PART II OF THE POLITICAL ORGANISATIONAL REPORT

CPI(M)’s Approach On Certain Policy Matters - III

 Sitaram Yechury

PART II of the Political Organisational Report adopted at the 18th congress notes: “The essential feature of the present phase of globalisation is the rapacious drive to maximise profits by removing restrictions on the movement of capital.” This is mainly the character of imperialist globalisation. Capital in its search for maximising profits moves all across the globe. The internationalisation of finance capital which is not only gigantic, as we noted earlier, but it is also, at the same time, instantaneously mobile, given modern technological advances. This mobility reinforces its search for speculative profits in financial markets across the globe. Simultaneously, industrial capital and capital involved in trade and commerce also moves across the globe, as noted earlier, in search of predatory profits. In this effort, imperialist globalisation seeks to remove or nullify the right of any sovereign country to impose any restrictions, in the interests of protecting its domestic economy, on the movement of such foreign capital.

This is the reality that needs to be confronted. Such international flows of capital will continue to take place in the present stage of the world capitalist development. Capital will continuously mount fresh assaults to bolster its drive for predatory profits. As the Political Organisational Report notes: “This is the case, as long as the socialist alternative to globalisation does not command a significant force internationally.” The task, therefore, is to strengthen the people’s movement for the socialist alternative internationally. This requires the need to confront the existing realities and through the process of such confrontation strengthen that material force which is capable of bringing about the social transformation in our country. This, in turn, requires the need to currently identify the main character of the assault being mounted on the developing countries, including India, by imperialist globalisation and to build and strengthen the popular resistance to this. 

The present phase of globalisation is characterised by a frontal assault on the economic sovereignty of independent countries. Eventually such an erosion of economic sovereignty also severely compromises the political sovereignty of independent countries. This is the process through which imperialism seeks to economically recolonise the developing world. 

Under these circumstances, the defence of national sovereignty – both economic and political – becomes an important element of resistance to imperialist globalisation. Further, as the report notes: “The surrender of national sovereignty to imperialism makes the task of revolutionary transformation all that more difficult. On the contrary, strengthening popular resistance to this sharpens the class struggle contributing to the shift in the correlation of class forces in favour of the revolutionary forces.”

Therefore, by building mighty popular struggles in defence of national sovereignty, the opposition to imperialist globalisation gets sharpened. At the same time, strengthening of these popular struggles also strengthens the progressive revolutionary forces and deepens their links with the popular masses. Thus, the struggle in defence of national sovereignty becomes an important element in strengthening the material force that will eventually succeed in a revolutionary transformation of our society.

Recognising the changed world realities, the CPI(M) Programme notes that following the completion of the democratic stage of the revolution, the People’s Democratic State will allow foreign direct investment in selected sectors for acquiring advanced technology and upgrading productive capacities. Regulate finance capital flows in the interests of the overall economy.” Till this stage is achieved, many interim slogans and approaches will have to be worked out. 

In the build up for a successful completion of the democratic stage of the revolution and also to strengthen the popular movement in order to achieve this, it is necessary, in the present situation, to work out, in the specific case of our country, the terms on which such capital flows will take place. Further, the popular struggles to ensure the adherence of such terms will, in turn, strengthen the revolutionary movement.

On the basis of such an understanding, the Political Organisational Report notes: “the flow of foreign capital into our country, in the present conditions, must be regulated by stipulating the following conditions: a) such capital would augment the existing productive capacities in our economy, b) such foreign capital must upgrade the Indian economy technologically; and c) such capital must lead to employment generation”. 

The stipulation of the first condition means that only such industrial capital must be permitted which will create new productive capacities in our country and, hence, expand the domestic productive forces. Capital that seeks to takeover existing domestic industries does not, in any way, add to an expansion of our domestic productive forces. On the contrary, such capital will only ensure the takeover of domestic resources and lead to a situation where the consequent profits can be apportioned out of the country. This will only lead to accumulative drain of our resources and wealth.

A classic example of such a process has been the manner in which Coca Cola has taken over the domestic soft drink industry. Before the entry of Coca Cola and Pepsi, 80 per cent of India’s domestic soft drink market was being catered to by the industrial group, Parle. Over a short period of time, Coca Cola appropriated the market share and took over Parle, thus, reducing India’s soft drink market to a competition between two multinational giants – Coca Cola and Pepsi. There are many other similar instances where renowned domestic companies have been taken over by multinational capital. In the process, domestic economic resources and wealth have been appropriated by such foreign capital exclusively for their profits. 

The CPI(M), therefore, while opposing the entry of such capital, must put forward the alternative that foreign capital that comes to India will have to set-up its factories. Though exploiting Indian resources and labour to garner profit, the establishment of such new factories will add to the productive capacities of our economy. 

A further implication of this stipulation also means that foreign capital that seeks to utilise our mineral resources must not be allowed to export these resources from India garnering superprofits. While opposing this, the CPI(M) states, if foreign capital seeks to exploit Indian mineral resources, then they must come to set-up factories, ideally in the joint sector, in our country to produce the final product based on the use of such mineral resources. Exhaustible mineral resources must not be allowed to be exported. For instance, using India’s iron ore deposits, foreign capital may be permitted to come and set-up steel factories for production within the country. This, again, would expand our domestic productive forces. Thus, while foreign capital will make profits from its activities in India, exploiting both our resources and labour, the stipulation of such conditions will also ensure that the Indian economy and the people will also gain.

The stipulation of the second condition means that the foreign capital that flows into the country must bring in higher levels of technology which hitherto did not exist in India. The upgrading of the Indian economy technologically will also render some benefit to the domestic economy in the modern world.

A case in point is the recent controversy concerning the expansion of the Foreign Direct Investment (FDI) limit in the telecom sector. The government has permitted FDI in telecom to the extent of 74 per cent. The Left Parties had opposed this move as it will be detrimental to our economy. Through these columns, many articles explaining our reasoning have been published. In justifying the case, the government often cites the example of China having allowed 100 per cent FDI in the telecom sector. 

A closer examination of the Chinese experience suggests something different. In China, all telecommunication services are provided 100 per cent by public sector companies. In the area of hardware production (i.e., for instance, the production of mobile phone instruments), 100 per cent FDI  is permitted. Thus, China secures its national security by not permitting any foreign capital to enter the area of providing services as also protecting the people with lower costs in the service providing area through the public sector. It should be noted that service providing in telecommunications is the maximum profit generating area. In the sphere of hardware production, however, foreign companies had been allowed to set-up factories domestically and to produce the instruments like mobile phones. Thus, China has seen a growth of all mobile phone producing companies on its soil. These have expanded China’s productive capacities, provided jobs to its people and contributed handsomely to its export earnings. In fact, almost every mobile phone instrument being sold in India is manufactured in China!

The CPI(M), therefore, advocates that the foreign capital that comes into India must, likewise upgrade the Indian economy technologically. Those areas where such upgradation is not possible or required but they provide higher rates of profit should not be thrown open to foreign capital especially when the domestic industry is capable of competently discharging these tasks. 

The third condition that we had suggested will automatically follow if the first two stipulations are adhered to. If foreign capital flows into India to set-up new production units and bring in higher technology, then they should lead to generating domestic employment. However, this condition has been explicitly stated in order to ensure this in modern times as foreign capital and advanced technology can, at times, as noted earlier, need not necessarily lead to any significant employment generation. Further, in some sectors, like, for instance, the retail sector, opening up to FDI may actually reduce existing employment in the sector.

It is on this basis that the Political Organisational Report states: “While foreign capital will seek to exploit our natural resources and labour to garner superprofits, the struggle for imposition of these conditions will, apart from making the resistance to the task of eroding national sovereignty more effective, render some benefit to the Indian economy and the people”.

The Political Organisational Report notes the distinction between Foreign Institutional Investments (FIIs) which is essentially finance capital flowing in search of speculative profits and FDI. While the latter is subject to the conditions we have discussed above, it needs to be underlined that FII flows must be regulated in the interest of the overall economy. The havoc that such speculative capital can wreak on the economy was nakedly visible in the East Asian crisis. The CPI(M), therefore, advocates and shall struggle for the imposition of such regulation on the flow of FIIs. Various suggestions have been discussed in the past. One such  was the Tobin tax, i.e., a tax of all transactions in the stock and financial markets. In fact, in the first budget of this UPA government, a nominal tax on such transactions was proposed by the finance minister. This, however, was rolled back significantly under pressure from those engaged in speculative capital trading. The struggle for the imposition of such conditions should be an important part of the agenda to resist imperialist globalisation. 

The imposition of such conditions for regulating the flow of FIIs and FDI in the interests of protecting and strengthening our domestic economic sovereignty form an essential part of our struggle against imperialist globalisation. It is by mobilising the Indian people for a popular movement for imposition of these conditions that the popular resistance to imperialist  globalisation can also be strengthened.

 (To be continued)