Dec 29, 2008

World - Rethinking the State

Arvind Sivaramakrishnan

The year will be remembered as the one in which the drawn-out excesses of a runaway capitalism came back to haunt ordinary men and women.

That 2008 has been a momentous year is not in doubt, but it has been momentous in several ways. In the first half of the year, financial commentators talked in restrained terms about the effective nationalisation of the British bank and former mutual society Northern Rock, which most called a temporary move, and which seemed to have been made in order to protect small investors’ savings, with a U.K. government indemnity for all savings up to £35000. One or two commentators even said this was the end of capitalism as we know it, but they went largely unremarked.

If there were deeper misgivings among the world’s major commercial institutions, they did not reach the public consciousness then, though people in finance talked of markets in chaos. For the rest, life went on. There were serious, even terrifying, problems looming, but they were of a quite different nature. The headlong replacement of food crops by biofuel crops for a world whose rich cannot imagine life without oil-fired industry and transport, and the total failure of the invasion and continuing occupation of Iraq to generate anything like the access to oil which had been a significant cause thereof, had pushed oil prices up to levels previously barely credible. Inevitably, food prices rose sharply, and the world discovered that it had, on some reckonings, a fortnight’s food left.

Getting poorer

In India, a series of policies from the allegedly targeted Public Distribution System to the governmental refusal to increase grain support prices had both rendered the hungry even hungrier and caused a situation in which the central government was importing grain at hard-currency prices substantially higher than anything it paid Indian farmers for their produce. The facts did appear, slowly. One third of Indians — 400 million people — are eating one-third less today than they were in 1975, and even then they were eating less than the U.N.’s stated daily minimum. The oil-price rise caused steep rises in all prices, for farmers most disastrously in the fertilizers and pesticides essential to India’s already high-cost agriculture. Suicides by irredeemably indebted farmers continued, and some State governments conceded the truth, finally classifying these as suicides. That indebtedness is a major factor here is undeniable, though it has several causes, ranging from the low prices paid by certain State monopoly cotton procurement schemes to the exorbitant cost of private medical treatment in the near-total absence of a public health service.

The Union government eventually attempted a response alongside — but not in — its 2008 budget, reviving the colonial practice of rural loan waivers. But this move was designed not to help the really poor. It covered only holdings of under two hectares, and in some regions excluded some of India’s poorest farmers — who need larger areas as they live on poorer soil. It also favoured already wealthier farmers, and only covered loans from public-sector banks. Among the 84 per cent of farmers who fall into the small and marginal category, 75 per cent of the debts are owed to unofficial lenders. In any case, as has been noted in these columns, the one-off waiver for farmers was only equal to a fraction of the tax breaks and tax holidays which central government gives giant businesses year after year. During 2008, India’s entire agricultural policy, indeed its entire political economy, was publicly called both povericide and genocide. It continues.

In the second half of the year, the attention of those in the world who do not have to worry about where their next meal is coming from, or if they will be killed before they can eat it, shifted to the predictably turbulent gestation of the next United States presidency. In the primaries, a nervous Democrat Party soon lost the one candidate many thought their strongest, namely John Edwards, the former North Carolina Senator with a fine legal record in actions against powerful corporations — some of whom made it known that he was the only candidate in either party whom they feared. The two remaining major Democrat candidates, Senators Hillary Clinton and Barack Obama, engaged in such pitched political battles that many feared the Republicans would win the presidency by default.

Formidable problems

But that was not to be. Obama won the Democrat nomination, and, aided by the Iraq catastrophe, the unwinnable war in Afghanistan, and a U.S. economy in free fall, proceeded to rout — at least in electoral college votes — the Republican Senator John McCain in the general election; the victory was the greater because Obama is an African-American, and even until the last weeks of the campaign there were doubts the world over that the U.S. electorate would want a black President. The new President, a man of considerable intelligence and ability, will face formidable problems, and will be expected to set the tone for much of the world. His pre-inauguration moves have as yet not been criticised, and his choice of experienced people of demonstrated competence — irrespective of their party affiliation — for his administration has attracted considerable attention.

The world economic crisis will be Obama’s first priority; it is already that for most other heads of government. The causes are well enough known, and lie in grossly inadequate financial regulatory systems which in any case were at best half-heartedly applied. The resulting volume of avarice, collusion, and gross misjudgment by the world’s major financial figures has put millions of ordinary people on the streets, thrown millions out of work, and destroyed their pension funds — and that is just in the industrialised countries.

Several of the world’s biggest financial corporations have disappeared. Those who head the remaining ones, the self-appointed New Olympians as Larry Elliott of The Guardian has called them, are now like beggars on a Third-World street; but these beggars are pleading for and getting hundreds and possibly thousands of billions in public money for the very institutions and the very people who have caused the collapse of the international financial system. Yet a bare few months ago those same institutions and those same people would of course have been the first to shriek their indignation — through what is itself a largely corporate international press — had States decided to fund public investment and public services properly; and the governments the corporates abused would of course have come obediently to heel, as they have done over all major issues for many decades now. Meanwhile ordinary people, as they have always done in such times, are understandably spending less, and major economies are sliding into deep slumps, with mighty industries collapsing; neither are the allegedly rescued commercial banks prepared to lend to anyone who wants to start a business in the recently-rediscovered real economy, where real people do real things. The financial corporations take our money and hide. Markets do not and cannot correct or regulate themselves, and even Alan Greenspan has publicly admitted that his ideology — that of the free market — is not working.

No country is immune. India, like Brazil, has seen foreign investors sell up and leave, as they were always going to do at the first sign of trouble. Yet political leaders, paralysed by the catastrophe unfolding around them, appear unable to utter simple truths about the dependence, even parasitism, of private economic activity upon the public realm. The closest any head of government has approached such an utterance has been Germany’s Chancellor Angela Merkel, in a little-noted interview before the G20 economic summit in Washington DC in November.

Nevertheless, there are signs of movement, even in the Third World. Some of the Indian elite, finally losing patience with monstrously corrupt and grossly dysfunctional public institutions and processes of every kind, are showing signs of thinking about the public space. That process probably gained additional impetus from the attacks on the elites’ own luxury entertainments in Mumbai at the end of November, and from widespread public disgust with TV coverage which fawned on the rich and the foreign at the expense of the ordinary people murdered at the CS railway terminus. It remains to be seen whether the Indian elites, with their liking for hardline procedural responses and their avoidance of substantive issues like hunger, poverty, caste, land reform, and class — not to mention the pervasive infiltration of India’s institutions by the Hindu Right — can maintain the momentum when they engage seriously with an India they have always bought themselves out of, or whether they will want to alter their own attitudes.

Reclaiming public space

Whatever else, gigantic questions can no longer be avoided, and if our current political leaders around the world are inadequate to the task of addressing them, they will be replaced under pressure of events. In addition, the collapse of the exclusively private as a political, economic, and even moral metaphysics can leave no doubt as to the necessity of the constituted public space as the only tenable space within which even humanity’s private activities can take place. The State, more specifically the form of the state, is returning to the centre of the world’s attention. While the messianic free-marketeers remain silent and thereby reveal their inadequacy, the rest of us can contemplate 2008 as a year in which we have had to learn some old lessons afresh. We cannot do without States, and we need much better ones. Furthermore, for States merely to reflate economies through revived production and consumption will only take us faster to an even more terrible fate, the physical destruction of the conditions for life. Economics has no answer here; what we need — as for example George Monbiot has indicated — is a different grammar of value. There is no other place to debate that than the State, but not the State as we have it. The owl that spreads its wings with the falling of the dusk on 2008 will float over a scene of widespread devastation — and infinite promise.

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