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Mainstream, VOL XLIX, No 50, December 3, 2011

Even the Mahavishnu of Market Economy Cannot Equate Slumdogs with Tycoons

Friday 9 December 2011, by T J S George

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Trust deficit is an expressive phrase. But it is applied only to India-Pakistan relations. It is just as relevant in describing people-government relations in India. The trust deficit on this front was highlighted by two recent statements. The first was by Prime Minister Manmohan Singh who said in Cannes that food prices shot up in India because of prosperity.

Less than half the population of India is prosperous. The other half-and-more is at varying levels of misery. A few hundred millions live in abject filth. A few thousand farmers have been forced to kill themselves, a phenomenon that still continues. Do these people have to pay impossible prices for essentials because some Indians are prosperous?

India ranks 134 among 187 countries in the UN Human Development Index. The proportion of underweight (read, deprived of nourishment) children in India is the highest in the world, higher than even African countries notorious for poverty. Barring Bolivia, Cambodia and Haiti, India has the lowest level of access to sanitation (read, highest level of public defe-cation). This is the country where skyrocketing prices must be accepted as a sign of prosperity?

If the government had been paying less attention to scam-making and more to improving social indicators and basic hygiene, it could have claimed some justification in relating unbearable living costs to prosperity. In this case, it is doubtful whether the Prime Minister can be justified even as an academic theoretician because textbook economics, too, makes a distinction between development and economic growth.

At best, the Prime Minister’s statement was a half-truth. The second statement, made by Pranab Mukherjee, was not even that. When petrol prices rose to the highest levels in the world, the Finance Minister seemed angry with the people who protested. The prices were raised, he said, by the oil companies, not by the government.

That is a new one. It is like saying that taxa-tion levels are raised by the Income Tax Depart-ment, not by the government. Indian Oil and Hindustan and Bharat Petroleum replaced Burmah-Shell, Caltex and Standard Vacuum by courtesy of nationalisation. Like Indian Railways, they are children of the government.

True, the oil companies incur heavy losses and government subsidies to them are hefty. They make out a case for higher prices that often seems strong. But that does not answer the lay man’s questions: Why doesn’t the excuse of international prices apply to oil prices in other countries including Pakistan and Bangla-desh? Why does petrol cost Rs 230 per litre in Lakshadweep? Why was Murli Deora, a close family associate of oil tycoons, made the Petroleum Minister?

NO angry fulminations by Pranab Mukherjee and no academic highfalutin by the Prime Minister can hide the trust deficit caused by bad governance and by equating slumdogs with the Formula One elite. The economist that he is, Manmohan Singh will be the first to realise that there is something to worry about when the United States, the Mahavishnu of market economy, goes through a historic upheaval. The Occupy Wall Street movement is an explosion of public disenchantment with the way the principle of free enterprise has developed in the US. It amounted, in the last few years, to tycoons walking off with public money, with banks collapsing because of licentious mismanagement and the ordinary people being forced to pay for the luxury class’s selfishness. People are losing faith in the way capitalism is being misused.

Or is it no misuse after all? Astonishingly Karl Marx had foreseen exactly what is happening today. In Das Kapital, he wrote: “Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and mechanical products, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the state will have to take the road which will eventually lead to communism.”

Scary? Re-assuring? Re-read the slogans of the “We are the 99 per cent” movement—and wonder.

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