Democracy, geographic distance and demographic divergence have provided the necessary conditions for the unity of India despite its massive poverty, but these have been merely necessary conditions for its survival. Still, this does not explain the success of its economy. What does?
Three points that are normally proffered as explanations for the current economic success are the investments in capital goods industry by the Indian state in the first four decades since independence, the protection of nascent Indian capital and its class through strong protectionist policies, and an emphasis on education by India’s middle class. Each of these is important and has played a crucial role in building up the resources needed to launch the Indian economy onto the global stage.
What is significant to note is that a large part of India’s industrial sector had already originated during the colonial era, riding on the need for import substitution during the world wars, as well as the ‘Great Depression’. While the individual capitalists were small and the capitalist class was vulnerable by global standards, they were clearly industrialists with manufacturing and financial assets inside India and not trading agents of foreign companies. Indian industry and capital emerged in this context of colonial rule, specially the need to survive in opposition to colonialism. The structural conditions of colonialism, where the government was not friendly to local industrialists, meant that per-force, Indian industrialists had to depend on India’s mass-based freedom struggle for survival. The strength of the Indian freedom struggle’s mass base provided the Indian capitalists with support in negotiating with British colonialists. On the other hand, the successes of Indian capitalists in the colonial period were also perceived as achievements of the larger Indian nation despite its colonial subjugation.
This dialectical relation of the Indian capitalists and its anti-colonial mass movement had two important consequences. One, it helped the Indian capitalist class realise the importance of anti-imperialism in its own survival in an independent India. Two, it also trained them in dealing with a populist state policy, which often severely curtailed the growth of individual capitalists to protect the larger economic system based on private property. While left critiques of neo-liberal policies have concentrated on India’s “sell-out” to global capital and its representatives, it is important to remember that even today many of India’s leading industrialists are direct heirs of those who started their industries during, and in direct opposition to, British colonialism. While the desire to merge with international capital is surely evident, one must not overlook the sense of nationalistic pride that is often evident too. India’s biggest buyout in the global marketplace as yet – Tata’s $ 11 billion purchase of Corus (formerly British Steel) – was often described in starkly nationalist terms (‘India Shining’?) as the former colony buying out a symbol of its colonial master’s industrial pride.
Emotions like pride and patriotism have little currency in global financial markets. What it does indicate is that India’s current transition into a global player is not merely a sell out. Neo-liberal reforms, or the package of liberalisation, privatisation and globalisation, has not resulted in the takeover of the Indian economy by multinational capital, it has rather led to a situation where there is now a fast growing breed of Indian multinationals – as rapacious and trans-border as any US multinational corporation/company (MNC). These economic reforms have not led to a deindustrialisation of India’s economy nor has it led to a weakening of the India state vis-à-vis international players.
Leftwing critics of the current economic policy often argue that this has reduced the independence and flexibility India had in its foreign policy, as well as in some crucial sectors of domestic policy, before these reforms integrated the Indian economy so closely with the global one. They cite the weakening of India’s support to Palestine and proximity to Israel, its weak response to the US aggression on Iraq, its lack of support to the least developed countries in the WTO as examples of India giving up its previous role as a leader of the non-aligned world and its growing alignment with US policies.
While there is no dispute with the fact of change in policy direction, it must be remembered that its earlier role as a Third World spokesperson was nothing more than a strategy of managing imperialist pressure. It was the foreign policy of a state whose dominant class, the industrialists, were frightened of competing in the global market and wanted total protection from global capital. Today, as is so clearly evident, India’s private sector is confident of being an independent player in the global market and is not frightened by global capital. Moreover, the Indian capitalist class is growing a whole harvest of budding MNCs of its own. And MNCs, whether US or Indian, have the same character. They want low barriers on movement of capital and goods and efficient control over people. It is this change in the capitalist class that is leading to a change in India’s foreign policy, and to some extent its domestic policy.
Does that make it less independent and more submissive to US interests? I would argue that this is precisely the wrong question to ask. The foreign policy of major industrial powers like Germany, Japan, France and the UK is aligned much closer to the US than India even today. Does that mean that these countries are less independent than India on the international stage? In a way yes, as they are that much more closely integrated into the global financial systems, but this very integration provides them with their strength. Why should it be otherwise for the newly emergent economies?
India, and countries like India – China, Brazil, Russia, perhaps South Africa – are on the cusp of joining the club of imperialist countries themselves. The two things that are holding them back are massive areas of poverty inside their borders and the environmental limits of industrialisation. While the latter is too complex an issue to deal with in this column today, I would like to end by revisiting the complex called poverty.
Though poverty remains a drag on the economy, its main impact is on politics. It is difficult for a country to sustain smooth economic functioning (a prerequisite for high growth and successful globalisation) when nearly two out of three citizens live in poverty, and more importantly, perceive themselves left out of the growing and visible prosperity. It is here that democracy, geographical distance and demographic divergence work to fragment systemic challenges to the present economic regime, while also providing local relief to people. And it would be a foolish leftist who would ignore the immense importance of this ‘local relief’ to the real lives of people.
But democracy, by its very working, also provides powerful platforms for mobilising people on political agendas and organising for change. Leftists in general, and communists in particular, have been reasonably successful in working the levers provided by democracy and its institutions in India. But while at a practical level they have been good at working democracy, they have not theorised what a functional democracy means for a people’s movement. And as Vladimir Lenin had pointed out almost a century ago, a communist who cannot theorise his or her actual conditions is no communist.
The ability or not of communists to understand and theorise the working of democracy will decide whether democracy will serve the interests of resurgent capital or become a weapon in the hands of the people.
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This article was published in my weekly column in The Post on 16 May, 2007.