People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 17

April 23, 2006

Imperialism Driven Privatisation Spree


N M Sundaram


IT is axiomatic that private ownership of means of production and services is for private profit as public ownership is for public good. In putting the latter policy into practice, distortions and mismanagement might arise. These have to be rectified in proper time. But certainly, the remedy is not privatisation.




After the end of the Second World War, most newly independent countries wanted to shed their appendage to the old world order and wanted to develop their economies suited to their priorities and requirements. After all, independent economic development is the very essence of freedom from colonial exploitation, secured after great sacrifice.


To start with, they wanted to get back control over their mineral and other natural resources usurped by the colonial powers and to build the wherewithal for industrialisation and rapid economic development, suited to their priorities and needs. This was only natural, if freedom from colonial exploitation should have any meaning and substance.


Internally, the newly independent countries adopted the policy of self-reliant economic development. This did not imply a policy of isolation. The policy of self-reliance drew from the bitter experience of the colonial period when imperialist countries wielding power, destroyed whatever manufacturing skills had been developed indigenously and made the colonies mere suppliers of raw materials for advancement of their industries and enrichment of their own economies. Colonies were looked upon merely as markets for exploitation and were forced to import manufactured goods from the colonial powers. This resulted in extortionate transfer of resources from the colonies to the metropolitan centre. These countries therefore, remained poor and exploited with no possibility of healthy and independent development of their economies suited to their requirements. They comprehensively missed out on developing their economies through industrialisation. It can therefore be said that the central theme of the policy of economic development after the colonies achieved independence, was ‘self-reliance’ or simply put, the element of planning, land reforms and modernisation of agriculture, industrialisation and import substitution. Self-reliant economic development became the watchword to these newly independent countries.


In order to provide a proper and strong foundation to this policy, crucial industries were nationalised. Resources too were mobilised from within to the maximum extent possible. This was the origin of public sector industries and services. This after all was the very essence of self-reliant development - the rai-son d’etre of freedom itself.


However, the promise of land reforms remained very much on paper due to strong pulls from powerful landlord elements. This remained an impediment for healthy development of the economy, the self-reliant way. It was here corrective measures required to be applied.




Internationally too, the question of finding solution to underdevelopment and poverty of countries came up. More particularly in the 1970s, the need for redistribution of resources and incomes from the former colonial powers to the former colonies – from the countries of the First World or the countries of the North to the countries of the Third World, the countries of the South – was strongly recognised. This was needed not only to rectify centuries of wrongdoing and exploitation but also in a more positive sense of recognising the rights of all countries for healthy development of their economies in order to provide good living conditions for their people. The enormous debt burden suffered by these countries could be said to be the motivation for this.


To enable this, it was imperative that all vestiges of the old economic order symbolised by colonialism and imperialist exploitation had to be eradicated. An international policy of creating a new economic order was therefore, necessary. To evolve this policy, it was important to identify the means by which colonial exploitation was carried out so that these could be eliminated. Side by side, a policy framework of economic and social development for the betterment of the people and their living conditions had to be created within these countries. These two were essential prerequisites.




To enable these salutary objectives, a number of initiatives were taken dating back to the 1970s, under the aegis of the United Nations. The emphasis was on ‘developmentalism’ inspired by the ‘structuralist’ analysis of the Argentine economist Raul Prebisch. The rationale was that the Third World countries could hope to progress only by making a break with the unequal relations in international trade, which condemned these countries to confine to exports of low-value added agricultural products and raw materials while being forced to import high-value added manufactured products from the developed countries. The emphasis was on a policy framework of affirmative action, rather than the so-called ‘free market’ regime, which would be iniquitous.


United Nations Conference on Trade and Development (UNCTAD) with Prebisch himself as the first secretary general was earmarked to spearhead this strategy. Other important UN agencies too such as the Economic and Social Council and the United Nations Development Programme (UNDP) adopted Prebisch’s prescription. Thereafter, the UN General Assembly itself endorsed it as its official programme. A special session of the General Assembly called in 1974 formally adopted this programme as the New International Economic Order (NIEO-1974).




As a corollary to this objective, it was essential to enable redistribution of wealth as between nations – from the North to the South. As part of shaping this policy, an international commission was appointed, called the South Commission. Chaired by the former chancellor of West Germany, Willy Brant, it had as its member secretary Dr Manmohan Singh, India’s present prime minister.


The South Commission Report was released in June 1990 in Caracas, Venezuela. Among the many laudable findings and recommendations it made was one on privatisation. Cautioning against reckless resort to privatisation, the report declared that ‘Political reforms rather than Privatisation was the remedy. Privatisation was not the panacea for Third World Problems.’ (South Commission, The Challenges to the South - 1991 & the Financial Express – August 20, 1990) As member secretary, Dr Manmohan Singh must have had a hand in not only the contents and direction of the report but also the language of it.


(To be continue)