People's Democracy

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


No. 39

September 29, 2013




The Executive under Neo-Liberalism


Prabhat Patnaik


THE pursuit of neo-liberal policies necessarily means bending to the caprices of international finance capital, so that it does not take offence and leave the country’s shores. This in turn necessarily means an attenuation of democracy, for democracy means that policies should be made in accordance with the wishes of the people and not those of international finance capital. Neo-liberalism therefore brings in its train a number of changes impinging on the constitutional arrangement of the country so that while it may retain all the outward trappings of democracy as before, there is a de facto shift in its orientation in favour of international finance capital.


One such shift in the constitutional arrangement is the increase in the weight of the executive at the expense of the legislature and the judiciary. In India what we have seen until now is an increase in the weight of the executive vis-à-vis the legislature; an increase in its weight vis-à-vis the judiciary however is bound to follow, especially with the judiciary taking up a number of “corruption cases”, unless the judiciary itself begins to get directly influenced by international finance capital (through judges having to take “refresher” courses at the World Bank or at metropolitan universities like Chicago that cater to the needs of international finance capital).




This increase in the weight of the executive should cause no surprise. The legislature, elected by the people, is under an institutional compulsion to remain accountable to the people. It cannot with impunity undertake measures blatantly favouring international finance capital at the expense of the people. The executive however can do so, provided the legislature’s hold over the executive is adequately loosened. This loosening is exactly what neo-liberalism brings about, which contributes to an increase in the weight of the executive at the expense of the legislature.


Two additional factors contribute towards this end. The first is the mode of recruitment into these organs of the State. Members of the “global financial community”, consisting of the group of academics, bureaucrats, consultants, management experts and financial “whiz-kids” who roam all over the world propagating the world-view of international finance capital and doling out as “advice” its favourite platitudes regarding the need for “austerity”, the need for privatisation, the urgency of financial reforms (including the autonomy of the Central Bank), and the need for freer entry for foreign capital into the various spheres of the economy, can obviously be more easily recruited into the executive than into the other two Montesquieu-an  organs of the State.


Just to illustrate the point, Dr Raghuram Rajan, who till the other day was the chief economist at the IMF, first walked into the office of the chief economic adviser of the government of India, and within a few months of doing so, has walked into the office of the governor of the Reserve Bank of India. But Dr Rajan would not have got elected into the parliament and would have been hard-put even to get a ticket from any political party.


The executive, barring the ministers at the very top who constitute in the era of neo-liberalism mere titular heads (for reasons we shall discuss later), largely appoints itself. An executive dominated by the “global financial community”, as is typically the case under neo-liberalism, can appoint into its corpus other members of the “global financial community” with ease, members who otherwise could never get into any other organ of the State. Even Dr Manmohan Singh, it must not be forgotten, despite being the prime minister of the country for years, is chary of contesting Lok Sabha elections. If this is true of such a distinguished member of the “global financial community” then the hurdles against other members of the “global financial community” entering the legislature can be well-imagined. And since the State under neo-liberalism must bend to the caprices of international finance capital, for which it must be run by personnel belonging to the “global financial community”, their preponderance in the executive must entail an increase in the weight of the executive relative to the legislature.


The second factor that works towards this end is the vilification of the “political class” that is typically seen as populating the legislature. The media, owned by corporate groups that are integrated into international finance capital, make it a point to highlight the venalities of the “political class”. This implicitly denigrates the legislature, even while presenting members of the executive belonging to the “global financial community” as knights in shining armour fighting for the revival of the Indian economy.


Even the Reserve Bank of India’s minor variations in interest rates which are periodically undertaken in a routine manner are now presented as high drama and the governor of the RBI as a Bollywood cult hero, single-handedly fighting for the country. Those elected by the people in short are presented as a pathetic venal lot while the members of the “global financial community” who uphold the interests of international finance capital and walk in and out of top offices of the country’s executive are made to acquire heroic dimensions.


True, the minor interest rate variations by the RBI have an impact on the stock market and hence upon the economy. But nobody can seriously argue that a 0.25 percent increase in the repo rate, which incidentally can be reversed any time, is of such outstanding importance that it has blighted the entire growth prospects of the Indian economy. Besides, even the impact it may immediately have is only transitory; but the media focus on it is meant to force the country as a whole to be interested in what concerns the stock market, and hence, implicitly, to cheer when the stock market cheers. The media focus on the interest rate policy in short is not so much because of its intrinsic importance as because it locates the stock market centre-stage, and hence implicitly deflects attention from other means of stimulating growth, such as fiscal and trade policies.




In presenting the “political class” as consisting of villains, the corporate-owned media get the support of “middle-class movements” like the anti-corruption movement. These movements themselves however are built up by the media so that we are in a peculiar situation where the media confer legitimacy upon the support that in turn confers legitimacy upon the media’s own crusade.


To say all this is not to deny or underestimate the venality of a whole group of bourgeois politicians who have misappropriated public money; it is only to underscore two points. First, focusing attention on the corruption indulged in by the “political class” deflects attention from the far more significant loot that the corporate-financial elite has been engaged in. After all, bourgeois politicians only get a “cut” from what the corporates get through illicit means, but the media focus has only been on the “cut” while the corporate elite appropriating the cake continues to be lionized.


Secondly, the members of the “global financial community” manning the country’s executive are both aware of, and complicit in, the corruption engaged in by the bourgeois politicians, whether or not they themselves get “cuts” out of it. There is in fact a subtle strategy at work here. While effective decision-making under neo-liberalism shifts to the members of the “global financial community”, the traditional bourgeois politicians are induced to reconcile themselves to this fact by the lure of private enrichment. “Corruption” therefore becomes part of a subtle strategy of international finance capital: if it goes un-noticed then it enables a snatching of the levers of power from traditional bourgeois politicians by members of the “global financial community”; and if it gets noticed then that discredits the traditional bourgeois politicians and hence serves again to transfer the levers of power from their hands into those of the members of the “global financial community”. For finance capital in short it is a strategy of “Heads I win, Tails you lose.”


The examples of the increase in the weight of the executive are numerous. The Indo-US Nuclear Deal was done behind the back of the parliament; and even now the government is colluding with the US administration to dilute the liability law behind the back of the parliament. The TRIPS agreement was signed behind the back of the parliament; the matter came up before the parliament at all because the Indian Patents Act of 1970 had to be amended to make it TRIPS-compatible, and when it did come before the parliament the argument used by the government was that it had already signed the Treaty and was therefore committed to it.


Some may argue that India never had the constitutional provision, as the US has, whereby treaties entered into by the executive have to be ratified by the legislature. But this claim itself is dubious, as was pointed out by Justice Sawant during the debate on the Indo-US Nuclear Deal. Besides, such issues had never come to the forefront in the earlier years when the country was pursuing the dirigiste development strategy. They assume importance only in the era of globalisation when a veritable effort is made by international finance capital to break down all national barriers to the free movement of capital and commodities even when it adversely affects the people of a country. Hence precedents are irrelevant here.


The government of India has been engaged in signing a series of free trade agreements without taking parliament into confidence. The executive’s aggressive drive to sign such agreements not only implicitly denigrates the central legislature of the country; it also violates the basic constitutional provision on centre-state relations.


The FTA with ASEAN for instance affects the condition of agriculture in states like Kerala; and agriculture, as is well-known, is a state subject. But the central government not only barged into this state subject entirely on its own without so much as consulting with the concerned state governments, but it even violated its own solemn promise of making the draft agreement available to the state governments before the final signing.


The day is not far off when the central executive that has ridden rough-shod over the central and state legislatures will insist that the judiciary too should be “committed to the cause of growth” which is but a euphemism for being committed to neo-liberal policies.


Marxism holds that the essence of the bourgeois State is the bureaucracy and the standing army. A strengthening of the executive, of which the bureaucracy is at the core, constitutes a strengthening of the bourgeois State. Neo-liberalism entails ironically (since it claims to be “rolling back the State”) both a strengthening of the bourgeois State, and its growing appropriation by members of the “global financial community”.