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Mainstream, VOL LII, No 31, July 26, 2014

Democracy the Corporate World Dislikes

Saturday 26 July 2014, by Suranjita Ray

The West is known for its rich tradition of being a constant champion of the values of democracy such as equality, freedom, rights, and justice. It has legitimised its positive intervention in all wars against democracy across the world. However, while the success of democracy lies in strengthening decentralisation, the democratic capitalist countries have campai-gned for the corporate world which privileges an integrated market economy that prevents redistribution of the basic productive resources. This has resulted in an iniquitous society which establishes the hegemony of the capitalist/corporate world.

Democracy, which challenges this hegemony and favours decentralisation of the economic power, is what the corporate world dislikes. Breaking away from such dislikes is a rare practice as the global world order has succeeded in manufacturing consent in support of this hegemony. It is therefore significant to understand the democratic politics in practice.

The Neoliberal Order

The hegemonic world order remains uncontested as most of the developing countries are made to believe that by integrating with the world economy they will catch up with the developed world. In fact the most popular understanding of development in the 21st century is to adopt the global neoliberal project that privileges the market model of rational choice which will ensure that every citizen as an individual customer will maximise his/her utility by exercising maximum choice. The national interest itself has been redefined to privilege privatisation, promote global trade, and boost economic ties with the corporate sector. One is made to believe that any deviation from this will result in losing out the benefits of globalisation and market economy and there will be a genuine threat to the economic growth and development. Any deviation from what the corporate world wants us to believe is seen as anti-development thereby giving the corporate world an upper hand.

The only answer to the persisting predica-ments of poverty, hunger, unemployment, and under-development in the developing countries is to implement the pro-capitalist global market model that will ensure economic growth as a pre-condition for development. Though the significance of economic growth is indisputable, by itself economic growth is neither sufficient nor does it lead to development. Without redistribution of basic productive resources, higher economic growth can co-exist with higher levels of poverty, inequality, disparity, distress, deprivation and underdevelopment. Therefore despite the campaign for inclusive growth and development, the large masses remain excluded from the mainstream development. While the neoliberal order allows the citizens to assert their political and cultural rights, they are deprived of economic rights. (See also Gopal Jayal, 2014)

Indian democracy and development are expected to adjust to the international norms of the free competitive global market economy. The focus has been on the need to strengthen the institutional/structural and legal dimensions of democracy such as the Constitution, rule of law, citizenship rights, and civil society, rather than working towards structural changes to redistribute economic resources to democratise democracy. Thus, the values democracies espouse are far from the ground reality which discrimi-nates, marginalises, and deprives the vast majority from the basic resources of livelihood.

Increasing Deprivation

Huge investments by the corporate sector in the SEZs, mines, forests, power plants, and infras-tructure might have led to a higher growth rate, but it has resulted in an increasing socio-economic turmoil across the country. Development-induced displacement and multiple alienations have resulted in destruction of livelihood of the large mass. Though the Gujarat model of development promises a higher economic growth, it ensures that the policies of development are in the hands of the corporate sector. The capitalist/corporate agenda streng-thens the forces of globalisation and increasing wealth is narrowly concentrated in the hands of the few. Based on a lived experience of difference from the mainstream development discourse, the history of consciousness of people’s rights movements across the country opposes and contests integrating and assimilating with the mainstream development. (Ray, 2012: 59) Therefore it is pertinent to engage with the debates on the development strategies that have failed to address the systemic deprivations which not only persist but also continue to increase.

Our past experiences suggest that rapid growth might have led to sustainable income, poverty reduction as per the norms of poverty estimation, but it has failed to empower the marginalised and poor to fight the everyday structural constraints of society. Thus a democratic economic system calls for ‘participatory economy’ which should work in the interest of the general population unlike corporate capitalism which is ‘radically anti-democratic’ and where the powerful are the ‘principal architects of policy’. (Chomsky, 2003: 140) In fact failure to decentralise the economic power has made decentralisation of political power meaningless. Though several amendments have legitimised the democratic state as representative of its people across class, caste, sex and ethnic communities, we find that the owners of productive resources control and influence the decision-making process at all levels.

The contemporary practice of democracy in a majority of the countries across the world suggests similar rule in which the decentrali-sation processes are confined to participation of citizens in the elections to choose the political party that shall govern. While issues that threaten the very survival of millions of people in the world’s largest functional democracy are not prioritised, the political party/coalition of parties that win a majority continue to provide political stability by convincing the majority of the citizens that they represent the interests of the latter. On the contrary, past experiences reveal that good governance prioritises the interests of the few who lobby for the capitalist model of growth and neoliberalism.

The institutional mechanisms of good governance in a democracy have failed to address the basic issue of redistribution of the produ-ctive resources. Lack of ownership and control over the basic productive resources is a major underlying cause of increasing inequalities, disparities, deprivations, exclusions and denial of basic rights to the absolute majority of the population. While Indian democracy has experienced the emergence of class and caste-based parties to represent the distinct group identities and their interests, the underlying causes remain unaddressed. The nexus between the economically dominant class/financial elite and the ruling parties continues irrespective of whom the latter represents. This alliance has not only resulted in increasing inequalities and violation of citizenship rights but also raises pertinent questions about the kind of democracy that is practised. C.P. Bhambhri rightly argues that the “great theorists of democracy from John Locke to John Stuart Mill and John Rawls have ended up as patrons-in-chief of an empty liberty and abstract individual because at the theoretical and philosophical level they have failed to find an answer to the basic contradiction between ‘individual liberty and rights’ and any kind of individual and social equality in any society where institutions of private property ownership determines and decides social relati-onship”. (Bhambhri, 2014) He reminds us of Dwight Eisenhower, who “in his presidential farewell address alert his countrymen that they are being ruled by an ‘industrial-military’ complex where real power is concentrated”. (Ibid.)

A Greater Challenge Ahead

While economic reforms and liberalisation in the early 1990s did away with ‘most of the constraints like industrial licensing policy, tariff and quota restrictions on import of raw materials and intermediate goods’, the later years saw economic growth due to the contribution of the traditional sectors alongside the growth in specific sectors such as ‘minerals, construction, real estate and telecom based on a close relationship between the political class and big private investors’. (Kar, 2014: 8) Thus the patterns of state intervention reflect vested interests of the political parties in protecting the dominant class against the underprivileged.

The present government’s campaign for the market model of development backed by the corporate-financial elite and the mass media, demand a cut on the rights-based welfare schemes and lesser role of the state in business. (Hassan, 2014) The Economic Survey 2013-14 also focuses on legislative, administrative and regulatory changes for transforming to a pure market economy restricting the state’s role only to intervene when the market fails. To achieve an expected growth rate above five per cent during the current financial year 2014-15, it prioritises ‘reversing the serious downward trend in the industry’, rationalisation of export promotion schemes, a reality check on existing trade agree-ments with other countries, and greater trade facilitation measures. As India’s share in the international trade is rising, the Economic Survey also ‘bats for simpler procedure for exports and improving export infrastructure’. (Srinivasan, 2014: 11) It calls for creating a national common agriculture market by remo-ving restrictions and bottlenecks for free trade and setting the agenda for market reforms and privatisation in agriculture and the food sector. (Parsai, 2014: 11) It further states that ‘removing market distortions will create greater compe-tition in markets, promote efficiency, growth and facilitate the creation of a national agricu-lture market’. (Ibid.) However, it is critical to underscore that global inequalities and asymm-etries are widespread due to the revival of the invisible hand and systematic biases against the developing countries. (Ray, 2014: 12) Free trade, that favours the monopoly of a few powerful developed countries, can only increase the powers of the corporate world which will further strengthen the systematic biases that persist. (Ibid.) Though Prime Minister Narendra Modi expects us to believe that the Budget 2014-15 ‘converts hopes and aspirations of the people into trust’ and it ‘is a new ray of hope for the poor and downtrodden sections of society’ (The Hindu, 2014: 1), its focus on removing obstacles to mining, reviving growth in manufacturing sector, encouraging Foreign Direct Investment (FDI) in critical sectors including defence, insurance and real estate, and development of smart cities, conspicuously reflects the class character of the Indian state. The continuity with the previous government’s pro-business bias is obvious ‘with the stated moves to dilute the already weak Land Acquisition Act to make takeover of land easier for industry’. (Karat, 2014: 9) In addition, expanding industrial corridors to benefit mining companies will only benefit the corporate sector at the cost of large scale displacement and violation of tribal rights. (Ibid.)

It is pertinent to understand that higher growth at the centre of economic policy should not be an end in itself. Higher economic growth will have little significance if it excludes the absolute majority of population from its benefits. The emphasis on the market economy and higher economic growth should be the means to achieve equality and justice in society through redistributive measures which benefit the marginalised and deprived. The need of the hour is to understand the limitations of excessive liberalisation, deregu-lation, free competitive market, and their long-term consequences. The democratic state should play a positive role in resolving the old conflicts of institutional democracy and substantial democracy. They face a greater challenge than ever before as the problems that need to be resolved are no longer confined to the autocratic regimes. The challenge is even greater in the present context with the break from the dynasty rule as it is expected to be less in continuity with the past. It is important to understand that development is more about the visible hand of the state than about the invisible hand of the market. (Subramanian, 2014: 17) We have seen that ‘rapid growth was not transformed meaning-fully to improve welfare of the poor’. (Ibid.) Thus the universal neoliberal discourse on develop-ment needs to be interrogated and contested.

The claims of the Prime Minister that ‘a strong economy is the driver of an effective foreign policy’ will make little sense to the large mass of the country if strengthening integration with the capitalist market economy and friendly foreign relations fail to bring about real changes in the living conditions of a majority of the people. Failure to balance between growth and double digit inflation has contributed in a big way not only to the processes of impoverish-ment and deprivation but also to the distrust in the politicians and political establishments. Therefore a more realistic view is that the political leadership has to be decisive about the positive intervention of the state in redistribution of the basic productive resources to empower the citizens.


Democracy can only be made stronger by addressing the fundamental issues that concern the majority who are deprived and margina-lised. It is the latter who are mostly in need of the democratic state. It is critical that the defenders of democracy should understand that represen-tative democracy in practice should represent the interests of the large mass of citizens to build their trust and enable their participation in the decision-making that concern their livelihood. The more the state dissociates itself from addressing the issues of economic empowerment, the more will be the distrust and disengagement with the kind of democracy that is practised. The promise of the present government to usher in good governance and rapid development through swift actions to speed up results on the ground without prioritising the redistribution of basic productive resources will only add to the existing distrust. It is important that the state intervenes to bring in structural reforms to secure the basic needs of its citizens rather than intervene if the market goes wrong. Thus can India take the credit as the world’s greatest functional democracy.


Bhambhri, C.P. (2014): “Contextualising Development in a Democracy”, Book Review of Politics in India—Structure Process and Policy by Subrata. K. Mitra in The Hindu, April 29, p. 16.

Chomsky, Noam (2003), Understanding PowerThe Indispensible Chomsky, Peter R Mitchell and John Schoeffel (eds.), New Delhi: Penguin Books India.

Hassan, Zoya (2014): “Development and Doublespeak” in The Hindu, April 11, p. 8.

Jayal, Niraja Gopal (2014): Citizens and its Discontents—An Indian History, Delhi: Permanent Black.

Kar, Sabyasachi (2014): “Putting the Spring Back into the Economy” in The Hindu, June 10, p. 8.

Karat, Brinda (2014): “Whose Budget is it Anyway?” in The Hindu, July 15, p. 9.

Parsai, Gargi (2014): “Set up National Common Agriculture Market: Survey” in The Hindu, July 10, p. 11.

Ray, Suranjita (2012): “On The Margins of Survival” in Mainstream, Vol. 51, No. 1.

Ray, Suranjita (2014): “Need for Altering Discourse in Contemporary Times” in Mainstream, Vol. 52, No. 26.

Srinivasan, Raghuvir (2014): “Trade Reforms High on the Agenda” in The Hindu, July 10, p. 11.

Subramanian, K. (2014): “Guiding the Development Debate”, Book Review of Catch Up Developing Countries in the World Economy by Deepak Nayyar in The Hindu, February 11, p. 17.

The Hindu, (2014): July 11, p. 1.

Suranjita Ray teaches Political Science at Daulat Ram College, University of Delhi. She can be contacted at suranjitaray_66@yahoo.co.in.