Abstract
The recently published book, Politics of Poverty, is a collection of various articles written by D. K. Rangnekar. An eminent journalist and political–economic commentator, Rangnekar’s writings have covered a wide spectrum of issues concerning Indian economy and polity during this period. Independent of the fact whether one agrees with its arguments, the book eloquently depicts the contradictions of the Indian society which was making its gradual transformation from dirigisme to a neoliberal regime during the decade of the 1980s.
As a collection of various articles written over a long time span, the book reflects opposite views of the author on the same issue. Instead of analysing the arguments of each of these articles separately, the present review attempts to explore the major arguments associated with the title and the main theme of the book, namely, the ‘politics of poverty’. The title of the book becomes particularly relevant at the present juncture when as many as 836 million people of the country eke out a living at ₹20 per day or below (National Commission for Enterprises in the Unorganized Sector [NCEUS], 2007).
In Rangnekar book, the ‘politics of poverty’ specifically captures the political–economic crisis of the 1980s. One of the underlying themes of the economic writings of Rangnekar has been the growing inequality in the Indian economy during this period. The author argued that high growth rate of GDP cannot necessarily solve the problem of socio-economic inequality. While noting the phenomenon of industrial slowdown after the initial plan periods, the author correctly identified its reason in the lack of adequate resources due to the incomplete land reform. His articles also touched upon the problems of black money and the issues related with foreign aid. While noting the gradual, but emphatic, shift in the direction of the economic policy in the 1980s, Rangnekar also criticised the growing tendency of privatisation of the economy.
Rangnekar’s depiction of the political situation is perhaps more interesting than anything else. Writing in the early 1980s, the author noted the growing disenchantment of the people with the political system. The author found its roots in the growing socio-economic inequality, empty slogans of the government and the inability of the state to address the aspirations of various identities. The marked resemblance of the social–political crises of the 1980s, as depicted by Rangnekar, with those of the contemporary period poses important questions for future research.
The analysis of such a depiction of the political and economic situation, nonetheless, is bound to provoke much debate. The author has explained the growing ‘social tensions’ and perpetuation of inequality and poverty in the economy by what he termed as ‘a quiet burial of ideology’. The political–economic process of the 1980s was viewed as one which was a ‘marked shift to the capitalist pattern of development’ due to mistaken views of the political leaders and ‘burial of ideology’. While noting the process of privatisation of the economy as a distinguishing feature of the political–economic crisis of the period, the author found its root in the fact that ‘parochialism far out-weighs national commitment’ for the ‘political leaders’. Thus, the notion of ‘politics of poverty’, for Rangnekar, was one which was essentially marked by mistaken views of the political leaders and ‘shift to the capitalist pattern of development’.
In sharp contrast to such a view, however, the growth process of the Nehruvian era was itself capitalist. This is, however, not to deny the ‘shift’ or argue that there exists no distinction between the growth trajectory of the Nehruvian era and that during the period characterised by privatisation and liberalisation of the economy. In fact, despite various problems and contradictions, the Nehruvian era was a product of the freedom struggle and was a distinct break from the colonial period in terms of the well-being of the people. It was this political–economic process which was subsequently reversed through the introduction of liberalisation and privatisation of the economy. Nonetheless, this is to underscore the point that the growth trajectory of that period was not a march towards socialism, as seems to have been implicitly assumed by Rangnekar; rather, the very process of privatisation and liberalisation was itself a logical consequence of a growth process which was characterised by state-led capitalism.
The theoretical root of the Nehruvian growth trajectory was embedded in the Bombay Plan of the 1940s which was proposed by the leading capitalists of the period. In sharp contrast to the demands of the left, the Bombay Plan eschewed the project of a radical land reform. Instead, it emphasised the need for a substantial stepping up of public investment which was expected to stimulate private investment both from the demand side and the supply side. The growth process during Nehruvian period was an emphatic reflection of the Bombay Plan.
By eschewing the project of a radical land reform, the domestic capitalist class could ensure its alliance with the landlord class. The lack of a radical land reform, however, not only kept the agricultural growth rate well below its potential, but it also constrained the size of the market for the domestic capitalists. Public investment in core industries, hence, was required not only to stimulate private investment from the supply side, but also to increase the size of the market for private investment through the conventional Keynesian multiplier. Due to the inability of the domestic capitalist class to withstand the competition from foreign capital during its infancy, protection of domestic industries was required along with the policy of import substitution. The growth process in the Nehruvian period, in other words, was itself characterised by state-led capitalism in the interest of the domestic capitalists. The process of privatisation which started from the early 1980s, and subsequently led to the introduction of the New Economic Policies in 1991, was a logical consequence of the contradictions of the dirigiste period. While a detailed review of such contradictions is beyond the scope of this review, one can nevertheless refer to at least two of those in the given context.
First, as Kalecki (1943) had noted long back, despite the fact that government expenditures provide larger market for the capitalists to sell their commodities, the capitalist class opposes such interventions under normal circumstances as such interventions jeopardise their social legitimacy. However, the nature of fiscal policy which characterised the Nehruvian period was essential to the capitalist class during its infancy for its very survival. However, as the domestic capitalist class gained in strength with due support of the state, it demanded a greater share in the economy through privatisation. Not surprisingly, both during the Nehruvian period and during the early 1980s, the government of the day agreed to the demands of the class whose interest it represented.
Second, the government facilitated the process of capitalist accumulation through the public exchequer by providing sops to the capitalists and allowing them to evade taxes. Along with the fact that the government needed to keep up the expenditures, such a constraint in the revenue generation led to a rise in its deficit during this period. The rise in demand through rise in deficits, however, was not associated with a similar rise in the supply of primary commodities for reasons discussed earlier. Consequently, the Indian economy has been largely characterised by rising inflation rate during this period. The phenomenon of rising inflation rate, however, cannot be sustained in a parliamentary democracy as it reduces the purchasing power of the bulk of population whose income is not indexed with prices. The contradiction between sustaining political legitimacy along with the necessity to serve the interest of the domestic capitalist class, subsequently led to the substitution of one form of capitalist growth process with another; the process of privatisation and liberalisation which was initiated in the decade of 1980s, finally culminated into the implementation of the New Economic Policies in the early 1990s (see Patnaik & Chandrasekhar, 1995).
In the absence of a dialectical and historical analysis of the social process, thus, the phenomenon of the crises of the 1980s has been perceived to emerge without the logic of capital. Thereby ignoring the logic of capital, the ‘politics of poverty’ in Rangnekar’s book gets interpreted as mistaken views of ‘political leaders’ and ‘burial of ideology’. In other words, though quite ironically, the very notion of ‘politics’ of poverty gets depoliticised in Rangnekar as it withdraws from the sphere of economics and finds recluse only in the sphere of ‘ideas’.
The phenomenon of pauperisation of the bulk of the population during the colonial period, the perpetuation of poverty during dirigisme and its sharp increase during the post-liberalisation period (see Patnaik, 2010), however, bears testimony to the fact that the ‘politics of poverty’ cannot be comprehended (and hence, confronted) without explaining the modus operandi of capital. Such an analysis, nonetheless, requires a careful study of history as it unfolded. In its depiction and analysis of Indian polity and economy over more than two decades, it is precisely here that Rangnekar’s book is bound to pose important questions.