with existing world realities with the sole objective of changing the co-relation of forces in favour of socialism". It also added that the "process of revolutionary transformation has to be based on such an engagement and not on the wishful thinking of escaping from existing realities". Political observers are of the view that the document constitutes a first ever acknowledgement by a third world communist party that globalisation cannot be wished away.

Elaborating further, the document adds: "[U]nder globalisation, the neoliberal policies reduce State governments to extreme penury, by reducing capital transfers to them and by charging usurious interest on loans." It also pointed out that imperialist agencies use this situation to make "offers of help" with strings such as structural adjustment attached to them. What the document visualises is not an outright rejection of these manoeuvres of neoliberal economic interests, but a tactical engagement with them.

With this premise, the document has also delineated its position on the flow of foreign capital into the country. It says that the flow of foreign capital (Foreign Direct Investment) must be regulated on the basis of three stipulations. First, FDI should augment the existing productive capacities in the economy. Secondly, it should upgrade the economy technologically, and thirdly, it should lead to employment generation. The document has also made a similar, qualitative analysis of the funds that flow into the social sector of the country through non-governmental organisations (NGOs) and self-help groups. (SHGs). On this too, the document does not advocate outright rejection of these funds and has asked party units to follow guidelines and take appropriate decisions after evaluating the situation.

At the level of immediate politics, the document imparts a sense of precision to the CPI(M)'s position vis--vis the UPA government's neoliberal initiatives and plans to attract foreign capital. And to that extent, there should be greater smoothness in the coordination between the United Progressive Alliance (UPA) and the CPI(M). However, immediate reactions show that even a well-laid out directive like this can be interpreted in different ways. One such interpretation is that it is tantamount to the CPI(M) revising its earlier stand and welcoming foreign investment in sectors like insurance, a viewpoint that party general secretary Prakash Karat strongly refutes.

According to Karat, the total import of the document would be clear only when the new Central Committee finalises it. However, there is little doubt that the document has imparted greater clarity to the ideological debate within the CPI(M) on how the party should balance its own larger objective of establishing socialism with its immediate concern of providing relief to the people by using the systems available in a bourgeois democracy.