People's Democracy

The Contrast Could Not Have Been Sharper

Prabhat Patnaik

THE contrast could not have been sharper. When the union government unleashed a double assault on the people, through a diesel and cooking gas price hike and by allowing FDI in multi-brand retail, every housewife, every man on the street, complained bitterly; but the stock market boomed and the rupee climbed up. Capital is delighted when the people are hit. Finance cheers as the working people are squeezed. India’s “credit rating”, as officials were quick to point out, would now improve!

The usual official arguments were all trotted out. Cooking gas and diesel price hikes would affect only the middle class, not the really poor; “we” cannot afford such a heavy subsidy bill, and so on. Every one of these arguments was disingenuous. The fisherman of Kerala who has to pay the higher diesel price and would now sink even deeper into debt and distress, is not middle class. The lakhs of the poor who live on the outskirts of metropolises and have to commute daily to their jobs, and who would now have to pay more for their transport, are not middle class. Those who would be hit by the high prices of virtually everything, on account of the higher transport costs that the diesel price hike would cause, are not all middle class. In short, in addition to the middle class, millions of the poor in the country will be hit by the government’s new “thrust to reforms”.

And for the very government that has handed over lakhs of crores of rupees to favoured capitalists through the 2G and “Coalgate” scams, not to mention the Rs 5 lakh crores doled out as cumulative annual tax concessions to big business over the last few budgets, to say that the public exchequer would collapse unless the people are hit through price hikes, is brazen dishonesty of the highest degree. Moreover, this very government is planning at this very moment to abandon the capital gains tax altogether!

This assault on the people in other words is a matter of choice. It is undertaken not because there is no other option for the country, but because capital demands it.

Acceding to the demands of capital is sought to be justified in the name of growth. Capital has to be appeased by squeezing the people, for only then will it invest: only then will its “animal spirits” revive, only then will global finance flow into the country, only then will the Sensex start climbing up, all of which will boost growth.

Even if this were true, which it is not, what good is this growth for the people? Any growth that requires for its revival such an assault on the people, will also require, for its sustenance, a continuation, or even an intensification of such an assault. Not surprisingly the years of high growth prior to the current slowdown, which were advertised as “India shining” or “India emerging as an economic super-power”,  were also years of declining per capita food absorption and of increasing absolute poverty.

This assault on the people in other words is not something that is “necessary” just for kick-starting growth. Any flagging in this assault, or even a non-intensification of it, dampens the capitalists’ “animal spirits” and brings down growth. Like a drug-addict who must have higher and higher doses of drug intake, capitalists cannot do without a steady increase in the assault on the people, which alone can keep up their “animal spirits”. A revival of growth under these conditions, which is what the Manmohan Singh government claims to be the justification for this assault, is not worth having. The country should do without such growth, obtained by appeasing international finance capital.

What is more, growth will not even revive, despite this assault, in the present conjuncture of world capitalist crisis. The advance of “reforms” is not going to make financiers flock to the rupee as they did before the crisis, since every currency, from the Euro even to the dollar, is under strain today and gold has become a favourite option for wealth-holders. Oil may join gold in this role in the coming days, in which case the world oil prices will go up further and the government, committed to cutting subsidies, will impose even heavier burdens on the people. The people already are, and will further be, victims of the government’s bankrupt strategy of servility to international finance capital.

The anti-democratic nature of the government’s measures is striking. They are being pushed through, even though a clear majority of members in Parliament, belonging to all Parties other than the Congress, is explicitly opposed to these measures.

But they are also anti-democratic in a more fundamental sense. A democracy, if it means anything, must entail that governments work in the interests of the people. If a government works, quite openly, explicitly and brazenly, in the interests of metropolitan capital (by opening up civil aviation and multi-brand retail to FDI, the latter at the expense of crores of petty traders), and for satisfying credit-rating agencies set up by such capital, and if it does so by launching an assault on the very people whose interests it is supposed to defend, then we have an inversion of democracy, an open coup d’etat against democracy. The Manmohan Singh government has just staged such a coup d’ etat. But this misadventure must be defeated by the people.