Corruption, Capitalism and Civil Society:
(DRAFT)
Alex Tuscano
Anna Hazare has made a history. He will be remembered by many for many years to come for his grand success in his fast against corruption.
To use his own words he initially thought that he would sit under a moderate pendal (shamiyana) with a few supports sitting with him for the hunger strike. But against all his expectation there was a huge following across the country in all cities and town. All young and old joined in his fast and campaign against corruption demanding legislation of jan lokpal.
Anna had his mind clear on what he wanted. For over forty years the lokpal bill has been lying in cold storage and governments after government have been shirking the responsibility for passing this law. What was lying in the archives of pending bills was a watered down version and teethless piece of legislation that had not seen the light of the day. Anna knew that the politicians and political parties who are guilty of corruption would never pass a law that will mussels them. He and the top leaders of the movement wanted members of civil society to have say in drafting the bill. They demanded that there should be 50% persons from the civil society to draft the bill.
The movement was so massive that it not only surprised Anna himself but also the government. Initially the ruling UPA was trying to scuttle the efforts of the people by hiding behind formalities and constitutional intricacies.
What is significant of the movement launched by Anna Hazare is that it did not involve any of the opportunist politicians. The opposition parties were not able to take advantage of the movement to get mileage from the movement. Two politicians, Uma Bharati and one more, were booed out from the gathering. The opposition could not take advantage of the movement to politicize it and use it against the ruling UPA as they were themselves responsible for not bringing out the law and they too have their share in the corruption scenario.
One important truth comes out of this movement is the role of the civil society in bringing about change in the society. Gramsci has been advocating the role of civil society in bringing out change in the society. In Anna Hazare’s movement the people from all ranks had participated and the movement had spread across the country. The role of the youth and the urban middle class was at the peak. The rural masses were not involved in the same extent. But non participation or low level participation of the rural masses does not rob away the importance of the movement. Jayaprakash Narayan’s movement too was predominantly of the urban middle class. The farmers, daliths and adivasies were not emphatic by their presence. The issue of corruption has greater appeal with the urban middle class rather than other section of the people. Corruption issue does not often affect election trend. This could be the reason for the absence of the rural masses, adivasies and the daliths from the movement. But the fact that the civil society arose in this manner totally non violently is a sign of maturity of the civil society and the democracy.
There have been some who have different views of the movement. They claim that not all who were part of the movement were very clear about the objective of it. This claim does not discredit the movement. Maxim Gorky’s mother did not understand fully all the elements of the Russian Revolution as Lenin had understood. But the mother of Gorkhy understood good enough to accept that the revolution would bring about change that will go a long way in meeting the aspiration of people like her. Any movement will have a situation where the level of clarity among the participants and members will be uneven depending on the role these different people play in the movement. If there were different levels of clarity among the participant of Anna Hazare it is not something that will discredit the movement. It is clear that all who were enthusiastically part of the movement and even those millions who would not come to the streets would not like to tolerate corruption that will adversely affect their lives.
The official position of the government was that Anna Hazare was asking something that was unconstitutional. It is only the Members of the Parliament and the Parliament which can draft and pass a law. The political class argued that involving the members of the civil society is not only unconstitutional but it will set a precedent that will erode the power and the sanctity of the Parliament. There were also another apprehensions expressed. Some fascist forces from the civil society would emerge and by sheer power of their number would demand something that would harm democracy and the interest of the people.
This is a tricky question. There are some in the movement who accuse that the Parliamentarians as defacto claiming that the democracy is of the politicians, by the politicians and for the politicians. Once the parliamentarians have been elected the people have no role in politics and in democracy. While we uphold the constitution there is something missing in the constitution which needs to be brought in to ensure that in democracy the citizens are supreme. While it is claimed that the civil society members can become fascist and therefore the Parliament can protect the nation and the democracy form this. On the other hand it is also possible that the Parliamentarians can become authoritarian and corrupt and they could destroy democracy. There is a need to arrive at some clarity on the issue of civil society, democracy, Parliament and the Constitution.
The way to end corruption:
There is a serious reservation among many about ending corruption through legislation. In the year 1975 Jayaprakash Narayan launched a nation wide movement for total revolution to end corruption and authoritarianism. From his time till today corruption has not gone away. Even if Anna Hazare had expanded the concept of corruption to include election process the notion of corruption expressed in the movement of Anna Hazare is very shallow. It is understood only in terms of financial irregularities or money misappropriated by the politicians or political class and state bureaucracy directly or indirectly. There is no analysis of corruption nor is the corruption seen as linked to the overall economic and political system of our society. Therefore it is easily believed that a piece of legislation can put an end to the corruption.
The western advanced capitalist countries believed and propagated this belief that corruption was characteristic of the non west countries where the states are weak and underdeveloped. They used this argument to justify the Washington consensus. But this myth was exploded by 2007-2009 global financial and economic crises.
“There is an imaginary world where corruption does not exist, which is nowhere realized in a pure form, and there are ‘real world’ economies where extant corruption is inevitable. It is the very impossibility of realizing corruption free economy which produces its disciplinary power, for its realization would dissolve traction.”
De Sardan in his article “A Moral Economy of Corruption in Africa” (Journal of Modern African Studies) states “corruption should be understood as a ‘moral economy’ underpinned by value systems and cultural codes”.
In this context I am reminded of the statement the BJP chief, Nithin Gatkari made while defending Yeduarappa’s corruption and nepotism in allotting public land to his son and son in law. He said Yedurappa is legally right but morally wrong. By this he adds a dimension to the concept of corruption. If he is legally wrong then he is corrupt. If he is morally wrong that does not make him corrupt. Yedurappa’s action of allotting public land to his son is legally right hence he is not corrupt. But this action is morally wrong and this does not make him corrupt. Hence corruption means actions which are legally wrong. Similarly the Reddy brothers too are not corrupt because they have licence to exploit the mineral resource than belongs to public; sell it and pocket the money and give fraction of their income as lease money to the government. Bothe Reddy brothers and Yeduriappa are not corrupt as they are not involved in illegal action. When we speak about corruption we are speaking about what is legal and what is illegal. Does corruption stop at this legality of action? In that case we will have to ask a question, on what does legality rest?
The land that Yedurappa gave to his son was acquired from the farmers with the money of the tax payers. The land from which the iron ore is extracted by the Reddi brothers belongs to the people, the common land or forest land. Just because Yedurappa has a discretionary power or the Reddi brothers pay a puny amount of money as lease amount does not make them the owners of the land or the iron ore. According to pre reformed India the mineral resource was supposed to be national resource and the revenue from that was supposed to belong to the nation and its people.
When we speak of corruption we do not speak about what is legally right only. It should also be morally right. What is morally wrong cannot and should not become legally right. We need to go one step further and consider that what is legally right should also be socially just. Justice and equity are high moral values and legal system cannot over rule these values and declare some acts as legally right though socially unjust and morally wrong.
Legal system is creation of human institution to uphold justice, equity and morally in the functioning of the society and governance. Legal system should converge with social justice and morality.
Corruption inherent to capitalist society:
Corruption is inherent in the capitalist system itself. This may sound like a moralist view of Capitalism. Capitalism ought to be analysed scientifically. But a moralist comment on capitalism nails capitalism. Even if one analyses capitalism in a scientific manner the inherent immorality of capitalism cannot be hidden. Karl Marx who is the most irrefutable proponent of scientific analysis of capitalism says apologetically, “To prevent possible misunderstanding, let me say this, I do not by any means depict the capitalists and the land owners in rosy colours. But individuals are dealt with here only in so far as they are the personifications of economic categories, the bearers [Trager] of particular class relations and interests. My stand point, from which the development of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creatures he/she remains, socially speaking, however much he/she may subjectively raise himself/herself above them.”
Capitalism survives by exploiting the toiling masses. It robs the wealth people create and appropriate for itself. It creates, sustains and lives on inequality in the society. Julius Nyrere has appropriately narrated that the natural functioning of the capitalist system brings about poverty and inequality. He says, “when it rains water ultimately flows from the driest region to the lakes and seas where there is already plenty of water, in the same way the wealth from the hands of the poor individuals and poor nations flows in the hands of the rich individuals and rich nation as a natural process of functioning of the economic system.”
Primary Accumulation in the past and today, is the most corrupt and unjust process:
When capitalism emerged as a prominent economic system it had to go through a process of formation of capital. Since this formation of capital takes place for the first time and out of wealth of pre-capitalist system it is called primary accumulation of Capital.
The process of primary accumulation of capital was the most corrupt and inhuman process. The events that led to the driving away of the land owners, converting the agricultural land to grazing ground and then expropriating for the construction of industries in England was an act of corruption.
“The stoical peace of mind with which the political economist regards the most shameless violation of the ‘sacred rights of property’ and the grossest acts of violence against persons, as soon as they are necessary in order to lay the foundations of the capitalist mode of production, is shown by Sir F. M. Eden, who is, moreover, Tory and ‘philanthropic’ in his political colouring. The whole series of thefts, outrages and popular misery that accompanied the forcible expropriation of the people, from the last third of the fifteenth to the end of the eighteenth century, leads him merely to ... ‘comfortable’ concluding reflection....”
“In the eighteenth century the Gaels were both driven from the land and forbidden to emigrate, with a view to driving them forcibly to Glasgow and other manufacturing towns . As an example of the method used in the nineteenth century, the ‘clearings’ made by the Duchess of Sutherland will suffice here. This person, who had been well instructed in economics, resolved, when she succeeded to the headship of the clan, to undertake a radical economic cure, and to turn the whole county of Sutherland, the population of which had already been reduced to 15,000 by similar processes, into a sheep-walk. Between 1814 and 1820 these 15,000 inhabitants, about 3,000 families, were systematically hunted and rooted out. All their villages were destroyed and burnt, all their fields turned into pasturage. British soldiers enforced this mass of evictions, and came to blows with the inhabitants. One old woman was burnt to death in the flames of the hut she refused to leave. It was in this manner that this fine lady appropriated 794,000 acres of land which had belonged to the clan from time immemorial.” Capital ‘So called primitive Accumulation: The Expropriation of the Agricultural Population’
Today’s situation of industrialization of India could be called a process of primary accumulation
In the name of industrialization and progress the government of India has passed a legislation to facilitate creation of Special Economic Zone. These zones are created to enhance foreign investment and promote export from the country. The SEZ gives the foreign investors the following incentives and facilities:
§ Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
§ 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
§ Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
§ External Commercial Borrowing by SEZ units up to US $ 12500 billion in a year without any maturity restriction through recognized banking channels.
§ Exemption from Central Sales Tax.
§ Exemption from Service Tax.
§ Single window clearance for Central and State level approvals.
§ Exemption from State sales tax and other levies as extended by the respective State Governments.
The major incentives and facilities available to SEZ developers include:-
§ Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.
§ Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
§ Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
§ Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
§ Exemption from Central Sales Tax (CST).
§ Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
To create Special Economic Zones the government has become real estate brokers who take the land of the peasant, daliths and adivasies and put them on the street. Any resistance from the owners of the land has met with violence from the state. We have examples of Singur and Nandigram where the police had opened fire on the resisting farmers and killed them. We see that today in Jaithapur.
The very act of land acquisition by paying compensation is a corrupt act. It takes away the land and assets of the peasants and farmers and hand over to the industries in the name of development. The value fixed for the land acquired is a make belief. The Karnataka government acquired 5000 acres of land for Bangalore International Airport. After completing the work it discovered that 400 acres excess land had been acquired. This land was offered for sale. When the authorities paid Rs. 500,000/ per acre to the farmers this 400 acres land from where not even a weed had been taken out was offered for a few crores per acre. The looters did not think of giving that land back to the farmers who were their rightful owners.
“It needs to be noted that transfers of this kind to private capital are not always seen as the result of corrupt practice. There have been many instances where sections of the private sector have made huge gains through means that are "unfair", even if not illegitimate, though they have not been associated with credible allegations of corruption.” C. P. Chandrasekhar, Front Line.
If we read about how in 19th century agricultural land was acquired in a most brutal way for building industries and converting the mass of land owners as dispossessed wage labourers we are not very far from that. The need of the time is to accumulation at the fastest possible manner to catch up with the rapidly growing economy. Faster the growth of the economy greater is the corruption in the society. After the economic reform from the year 1990 India is witnessing massive corruption. The quantum of black money and money in the Swiss Bank has multiplied manifold. The amount of black money that is stacked up in Swiss bank from India is the highest among all nations of the world. The manner in which our economy functions is an evidence of highest form of corruption. The liberal ideologues clamour for a least role for the state and the government in the market forces. The government should restrict itself to governance. But governance means governance only for the capitalist class. By minimal role for the state and the government they expect that the government aggressively acquire land of the poor and hand over to the rich corporate and international capital and reduce the owners of property to mere wage labourers. That the government give host of concessions on taxes, build infrastructure for the smooth functioning of the industries and let the rest work under contractors for the industries without any guarantee of permanent employment.
‘Inflation’, a permanent corrupt policy:
Another intervention that the states have been making is following ‘permanent inflation’ as a policy. The economists tell us something else about inflation and make the state and the capitalist class innocent of this mechanism.
The total money available in the society should correspond to the value of the total available product in the society. Money expresses or represents the value of the commodities. If the total available commodities in the society is ‘X’, the total money available in the society should be ‘X’. Money that is available in the society (market) is a token money (paper money). It is note or a declaration by the governor of the Reserve Bank that he promises to give the person holding this note of that much of money. This token money or printed money can be printed or introduced in the economy (market) by the government. No private agency or institution can print money. We are often told that inflation takes place when more money chases after less quantity of commodities. Which means the quantum of money in the market has increased and gone beyond the quantum of value of the commodities available or produced in the society? Why does the quantum of money increases, money supply in the market increases? It increases because the government prints more paper money. Though the central government alone has an authority to print money it is also subject to the law of the economy. Government prints money in the situation of deficit financing. This means government plans to implement several schemes and programmes in a fiscal year. Government will require money to carry out these schemes and plans.
Government decides to raise this money required for the schemes and plans by levelling taxes on the people. The income tax, excise duty, import tax, sales tax, turn over tax etc are the different kinds of tax are levied on the citizens to raise the money. This will increase the price of the products people buy for their needs. But this will not result in inflation. This will result in redistribution of available money and the money used by the government for their planned schemes will return to the market or society in the form of those schemes. There will be better roads, better transport service, more schools, and health services. It will also mean buying of more weapons in the name of security and defence. The price rise of commodities will also accompany availability of more services in the market.
Often it happens that the government revenue raise through taxes falls short of the required money to implement all its projects and schemes. In such situation the government resorts to printing of more money. This is called deficit financing. Fiscal deficit happens most often when the government tries to implement social projects such as employment generation programmes. To provide employment the government gives the unemployed people work that may not result in direct creation of wealth or commodities. This will result in more money available with people but the production of more commodities will not take place. Here we have a situation where money supply increases but the supply of goods and services remain constant. Here is a situation where more money chasing the same quantity of goods and services (c0mmdities). Here we encounter decrease in the purchasing power of money. We often hear expert tell us that the real value of rupee is seventy paise; the value of money has come down and therefore the purchasing power of money has come down. Hence the real income of the people comes down.
“The Keynesian revolution”, i.e., transforming not only the form but also the content of money creation: Bank money, or deposits plus over drafts on current account henceforth become the main source of inflation.
Inflation as a permanent policy of the capitalist governments:
“We are impelled by present attitudes and goals to seek to operate the economy at a capacity where, we have seen, inflation must be regarded not as abnormal but as a normal prospect” (Galbraith, “Affluent Society” 1958).
Apart from deficit financing, i.e., the state printing money to finance some projects that do not result in creation of goods and service the state allows for the creation money which is called BANK MONEY. Bank Money is created by way of over draft on current account issued by banks. Creation of credit by banks becomes much more emancipated form of actual circulation of commodities. [“Hundi system”, money in anticipation has been an age old practice followed by the banks to allow the capitalist to get the price of their product even before the goods reach the market and even before it reaches the consumer who will pay for it. The capitalist producer submits documents about the production of goods and draw money from the bank as over draft on the basis of production]. Companies could obtain credit for production by overdraft on their current account. Hence the volume of money becomes an inverted pyramid - gold at the bottom, paper money at the second broader level and bank money one the top broadest space.
Hence forward the main source of inflation became the expansion of over draft on current accounts granted by banks to the private sector and covered by central banks (Reserve Bank of India) and governments. In other words production credit to producer capitalists companies and consumer credit to house hold (above all to purchase houses and consumer durable goods). Thus the permanent today is permanent inflation of credit money, or the forms of money creation appropriate to late capitalism for the long term facilitation of extended production, additional means for realizing surplus value and accumulation.
All these policies are aimed at helping the capitalist class to gain quick return for the investment and facilitate faster accumulation and growth. Before the commodities could reach the market and land in the hands of the consumers the producers have already got their money to go in for accumulation and further production. Inflation is a deliberate policy followed by the state to help the capitalist class to rapidly realize their investment and profit and promote fastest accumulation of capital. In the fast growing economy the urgency to fastest accumulation is high and the capitalist class supported by the state go all the way out to maximize their accumulation process. As a result we have high level of inflation along with high level of growth.
International Trade, based on corruption and injustice:
The international relationship and trade is based on corruption and injustice. The advanced western capitalist countries resort to unfair trade with the developing and poor countries. They want to exploit the cheat labour freely available in the poor nations and de-facto refuse free access to the markets for the developing countries. The most developed countries want the poor countries to open their boundaries for foreign goods while they practice protectionism in time of hardship caused by corruption in their own countries. All this is done in the name of ‘free trade’.
“These MDG goals and other plans were set in the WTO conference at Doha, which came to be called the “Development Round”. These are nothing new or different from the basic human rights – rights of each person on the planet to health, education, shelter and security. The difference is that the advance industrial countries want to provide the finance for the achieving the goals.
What the advance industrial countries want to do by this is to give doles to the poor and developing countries. By doing this they want to continue to exploit the developing and poor countries for the profits of the advance industrialized countries.
40 to 50% profits of the US Corporations were derived from the developing and poor countries, especially from China
“The Washington Consensus used to blithely exhort all the developing countries to liberalize their markets rapidly and indiscriminately.
Walden Belo, a progressive economist has pointed out that these policies in fact were not meant for the development of the third world but to solve the economic crisis in the first world. He points out that the aim of this structural adjustment in the third world was to invigorate capital accumulation by 1. removing state constraints on the growth, use and flow of capital and wealth; and 2. redistribute income from the poor and middle classes to the rich on the theory that the rich would then be motivated to invest and reignite economic growth.”
“The advanced industrial countries committed themselves to helping (provide the finance) for development priorities of poor countries.
Unfortunately, in the years since it was launched, the Doha Round has not delivered on its development mandate in several important respects. First, there has been little progress on the issues of interest to developing countries. In particular, developing countries are interested in agreement to reduce tariffs on goods that they can export competitively. These are mainly labour intensive goods, i.e., goods that are produced cheaply in countries with low wage rates and abundant unskilled labour.
The developed countries gain from liberalizing their own markets, because, they are able to adjust, and the disturbances posed to them by the developing countries are small.
The developing countries are in a far more disadvantageous position – they will need assistance in making the required adjustments, and they should be given a longer time within which to adjust.” (Joseph Stiglitz)
Corruption is inherent to capitalism. Accumulation and the growth is a function of corruption.
The corruption that Anna Hazare and his movement would like to root out is only a symptomatic corruption.
“In fact, when discussions of corruption occur, the possibility that it serves as a mechanism for private aggrandisement receives little attention. The tenor of the discourse is that the virus of corruption afflicts only government officials and politicians, who control and misuse state power. This may have been a partly reasonable position to take if corruption is merely reflective of the price to be paid to state functionaries for private individuals or entities to realise what would have been legitimately due to them. But increasingly corruption appears to reflect payments made by the private sector to realise illegitimate gains that are not merely violative of fair practices and/or the law but damaging from the development, environmental or fiscal points of view.” (C.P. Chandrasekhar, Front Line, December 17, 2010.)
Let us take 2G spectrum corruption. It is not corruption where small people were involved. It is operated by the big business like TATA, Reliance and many other big companies who have looted the money of the common people for their growth. A Raja claimed that under him the telecom has grown in an unprecedented manner. No doubt it is true and it is the function of corruption that engulfed the 2G spectrum allocation. There are huge numbers of citizens who have access to telephony facility but they pay for this. But those who have grown without paying for the spectrum or rather by robbing the common people are the corporate like Tata, Reliance and all spurious companies.
CWG scam was for the sake of growth of the different companies who have been suppliers of facilities for the CW games. They were greedy as all capitalists are to make maximum profit out of the business of Common Wealth Games. Organizing such functions and game, even organizing Wold Cups, if analysed critically, serve the interests of the capital and obviously all these activities are not free from corruption.
I would call this the 21st century primary or primitive accumulation akin to the accumulation of 19th century England quoted above. The story has to be told about the Common Wealth Games scam.
When the capitalist class is not able to cope up with the growth that is befitting fast growing economy they resort to plunder and robbery. The absurdity of the capitalist state is that those who fight against corruption through peaceful agitation land up in the same Tihar Jail as those who indulged in corruption. Being absolutely corrupt or fighting vehemently and peacefully against corruption amounts to be the same – criminals in jail in the company of the corrupt. Anna Hazare will be treated in Tihar Jail in the same way as A. Raja and Suresh Kalmadi are treated.
(16th August 2011)
No comments:
Post a Comment