In My View

Thousand Mutinies

The abiding television image of the 60-hour ordeal in Mumbai during the last week of November would be the one featuring BJP’s leader Gopinath Munde. Almost as soon as the siege at the city’s Nariman House ended by the commandos of the country’s elite National Security Guards (NSG), Munde was seen sauntering down the lane leading up to the House with a puffed up chest and his even more protruding gut.

This was while his BJP fellow travelers had already gathered at the entrance of the building – even before the NSG authorities had declared the official closure of the operation – and were seen cheering the NSG personnel in a style reminiscent of the cricket grounds. It seemed from their demeanour that the NSG men had not just completed a multi-hour, life-and-death contest, but had won a mere one-day cricket match. Such were the signs of the times.

A section of the Delhi intellectuals believe that India’s nation-building exercise is over; only its state-building project is continuing. Message from the events of the past week has been that project is actually regressing. Gopinath Munde and his BJP cohorts reflected on the nature of the dysfunctional Indian State.

This is the state that could not protect its own shorelines, even though they had been amply made aware of its lack of security. Indian Coast Guards failed to apprehend a rogue fishing trawler in its own territorial waters even as its elder cousin, the Indian Navy was thumping its chest after drowning a pirate boat in international waters off the coast of North Africa. They were declaring the Indian coming-of-age as a maritime power, albeit as an US surrogate. Clearly, they spoke out-of-turn.

Signs of a failing state were evident in each stage of the operation too. The terrorists who attacked the Taj Mahal hotel in the city had detailed floor plans of the building, but reportedly our NSG group did not have one in their possession.

Having a terrain map is the first maxim of any military operation in any ground.

Add to that the fact, that the country’s only quick reaction force could be inducted into the battle grounds before nine hours had elapsed after the first bullet was fired because it did not have a dedicated transport of its own. They did not have any clue about how many terrorists they were confronting or about their armaments.

The list goes on. On the first day of the three days and three nights of murder and mayhem, the central government could finally find an official spokesperson who could filter the information and present it credibly to the public. That man, a special secretary of the Ministry of Home Affairs, looked natty in an expensive suit and jacket (following in the footsteps of his sartorially accomplished minister). But by the second day, he was at least two news cycles behind with his information. He read out a cable from the NSG about the death toll at the Oberoi hotel that had already been upstaged by briefers on the ground, two hours ago. All he could accomplish after his tenure in front of the cameras was to promise the correspondents that he would “SMSing” the relevant information after the press conference got over.

The prime minister of the country rent the air waves in the evening on 27 November, 2008 with what was hoped to be a stirring message of resoluteness in the face of adversity. What the nationally televised address by Manmohan Singh ended up doing was to show the world how uninspiring and barren a leader could be.

This piece is about the dysfunctional nature of the Indian state. It has to be said that when the Congress-led United Progressive Alliance (UPA) had come to power four years ago, it did seem that they had got the message part right in the battle against terrorism and militancy. Possibly under the guidance of such gray eminences like MK Narayanan, the UPA had then said terrorism notches up successes when there was disaffection in the society. This was not just a subject of sharply focussed security policies but a function of social policies too. On many occasions in the past four years, they were able to stave off disaster from happening by better policing.

That UPA view had challenged the ruling American theology on the subject. The same held that Islam was antithetical to modern civilisational values, thus needs to be confronted as an enemy in every turn. This securocentric view created a notion of Us and Them that vitiated the global ideational milieu.

But somewhere down the line, the UPA government too lost the plot. Its current vilification of the Pakistan government might detract attention from its own omissions and commissions – besides creating a war-like, jaw-jaw confrontation with the neighbour which might serve the electoral prospects of the Congress party – but it would do little to deter future terror attacks.

The latter needs a far more wide-ranging plan of developing a well resourced and coordinated mechanism for anti-terror operations. It would also require diplomatic prowess of a very high order to create an international atmosphere of active cooperation between nations for information gathering and sharing. It would require jettisoning the current Indian notion of beating any competition in the money-making game; but instead generate common resources that could be shared for welfare of all.

Ultimately, when the society will be less monetised, the basic human values that Thomas Hobbes had ignored in his observations, would arise to confront bestiality.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

In My View

Irrelevant exertions

Four-fifths of the world population was not represented in Washington last week (15 November). Yet, 85 per cent of the global wealth was controlled by those who were present in the city that is popularly considered the power capital of the world. This enormous unrepresented population does not care about the fulminations on the International Monetary Fund (IMF) or the World Bank (WB). They do not care about the countercyclical measures the managers of the world economy adopted to beat the current downturn in their coffers. These five billion people (2006) are outside of the ‘market’ realm.

Economic cycles hold very little meaning when you are surviving on less than $ 2 a day. Financial derivatives and credit swaps remain beyond your pale when you remain off the charts of all credit managers of the world. Still, India’s Prime Minister, Manmohan Singh feels, “Economic performance in almost all developing countries has improved. In the process, attitudes towards globalization have begun to change and people all over the world have come to appreciate the enormous benefits that can be derived from global economic integration.” This is what he had said last week at Washington in the meeting of the well heeled.

Predictably, the meeting said nothing new. It iterated such deep seated homilies like, “We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.” In other words, it continued to extend the illusion that the market is inclusivist and thus all pervasive.

So what did this meeting propose as actions that could reverse the adverse fall-out of the current crisis? Leaders of the 20 most powerful nations of the world who could decide on matters of life and death, war and peace behaved as if they were fund managers of a mythical Wall Street firm that had under its aegis the resources of the world. So they talked about, “Strengthening Transparency and Accountability;” “Enhancing Sound Regulation;” and, “Promoting Integrity in Financial Markets.” In the process, they let it be known to all who cared that all this while they were sleeping on the job.

If transparency needed to strengthened in the financial markets, or regulation of the market needed to strengthened and integrity promoted, what were the leaders doing all this while? And if they had allowed this situation to come to such a pass without all these being undertaken in the financial markets all this while, should they be not held accountable for their acts of commission and omission?

The reason they flailed their arms so irrelevantly last week was because they did not want address the core issues. One of the most important core issues is whether Capitalism has only worked as a system of accumulation for a few, and failed to cater to the needs of the most. The rich men’s clubs this system of human development has spawned have become so anti-democratic and incestuous that they stopped noting even the warning signs of their own imminent collapse.

The most important philosophical entreaty of current times emerging from the West, that ‘greed is good’ has shown that the inherent predatory nature of the powerful, when not disciplined in time, can devour the very hand that feeds it. In effect, this thus nullifies the philosophical underpinning of contemporary Western societies.

This is not a moral issue. It is an issue that has shown how vacuous the overriding commitment of Capitalism for efficiency of allocation and accumulation truly is. This is an issue that can no longer be addressed by a countercultural argument based on the failures of the Soviet system of socialism. In any case, the success of the capitalist phase of Chinese socialism’s work-in-progress (it has raised roughly 300 million people above the poverty line in one single generation) has long overtaken the communist excesses of the Russian regime, as an attributive character of Marxian thought.

Marx’s words of 1875, “From each according to his ability, to each according to his needs,” do not call for a fundamental sublimation of human nature as supposedly ‘greed’ fosters. But on the contrary, it points at a higher purpose of life where the economic production system does not consume all of human endeavour in a cyclical process of consumption.

The egalitarianism this thus gives birth to is not conditioned by the managerial abilities of the political leadership. But instead it becomes the bedrock of human belief where the striving for better life transcends the limits of material wealth and opens the vista for higher aesthetics.

But it also has to be said that the world cannot prosper in any way under any system, be it Capitalism or Socialism, when four-fifths of its population have to encounter the dehumanising influence of poverty on a daily basis. From that perspective alone last week’s meeting is of no relevance to world as we know it.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

Small business credit woes

In My View

Perfecting homilies

The fallen god visited his sepulchre for the final time before his entombment. And he told his baying audience a few unvarnished truths about how he thought the world should have worked. Only the gulf between his belief and the reality yawned, as the people tumbled out while their make-believe financial edifices crumbled.
Former US Federal Reserve chairman, Alan Greenspan told an American Senate hearing that he was "shocked" to discover his bedrock belief that financial firms could police themselves turned out to be "flawed."
"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity," Greenspan gulped, "(Its) a flaw in the model ... that defines how the world works."

Not entirely unconnected are the reports that the works of Karl Marx have picked up sale as out-of-work corporate executives pick up their between-jobs reading. But clearly Greenspan would not have given Marxist tomes a pride of place in his sumptuous library – he might even have known that financialisation of capital had occurred after Marx had died.

But there were Marx’s followers – people like Rudolf Hilferding, Nikolai Bukharin or even Lenin – who analysed the phenomena with equal dexterity. But then in Greenspan’s little diary, those were names, which could not be associated with American history, for they symbolised the carefully inculcated paranoia of the American people about ‘socialism.’

At least, Greenspan could have read ‘Marxism-made-easy’ Alvin Toffler, the futurist. Talking about economic production and distribution getting increasingly dispersed, Toffler had argued in his book Powershift that centralisation of financial power was inimical to the interests of economic progress. He had thus opined, “One thing seems clear. When the battle to reshape global finances reaches its climax in the decades ahead, many of the greatest ‘powers that be’ will be overthrown.”

That brings us to a potential footnote in human history: the meeting on 15 November scheduled to be held in New York ostensibly amongst the likes of George W Bush, Nicholas Sarkozy and Manmohan Singh. The failing verbiage of the overbought American media institutions is still gamely trying to describe the purpose of this meeting in such ostentatious terms as “restructuring of global financial institutions,” etc. Does anyone have any illusions about the fact that any of these Western nations are in a position to dictate ‘prudential norms’ of running, anything?

So, the real game in town would be the attempt of the Western leaders to sit on the likes of Manmohan Singh to make them smoothen greater inflow of finance capital into their economies in some form or the other. It could take the form of higher purchases US government treasury bills, or more indirect injection by opting for Western corporates to undertake internationally funded projects in developing economies.

There would also be a talk about increased centralisation of financial power; all in the name of greater regulation. The attempt would be to appropriate the remaining financial assets into the hands of the Western powers so that they can first rebuild their destroyed institutions, and then farm out financial largesse according to their revised set of rules. It would be the return of the IMF and the World Bank and their smaller private potentates in all their glory.

Yet, there is the little matter of Alvin Toffler and his cognitariate challenging the might of big capital. They would need a more decentralised sources of finance; finance that is geared towards not manufacturing junk bonds and other derivatives, but creating real wealth.

The need of the time is microisation of capital; not its macroisation. And that need was not vitiated by the small creditors of America but by those who enjoyed multi-million dollar bonuses in Wall Street. They are the ones who created the utterly false bonds that they traded on the basis of presumptive values. They called it competition.

As Giovanni Arrighi points out Hilferding made an error in understanding the future of finance capital to remain confined in the hands state monopoly capitalists – as was in the case of Germany. Or, the USA today, for that matter with billions of dollars of people’s wealth being funneled into privately owned companies only to help their promoters survive. Only, the Americans call this ‘socialism,’ trying to mislead the people by harking back to the Soviet Union’s ways.

On the contrary, never before in the past have they had to ‘socialise’ the costs of capitalism at such a large scale. The US and global capital had avoided crisis all this while by inventing the joint stock company, which in the name of enhancing shareholder value had actually institutionalised a marriage of power between the elite which ran the state and the elite which ran the publicly held companies. Will this neat compact break?

The institutional Left does not appear to be providing an answer. In India, the communist parties seem to have given up the battle after patting themselves in the back – rightly so – for acting as trustees of the people by not allowing the state to let the financial institutions have a free run. But they have bigger role to play – to articulate a powerful alternative vision. Will they step up to the plate?

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

In My View

The ‘Word’ delivered

The twin oracles have spoken. They have delivered the ‘word’ apportioning blame for the global financial crisis that generated from the USA. Both the World Bank and the New York Times have found the real villain of the piece. And they have produced it signed, sealed and delivered. It almost seems that God (Milton Friedman!) has spoken to them in one bright moment of revelation. The verdict: the person to blame is the ‘small man’ – black, brown or pale (the pallor is from malnutrition).

François Bourguignon, Chief Economist of the World Bank (WB) and Michael Klein, Chief Economist of the International Finance Corporation (WB’s private sector lender) wrote in a recent report of the international financial institution, “Policy makers need to have realistic goals. For instance, while access to formal payment and savings services can approach universality as economies develop, not everyone will or should qualify for credit. There are instances where national welfare has been reduced by overly relaxed credit policies.” There, the ‘word’ is out. The poor do not deserve credit. So don’t give it to them.

The NYT is arguing in the same vein. In a report published on 18 October, 2008 titled, Building Flawed American Dreams, it has found the sex-scandal scarred housing and urban development secretary of the Bill Clinton administration to be the man who loosened the purse strings of the American credit institutions offering ‘sub prime’ mortgages to the poor. The two writers of the report also found the ‘fall guy’ of the narrative, those of the American poor who coveted a house of their own.

The report notes, “Homeownership has deep roots in the American soul. But until recently getting a mortgage was a challenge for low-income families. Many of these families were minorities….” The report later notes in a somewhat bemused tone, “There were real gains during the Clinton years, as homeownership rose to 67.4 percent in 2000 from 64 percent in 1994. Hispanics and African-Americans were the biggest beneficiaries. But as the boom later gathered steam, and as the Bush administration continued the Clinton administration’s push to amplify homeownership, some of those gains turned out to be built on sand.”

Now that we have the protagonists, antagonists and the plot, the story should gather momentum. Indeed, the WB report quoted above, entitled Finance For All? Policies and Pitfalls In Expanding Access, lays down with great dexterity the grounds for creating barriers towards the poor accessing loans from acknowledged financial institutions. It prescribes higher interest rates and of course, no credit subsidies by governments to the under-privileged. And all this was sugarcoated in the lexicon of the development discourse that the WB extends to befool the common people.

This writer has been arguing since last year that income inequality in the USA has reached such epic proportions that something has to give in. Considering the American elite have developed over a hundred years, failsafe mechanisms to staunch any challenge to the rule of a diarchy, the sheer economic weight of the costs of the inequality would make it untenable for the party to go on.

Let us consider a few facts about that inequality. An analysis of the American Internal Revenue Service (IRS) data in 2006 revealed that, “Between 1979 and 2005, the mean after-tax income for the top 1% increased by 176%, compared to an increase of 69% for the top quintile overall, 20% for the fourth quintile, 21% for the middle quintile, 17% for the second quintile and 6% for the bottom quintile.” Please note the difference of income growth between the top five per cent and bottom five per cent: 69 per cent and six per cent respectively.

So can one safely argue that the Clinton administration’s policies of making cheap and easy credit available to the American poor was nothing but a ploy to put a salve on a festering wound. Can it also be argued that the American financial institutions like Fannie Mae and Freddie Mac – the twin names symbolising the credit blowback – offered sub prime loans to the poor not because of a generosity of their hearts but because there were not enough creditworthy people left in the United States?

The question more pertinent to us Indians is: Do we intend our country to be like the United States of America? That would entail holding 4.6 jobs between the two adult members of a family of four. Your children would have to carry their student loans for the rest of their lifetimes. And your family could get bankrupt paying the medical dues in insurance and bills that the insurance company refuses to pay.

Amartya Sen, India’s only Nobel laureate in economics, and one who ironically delivered the first Prof Hiren Mukherjee lecture at Indian Parliament just a few months ago, talked about a strange notion “controlled greed” to be the driving force for the post-Crash world economy. Unfortunately Sen refuses to acknowledge that monopoly capital – formed in the conjuncture of finance capital and industrial capital – is by its very nature ‘all consuming.’

It is this power of monopoly capital, which keeps the American wheel of global domination chugging. If anyone shows the temerity to control that ‘greed,’ that person is soon removed from the scene. Dr Manmohan Singh, Sen’s friend, is deeply aware of this small fact.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in