'Emerging Kerala' is a prescription for unleashing primitive accumulation of capital in Kerala
|Prabhat Patnaik||September 24, 2012|
The 'Emerging Kerala' project represents a very serious threat not only to the fragile ecology of the state but also to the living standards of the ordinary people of Kerala. It also represents a departure from trajectory of development which has come to be associated with what is called internationally as the 'Kerala Model' of development. Why do i say that?
Indians during India's "growth decade".
Lets us go back a little bit to look at what is happening to India as a whole. In the last few years, until let us say a year or two ago when the growth rate in India started coming down, India was being talked about as a new emerging economic power. India was having rates of economic growth which were unparalleled in our history, which were next to China, and which were among the highest in the entire world. Look at the period of a decade or so prior to the last year when the growth rate started coming down. Precisely this period of high growth was one during which there has been an increase in absolute poverty in the country.
Let me just give you one or two statistics to make my point. In our country poverty is defined in terms of whether the people have access to 2100 calories per person per day in urban areas and 2400 (but subsequently revised down to 2200) calories per person per day in rural areas. If you take such people who do not have access to 2100 calories per day, their proportion in 1999-2000 was 57 percent in urban India. In 2004-05 it went up to 64 percent. In 2009-10, during which there were all these talk about high growth rate and India as an emerging power and 'India Shining', the proportion of people who did not have access to these minimum calories in urban India went up from 64 to 68 percent. That is, precisely during this period, there has been an increase in hunger and malnutrition. Exactly the same kinds of trends are visible for rural India. In rural India, in 1999-2000, you had roughly 64 percent of people who had access to less than 2200 calories, in 2004-05 it was about 69.5 percent, and in 2009-10 it was 74 percent. In other words, precisely during this period of high growth, an increasing percentage of the country’s population has been denied the most elemental necessity, namely, food.
When this is pointed out, all these people who live in New Delhi and come for television shows and so on sometimes argue: “No, no, no. You know, as you become richer you consume less food. So after all even if you don’t have access to calories you should not worry because you consume other things”. As a matter of fact, however, when one is talking about food intake, what is taken in to account is the food that is directly and indirectly ingested. This includes processed food and food through animal products because animals are given feed grains. And you still find that in India the per capita absorption of food grains directly and indirectly is something which has gone down.It was, before the reforms started, about 180 kilograms per person per year and it has come down to 162 kilograms by 2009. If you look at countries like the United States, the figure is 900 kilograms per person per year. So you find that with rising incomes there is a tendency towards greater direct and indirect absorption of food grains. But in India we are having just exactly the opposite which is indicative of the fact that income inequalities are increasing to such an extent that a substantial and growing proportion of the population, precisely during the high growth phase, cannot manage to access the requisite amount of the most elemental necessity of human beings.
Primitive accumulation of capital
Why is that the period of high growth in India was accompanied by a period of growing absolute poverty? How do we explain this? I believe we explain this by the fact that, precisely in this period, there has been a process of, what Marx had called, "primitive accumulation of capital". A process wherein assets belonging to petty producers, marginal producers, the state and common property resources are being transferred at throwaway prices to a small group of big capitalists and financiers.
Primitive accumulation of capital operates two ways. It operates in terms of ‘stocks’ and ‘flows’. "I have a plot of land. I am a small man and a marginal producer. Someone big, a capitalist, comes and takes away my plot of land." That is primitive accumulation in stock terms. It also operates in flow terms. "A certain income is coming my way. A part of that income, which is a flow, is taken away by a multinational corporation, by big capital and added to their income." That too is a process of primitive accumulation of capital. Flow primitive accumulation of capital is something which ultimately has the same effect as the stock primitive accumulation of capital. Such a process has been going on in India precisely during this period of high growth, and more generally during the entire period of economic liberalisation.
I don’t have to labour the point. You just look at all the scams that everybody is talking about. Lets say the 2G scam. What is the 2G scam? The 2G scam is basically making available state property to a bunch of favoured capitalist operators at throwaway prices. It is the most classic example of a case of primitive accumulation of capital. You look at the Coalgate scam. What is the Coalgate scam? It is again a transferring, at zero price, the assets of the nation, in terms of coal blocks, to a bunch of favoured capitalists. This process, which is sometimes seen in the form of corruption, but which is fundamentally a process of primitive accumulation of capital, has been going on, particularly with an accelerated pace, since the introduction of economic liberalisation and has accompanied the period of high growth.
Why does primitive accumulation of capital impoverish people?
Now you may ask what is wrong with that? After all, if you have high growth then those who get dispossessed of their property are then absorbed as proletarians into the growing capitalist sector. But, as we know, that is precisely the kind of thing that has not been happening. If you look at the absorption in the capitalist sector, which would be necessary the organised sector, that absorption has been trivial. The bulk of the people dispossessed by this process of primitive accumulation of capital, instead of getting absorbed as proletarians into the organised capitalist sector, have only added to the reserve army of labour which in India is euphemistically referred to as the 'informal sector'. In other words, when you say someone is absorbed into the informal sector, it is the same as saying that someone has really become a part of the reserve army of labour. The average income and living conditions of a person who is a part of this reserve army of labour is lower than that of the small petty producers before they were dispossessed of their properties. Therefore, in the case that the dispossessed petty producers join the informal sector, there is a process of absolute immiserisation that is taking place.
You know capitalism necessarily imposes this. It becomes invisible in the context of the advanced capitalist countries because what happened in the advanced capitalist countries is that, when poverty would have grown further, a large number of people migrated to the United States, Canada, Australia, New Zealand and so on. This migration dispossessed the local producers of their land and therefore big capital could absorb large amounts of land. In the nineteenth century 50 million Europeans migrated out of Europe to these temperate regions of white settlement. From Britain, between 1820 and 1910, sixteen million people migrated even though Britain's population in the initial date was only about 12 million. So if from India we could export about 40 crores of people to some other lands where they could settle, then of course absolute poverty would be much less. But on the other hand, that is something which of course we cannot do. We do not have access to such lands. In the past, such access was ensured through a process of conquest and destruction of large segments of the original inhabitant population which can't and must not be replicated ever in history.
So, given this, the kind of growth strategy that we are having in the neo-liberal period is a growth strategy which is accompanied by a substantial process of primitive accumulation of capital. If growth comes down as it is coming down now, that coming down does not mean primitive accumulation would stop. On the contrary that will also continue and the growth will also come down. So, fundamentally what we have to see is that, in the current period the neo-liberal economic strategy has been associated with and it has opened the floodgates to a process of primitive accumulation of capital.
India prior to liberalisation
Capitalism is not something which in our country has always necessarily aimed at it this. On the contrary, if you look at the period from independence prior to economic liberalization, yes, there were scams, there were individual cases of corruption and so on. But it was never the state policy to actually enforce a process of primitive accumulation of capital. For instance, it was never the state policy that mineral resources should at all be privatised. Going back to the Karachi Congress Resolution of 1931, which was the first time it said that the state must own the key industries and mineral resources, that had been continuously the policy of the Indian government. But that gets supplanted in favour of a policy which is to hand over captive coal blocks to all kinds of private individual capitalists in 1993-1994.
In other words, no matter what you can say about the pre-liberalisation Indian capitalist phase - yes, people were still poor, yes, it was the case that poverty did not disappear, unemployment did not disappear - but I must make a point clear. If you look at the long term trends of food grain absorption that I mentioned above, at the beginning of the twentieth century per capita annual food absorption, in what was then called the British India, was 200 kilograms. It declined drastically in the last fifty years of colonial rule to reach 137 kilograms, at the time of independence. During the period of post independence development that now most people are saying was a bad period, per capita food-grain absorption increased from 137 kg at independence to 180 kg by the end of the 1980s and that has now come down to 162 kg. I must say this since these days everybody keeps talking about the painful nature of the pre-high growth, pre-liberalisation phase.
If low growth is associated with giving more food to the people, then I am for low growth. This extraordinary fetishism about a growth process that actually deprives people of their most elemental necessity is something which must be decried. It is because our tendency these days is to whip up enthusiasm for it and that enthusiasm must be damped. People must be told that growth means nothing if the ordinary person is not even getting enough food. He is actually getting, during the process of growth, a declining amount of food per-capita.
The process of primitive accumulation of capital therefore was there, but in a muted form. It was kept at bay. The government was committed to improving the conditions of the poor. Socialism was written into our constitution during the emergency and the generally the idea was to have some kind of an egalitarian order. In the fifties, when it was found that actually inequality was rising, Nehru had even setup a committee under the chairmanship of Prof. P. C. Mahanalobis to make recommendations about how to reduce inequality. In other words, at least the professed goal of the national economic policy was to have an egalitarian order. You may have failed in that but at least that was the professed goal.
Not so now. Since liberalisation, the idea is that growth is all, and if you have a high growth then it doesn't matter what costs you pay, because its benefits ultimately will trickle down even if you may have some problems in the short run. This has not happened. And as a result, what you find is a remarkable increase in absolute deprivation, including, as I said, in the most elemental necessity, that is the food-grains, precisely during the period of high growth.
Land concentration in Kerala
Now, in my view, this 'Emerging Kerala' project is something which is a prescription for unleashing a process of primitive accumulation of capital in this state which actually has witnessed a degree of egalitarian growth in the past. Why do I say that?
You just look at some of the specific measures. Look at the measure that 5 percent of the plantation land can be given for tourism and other purposes. When I was in the planning board of Kerla, we used to go for discussions where Montek Singh Ahluwalia would say this: "Why don't you actually give 5 percent of your plantation land for tourism?" These plantation lands were given on long leases to those who now control the plantations on the condition that they actually grow plantation crops there. Now, in most plantations, the area on which the crops are grown is of course a small area. Otherwise the question of 5 percent being converted for tourism won't even arise. If that is the case, then these plantations owners are, in fact, already holding illegally - against the terms of their original contract - large tracts of land. Let me remind you that, in Kerala, not withstanding the remarkable achievements of land reforms in the past, there still exists a residue of landlessness as well as houselessness. And what is more? Some figures are quite disturbing. Like those which tell us that actually there is an extend of increase in landlessness that is taking place. Land concentration is actually increasing in the state. Therefore, it is not as if we have completed the tasks of land reforms. Very important tasks remain which have to be fulfilled. And among these tasks is of course the settlement of those who are landless and houseless.
During my years in planning board we had a set up a committee, which actually suggested the following. It said that there is a problem in measuring. Nobody even knows how much land these plantation owners have because they have claimed all kinds of land, including government land, public land, and common land as their own. So the committee suggested that why don't we actually look at employment figures. You know roughly how many people are being employed in a plantation. Find out a certain norm, depending on the crop being grown, that to employ these many people how much land would you need to be cultivating on this particular crop. On the basis of that, make an estimate of the surplus land under the plantations. And let the state take over these surplus lands. The state has given them the land for growing crops and therefore it is the right of the state to reclaim that land and settle on that land, the landless, houseless people in the state who actually number several, several thousands of families.
Now, therefore at this moment when one should actually be breaking the concentration of plantation owners on vast amounts of land in a state where landlessness is growing, to say that “No let us give 5 percent of this land for tourism” is actually to legitimise their control of this land. Because if you allow them 5 percent, that basically means the 100 that they have of which the 5 percent is going, we recognise as theirs. Therefore, that would be legitimising a process of encroachment, a process of primitive accumulation of capital, a process of not fulfilling the promises on the basis of which the land was made available to them in the first place. So again, that is merely visiting on the state a process of primitive accumulation of capital.
Take the case,for instance, of state land being available for various projects. Sometimes, this land is made available for various projects at throwaway prices. There is a certain lack of clarity on what the projects showcased in 'Emerging Kerala' are going to be, and on the terms under which the land would be made available by the state are going to be. But even if it is the case that the state makes available this land to the various projects at the going market price, so that there is no primitive accumulation at the point of making this land available, we know that the land values are going to rise immediately. A child would know that in Kerala, no matter what happens, land values are going to rise in the coming years. Therefore, you are actually foregoing from the state and handing over to these private entities remarkable increases in land value which are going to take place in subsequent years. One way, for instance, of guarding against that is to make sure that the project itself is one in which the state has a certain substantial amount of equity. If the state has that equity when the land values rise the state is actually also a shareholder and hence a partner in getting these increased land values. It could be the state owning 51 percent equity or at least a controlling equity.
But if you do not have that, if you make land available and even if you make land available at the going market price, which is different from the 2G and the Coalgate scams, even then there is an element of primitive accumulation of capital involved. Therefore to my mind, this Emerging Kerala project is something which is visiting upon the state the same process of primitive accumulation of capital which is going on elsewhere in the country, which is going on as a part of this whole policy of neo-liberalism.
Land use must have a social rationale.
But that is not all. When you hand over state property, common property resources or petty and marginalised producers' property, that also entails a change in the use of that property. If you hand over land, lets say to somebody then that land is going to be used differently from the way that it is being used when it was petty property.
In Kerala, for instance, one of the very significant things which has been happening over a long period is a decline in land use in favour of food grains. Now this is something which pose a very serious threat to this state’s food security. As a general policy, it is disastrous for any country to abandon its food security. There was a time in Kerala when this might have made sense when, for instance, Kerala earned lots of foreign exchange, deposited it with the Central Government and the Central Government assured Kerala: ”All right, you have given us the foreign exchange, we will give you enough food grains.” But now that entire arrangement has become extremely dicey. Of course we cannot have complete food security in the state - but we at least make sure that the state produces a minimum amount of food grains for itself. In any case, for country as a whole, land use cannot be determined by individual owners. Land use must have a social rationale. If in a country everybody uses the land for growing all kinds of cash crops, then no food will be produced.
The looming famine
As a matter of fact, now in the international economy, there is a decline that is taking place secularly in the per capita cereal and food grain production; in the world as a whole. More food grains have been diverted for bio-fuels. You are going to have food crisis rising because oil prices will also keep rising, grocery stores are subjected to speculation and now food prices are also subjected to speculation and they get linked to oil prices. So the rise in food grain prices is something which is going to be with us. At any rate, the declining availability of food grains for the ordinary people is going to be with us.
Two days ago, Dr. Binayak Sen was giving a lecture about the coming famine in India. He is a doctor. Many people who are associated with nutrition, with food grains and so on are extremely worried about this trend that is taking place. As a result, in Kerala, the previous assembly had passed a legislation preventing the diversion of paddy lands for other purposes. The famous economist from New York, Joseph E. Stiglitz had said to me that it is a wonderful legislation and that every country in the world should have legislation of that kind. The diversion of land from the production of food grains to other purposes must be restricted. Land use must be socialized, precisely because of the fact that we have the threat of a looming famine as far as the world is concerned and even in the case of our country.
Aftershock of primitive accumulation
A process of primitive accumulation of capital not only produces, directly, poverty because you are actually dispossessing people of their means of livelihood, it also has a very serious indirect effect. The indirect effect consists in the fact that such dispossession also brings about a change in the end use of land. The use to which land is put. If less is produced by way of food grains, then food prices rise. If food prices rise, inflation takes place. How does the neo-liberal government control inflation? It controls inflation by reducing expenditure. What kind of expenditures? Expenditures that would have gone as some transfer payment to the poor, expenditures that might have gone on subsidies, expenditures that might have gone on food subsidies, expenditure that may have gone to the peasants in the form of various agricultural subsidies. You can see this when Mr. Rangarajan says that there are too much subsidies and we have to have fiscal corrections. The point is that the moment you have inflation, expenditures that might have in one way or another sustained the poor are then going to be cut.
Therefore you have a second round, if you would like, of impoverishment and absolute immiseration imposed on the people, as a fall out of the first round; the first round being the primitive accumulation of capital. Therefore, we find, that even in the case of Kerala, there is something extremely serious that is being planned in the form of this 'Emerging Kerala' project.
Do we have an alternative?
Do we have an alternative? Well, here we are in a situation of Kurasowa’s film Roshomon. I am sure many people will be discussing about their alternatives. Let me just put one or two things that strike me directly as consequence of this.
If neo-liberal growth takes the form of handing over substantial amounts of assets- state assets, common property assets, assets of petty producers to the big capitalists, which I call the primitive accumulation of capital, we have to say first and foremost “no to primitive accumulation of capital”. We live in a capitalist society, we are not and cannot be unfriendly to the capitalists. We live in that society where whatever happens to the economy is determined by the kind of investments they undertake. We are not investor unfriendly.
So let us draw a distinction. You do your investment, we will not stand in the way, but no primitive accumulation of capital will be permitted. There will be no question of handing over, at a throwaway price, state property or common property resources, or the property of petty and marginal producers to a bunch of big capitalists. But that is only a negative stance. In addition, we have to think in terms of an alternative trajectory of development. It has always struck me that in Kerala, which is essentially a small-producer economy, we don’t really have large plants or large capital in the state. If you have essentially a small-producer economy, then the trajectory of development must be one in which the state does the opposite. Namely, it stands, it supports, promotes, defends, encourages and develops petty producers. It supports them against encroachment by the big and defends their property and livelihood, and improves upon their livelihood by ensuring they get better prices, by ensuring they get facilities, by ensuring they get subsidised inputs and so on. The whole idea must be not to give these incentives to big capitalists but it must be to ensure that these incentives are given to the small producers, the marginal producers.
Just imagine, the central cabinet is sitting today to decide whether diesel prices are going to rise or not. If diesel prices rise (and people are talking about five rupees increase per litre in diesel prices) that will affect the fishermen in Kerala. So the point is that in every way the marginal producers are being squeezed under this new regime and the entire trajectory of economic policy, in my view, should be to defend them from being squeezed and to encourage them; to promote their production. So the promotion of petty producers in their attempt to eke out a livelihood should be the core of the alternative trajectory.
Now, of course it’s true that they may still not be able to withstand competition. You need to have value addition; you need to have some element of technological upgradation as far as their production is concerned; you need to have reduction in drudgery of work as far as they are concerned. But all that should be attempted through raising their scale of production through voluntary cooperativisation rather than getting rid of them, reducing them to the status of mendicance and handing over their property, handing over their activities to bunch of big capitalists. Therefore, I think, in the case of Kerala, the whole trajectory of ensuring that they defend and promote petty production on the one hand and enable it to become more competitive powerful through voluntary cooperativisation should be the objective. Of course, at the same time we have to make sure the fundamental process of the state ensuring that the people have a minimum livelihood - through welfare expenditures, through subsidies on essentials, through the provision of health care, through the provision of education, through the provision of food at assured subsidized prices- all that must continue. So in Kerala, the whole trajectory of development needs to be very different from what the neo-liberal trajectory entails.
This is something which in a certain sense is what has been happening anyway. I know it because I was associated with the last Government. In some general way this what we were really groping towards. A whole lot of projects and activities were introduced whose idea was that the coir spinner should get a higher daily earning, whose idea was that the health should be made available even within the limitations we have through public hospitals to at least half of the state’s population and so on and so forth.
This was in sharp contrast to the kind of economic policy that was being pursued elsewhere. I must tell you that my experience says the bureaucracy in Kerala was completely enamored with Narendra Modi. They would actually tell us: "Sir look at Narendra Modi, look at [how] Gujarat is developing, but Kerala is not". So the idea of development got associated with the idea of enforcing primitive accumulation of capital and giving out huge dolls as far as capitalists are concerned. Many of you would know that actually when Tata shifted their Nano plant from West Bengal to Gujarat, the Gujarat government, reportedly, promised them 31,000 crores of tax reliefs and subsidies over a period of time. I am not saying one year. But over a period of time. Imagine if you are giving 31,000 crores, what do you have left to spend on health care of the poor, to spend on education; no wonder Narendra Modi actually says that if women in Gujarat are malnourished, it is because they are trying to protect their figures rather than actually being malnourished. It is not surprising that such vulgar explanations will be put forward precisely because of the wrong economic policies that you are pursuing and then you actually say that hunger is voluntary; malnutrition is voluntary.
In Kerala, that is something what we did actually avoid. Something on which many people were upset. Montek would tell us Gujarat is growing very well under Narendra Modi, but Kerala is not. He would ask that you have all these welfare schemes, but what about growth? But to my mind suppose the state actually protects and promotes petty productions, then first of all you are putting purchasing power in their hands. If you have a substantial health care scheme then the amount of money people are spending in going to expensive hospitals (they are spending through their noses), is put in their hands and they will spend it. So any such alternative trajectory immediately enlarges the domestic market because more becomes available as far as the ordinary poor people are concerned. When they spend more, then of course demand rises for a range of goods. When demand rises for the range of goods, not the Tatas, not all the multinational corporations, but local entrepreneurs will start producing more of those goods in order to fulfil that demand. As a result we can have substantially high rates of growth even through a trajectory which alternatively tries to put expenditure or virtually power in the hands of ordinary poor people. I object to growth as an indistinguishable hold all entity. But that growth that would emerge as a result of a more egalitarian structure in which the state comes to the defence of the poor and marginal, would be growth that would be more employment intensive, one that would be more dispersed, one that would be more decentralised and one that would not generate enormously powerful vested interests which could threaten the democratic structure of our country as you find taking place under neo-liberalism.
The final days of neo-liberalism
The last point I want to make is the following. Many people do not realise that the days of neo-liberalism or the days of "neo-liberal success story" are over. Of course you can have primitive accumulation of capital. But at least there was a certain period in which that primitive accumulation of capital was accompanied by investment by the capitalists and high rates of growth. As a matter of fact that is over. The world capitalist crisis has meant that even the kind of growth India had over the last 10 years is really a period that is over. You are now having a crisis all over the world. Euro is in crisis. Dollar is strong, paradoxically even while America may have a crisis, because the wealth holders think of dollar as being as good as gold. Because dollar is strong there is an outflow from rupees to dollars. Therefore finance is moving out of India.
The Manmohan Singh Government is trying to flog a dead horse by providing all kinds of incentives. Pranab Mukherji in his last budget had said that we are going to very strictly come down on tax evasion. Now Mr. Chidambaram says no, we are not coming going to down tax evasion. They set up a Parthasarathi Shome committee which has actually said to give up even capital gains tax. So they are trying to flog a dead horse when they are trying to make international financiers again put their money into India in the hope that that would generate a stock market boom. They think if it generates a stock market boom then more money would come in, there will be more money with banks to lend and therefore banks are going to start another bubble. As a matter of fact that is no longer the case because we now have a situation where all over the world the incentive to invest for the capitalist, or what the economists sometimes call the "state of their confidence" is at a remarkable low. All over the world there is a fright as far as wealth holders are considered. They are moving, rushing to the dollar. Euro is in a mess and is going to become further and further in a mess as a result of which the revival of that growth strategy is in any case over.
To imagine, therefore, that if we unleash a process of primitive accumulation of capital the capitalists will be so delighted that they are going to come and invest heavily in India and in the state of Kerala to bring about a high growth is something which itself is based on wrong assumption. So it is not only that the growth, if it is so generated, will mean poverty for large masses of people. But that the growth will not even be generated.
The social contract
In that case it becomes incumbent to think in terms of an alternative strategy. Now is the right time to really think in terms of an alternative strategy to go back to the kind of social contract upon which our modern nation was founded. Kerala has always of course respected it. That social contract has said that every Indian will be assured of a minimum standard of living. By the way, that social contract has also said "right to strike" when today the Manmohan Singh Government is saying "labour market flexibility" which basically means they restrict the rights of unions.
In every way there is a rejection, repudiation, and turning your backs on that social contract upon which this nation was founded. And this nation is in great peril. Not a day passes without your hearing of clashes, hearing of riots, hearing of all kinds of things which are really threatening the very being of this nation. It is very important at this stage that the social contract on which it was founded should be revived. It is very important particularly now that every Indian citizen must be proud of belonging to a fraternity of equals and the assurance of a minimum livelihood to everybody irrespective of cast, creed religion and so on is something which is absolutely essential as a means of survival of the nation.
For a state like Kerala, which has always been enlightened, far ahead of the rest of the state, which has stood as a contrast from Modi's Gujarat, now to emulate the Modi trajectory of development would be the sheerest disaster and I am so glad that KSSP is organising this event against it.
|Development, emerging kerala, Essay, kssp, Politics, primitive accumulation of capital, India, Kerala, Neo-liberalism, Poverty, Economics|
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