In the Aftermath of Nandigram

 Prabhat Patnaik

Tragedies like Nandigram are inherent in the operation of a neo-liberal policy regime. These tragedies are being debated as a conflict between the needs of industrialisation and the peasantry, as if the corporate nature of that industrialisation did not matter. Nandigram should make us look beyond scapegoats at the process of ‘accumulation through encroachment’, which neo-liberalism has unleashed in the country.

The appalling tragedy of Nandigram will haunt the left for a long time to come. Indeed, after the initial period of knee-jerk reactions, a process of churning has already started within the left, a fact which only underscores the distinctiveness of the left among all the political formations in the country.

A certain amount of CPI(M)-bashing in the aftermath of Nandigram was inevitable. But CPI(M)-bashing has also been used for an ulterior purpose, namely, to deflect intellectual attention from the root cause of tragedies like Nandigram, namely, the neo-liberal policy regime being imposed upon the country and on all the states. The West Bengal government of course may be faulted for not having protested against this imposition, as it would have done in an earlier period; but tragedies like Nandigram are inherent in the operation of such a neo-liberal policy regime. It is to camouflage this that the proponents of neo-liberalism are attributing the Nandigram tragedy to the so-called ‘Stalinist’ methods of the CPI(M).

The crowd of neo-liberal intellectuals who were, but yesterday, hailing Buddhadeb Bhattacharya as ‘progressive’, ‘forward-looking’ and a ‘visionary’ breaking with the ‘old communist mindset’ for his apparent acceptance of the neo-liberal regime (the leading neo-liberal intellectual of the country even called him the ‘best chief minister in India’ a few weeks before Nandigram), are now busy denouncing his party and government as ‘Stalinist’! It is a ‘heads-I-win, tails-you-lose’ argument. If West Bengal’s industrialisation drive succeeds, then that is to the credit of neo-liberalism; but if it does not, then that is because of the CPI(M)’s ‘Stalinism’. The fact that everywhere in the country, not just in West Bengal, peasants are up in arms against such ‘industrialisation’, the fact that a similar tragedy had already occurred in Orissa a couple of years ago (and three Posco officials were recently abducted for a short period by ‘villagers’), and the fact that throughout the long rule of the Left Front (LF) in West Bengal, not one incident of this kind had occurred despite the CPI(M)’s alleged Stalinism, should have suggested that the roots of the problem lay elsewhere, not in the intrinsic nature of the CPI(M). But Buddhadeb Bhattacharya and his party have become a convenient scapegoat for the proponents of neo-liberalism.

Corporate Industrialisation

The basic fact, however, remains that the only ‘industrialisation’ possible under the neo-liberal policy regime is corporate industrialisation; and the type of corporate industrialisation that can occur within such a regime is, as we shall see, necessarily anti-people. It creates very little direct employment: in India for instance, between 1991 and now, the number of persons employed in organised manufacturing has remained constant in absolute terms, not-withstanding a nearly 8 per cent annual growth rate in manufacturing output. The problem to be sure is not confined to corporate industry alone; it afflicts the entire spectrum of grandeindustry (to use Engels’ phrase), for even in China in the post-Town and Village Enterprise (TVE) period, despite a phenomenal (close to 12 per cent) growth rate in industrial output, the total industrial employment has hardly increased at all.

It is an awareness of this fact which makes peasants most reluctant to part with their land for industrial purposes: they know that notwithstanding the compensation they get, their future employment prospects remain bleak. Proponents of grandeindustry typically point to ‘downstream employment generation’, i e, to the fact that while not much direct employment may be generated by such industry, the indirect employment created in activities spawned by such industry is considerable. But this argument is no more than a pie in the sky for the dispossessed peasants. Besides, there are two problems with this argument: first, it does not take into account the fact that even while employment is created directly and indirectly by grandeindustry, there is a simultaneous destruction of employment in activities supplanted by such industry and its off-shoots. Unless the output of such industry is exported or substitutes for imports, or unless real wages can increase sufficiently with labour productivity to expand aggregate demand, a possibility ruled out by the very existence of large labour reserves, the net employment generated through the creation of grandeindustry may well be negative. Secondly, we have to look at the effects not just of a one-shot shift from traditional to grandeindustry, but of a sequence of shifts, of technological progress over time. When we do so, the direct and indirect employment creating capacity of the grandeindustry sector as a whole appears even more negligible. It follows that the employment argument for ‘industrialisation’, i e, for the development of grandeindustry, is with-out any foundation. The argument that ‘industrialisation’ is necessary because it will take surplus labour out of agriculture is completely baseless. True, in the case of the advanced capitalist countries, ‘industrialisation’ was accompanied by a shift of surplus labour out of agriculture, but that is because such surplus labour simply migrated to the ‘new world’ (where the native Indian population was forcibly driven off its land); in addition unemployment was exported to the colonies in the form of ‘de-industrialisation’. It is completely erroneous to believe that countries like ours, in the context of present-day capitalism, can take substantial numbers of people off agriculture into grandeindustry. The only significant cases where this has been successfully effected in recent times are the Soviet Union and other former socialist countries, but their ability to shift workers out of agriculture into grandeindustry was because they controlled the rate of technological-cum-structural change: their grandeindustry came up within the context of a planned economy, not a market-driven one.

While the employment argument for ‘industrialisation’ cannot stand scrutiny in the context of a capitalist economy, or even a market-oriented economy like China, this does not mean that ‘industrialisation’ should not occur. Grande industry provides us with a whole range of use-values which are part and parcel of everyday life for everyone. These use-values have to be produced and it is worth producing these use-values at home, which means that their production has to be located in some state or the other. (This argument, needless to say, provides no justification for real estate projects involving luxury construction which are sometimes passed off as ‘infrastructure development’.) Thus while the ‘Luddite’ argument against industrialisation is indefensible, so also is the employment argument in favour of ‘industrialisation’.

‘Industrialisation’, including the development of grandeindustry, must be promoted, but not for the reasons usually adduced for it. It follows then that while promoting ‘industrialisation’, care must be taken to ensure that its destructive effects upon the surrounding population, including especially on the peasantry that faces dispossession, are minimised. But this cannot be ensured if corporate industrialisation is the only type of ‘industrialisation’ available, and if states are made to vie with one another for such corporate industrialisation, i e, there is no ‘reservation’ price at which a state desists from pursuing corporate industrialisation.

Discrimination against Public Sector

The neo-liberal regime ensures both these conditions, i e, the exclusive reliance on corporate industrialisation and the absence of any ‘reservation price’. The public sector is no longer considered a serious investment option; and this for two reasons. First, there has been an assiduous, and largely successful, propaganda against the public sector that it is ‘inefficient’ (even though the notion of ‘efficiency’ used in this argument makes it synonymous with ‘profitability’, not at some ‘shadow prices’ but at some arbitrarily given prices, and hence is without any theoretical validity). Secondly, an argument has been advanced that the public sector ‘lacks’ the resources for undertaking investment, which is nothing else but an intellectual sleight-of-hand that deliberately obfuscates the distinction between ‘finance’ and ‘savings’.

When the Tatas or the Ambanis invest, they do so not out of their savings; they obtain finance from various institutions for making the investment. The public sector can do exactly the same and raise finance for investment projects; but when it comes to the public sector, the objection is always raised that there are not enough budgetary resources, i e, not enough savings! The term ‘resources’ in other words is used in two very different senses in the two cases, and an argument is made out against the public sector on the basis of this duplicity. And when it comes to other forms of ownership like cooperatives, etc, they are simply ruled out of court, even though one of the most remarkable success stories of industrialisation in post-independence India has occurred within the cooperative sector.

But it is not just arguments that are used to promote corporate industrialisation. There is coercion through a combination of the carrot and the stick. The much-touted public-private partnership (PPP) policy of the centre says: we shall give you money (‘viability gap financing’) if you entrust your project to a private player, but not if you do it yourself in the public sector. The much-touted information technology (IT) policy of the centre says: we shall give you money if you entrust your Village Resource Centres to private players, but not if you do it yourself in the public sector (as Kerala has been already doing success-fully for a long time). The much-touted power sector policy says: we shall give you money if you trifurcate the state electricity boards and entrust large chunks of the power sector to private players, but not if you persist with a public sector organisation. The much-touted Jawaharlal Nehru National Urban Renewal Mission says: we shall give you money if you bring down stamp duty to 5 per cent and sacrifice precious revenue (though an absurdity called the ‘Laffer Curve’ is invoked as a fig-leaf to cover this), but not if you persist with high rates of stamp duty for land speculators. One can go on and on. We have here the entire state machinery, represented by the central government, that is being used to promote the interests of monopolists and multinationals; and the state governments which are also a part of the state machinery but which could act recalcitrant are being arm-twisted to fall in line.

Neo-liberalism justifies itself by invoking the ‘virtues of the free market’. The ‘free market’ it imposes through coercion is a euphemism for the domination of a handful of monopolists and multinationals. And the irony of the situation is this: the legitimacy of capitalism is supposed to lie in the fact of competition which the ‘free market’ is supposed to promote. What we have in India today is not capitalists competing against one another for state government projects, but state governments competing against one another for attracting capitalists. The Tatas want land at Singur, nowhere else, and if they do not get it they threaten to go to Uttarakhand. Grande industry generates, we argued earlier, little additional employment. When grandeindustry takes the form of corporate industry, it too not only generates little additional employment; but in addition it uses its monopoly position to carry out primitive accumulation of capital (or more generally, what I would call ‘accumulation through encroachment’): by demanding concessions from the state exchequer; by imposing ‘conditionalities’ on the state government to the detriment of the people, including dispossession from their land and displacement from their habitat; and by engaging in land speculation. If ‘industrialisation’ could be brought about through other means, e g, under the aegis of the public sector or the cooperative sector, where the peasants themselves could collectively own industry by organising themselves into cooperatives, then these costs to the people could be minimised or even avoided. But the fact that neo-liberalism insists on corporate industrialisation, and that too without any ‘reservation price’, imparts an anti-people character to the process of ‘industrialisation’, where protests and even tragedies like Nandigram become inevitable fall-outs.

Caught on the one hand between the need to undertake an ‘industrialisation’ drive, which necessarily takes the form of a predatory corporate industrialisation, but which becomes imperative both as a general tendency and also as a specific demand of middle class youth that cannot be ignored, and on the other the wrath of the peasantry, threatened with displacement and dispossession, state governments today are placed in an unenviable situation. To be sure they have been complicit in the emergence of this denouement, but they are also the victims of this process, as the West Bengal government is no doubt belatedly realising.

And yet the supreme irony of the situation, and the supreme triumph of neo-liberalism, consists in the fact that this entire issue is being debated as a conflict between the needs of ‘industrialisation’ in general and the interests of the peasantry, as if the corporate nature of that ‘industrialisation’ did not matter. Obliteration of the specific social form of a phenomenon represents the triumph of bourgeois apologetics, and such is the magnitude of the triumph today that ‘industrialisation’ and corporate industrialisation are being treated as synonymous concepts. The tragedy of Nandigram, one hopes, would drum some dialectics into this discourse, so that we go behind scapegoats to look at the real processes of primitive accumulation of capital (or more generally of ‘accumulation through encroachment’), which neo-liberalism has unleashed in our country.

Economic and Political Weekly
May 26, 2007

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