The Hindu Business Line : How surplus accumulates in our villages and towns

GANDHIJI said, "Constant development is the law of life, and a man who always tries to maintain his dogmas in order to appear consistent drives himself into a false position." The law of development, however, is that you need surplus, argues Barbara Harriss-White, of the University of Oxford, whose new book India Working, from Foundation Books (www.foundationbooksindia.com), is the story of how surplus accumulates.

However, this eminently readable book is not about the 12 per cent of population that lives in metropolitan India; for, the author is of the view that this minority is `embedded' in the 88 per cent that lives in our villages and towns, outside the much written-about buzz of cities.

But first, let us name this segment. White considers labels such as `local', `real', `authentic', characterised by `mud-floored markets' and `unorganised economy'. Other options are `lower', `bharat', `bazaar', `mofussil', and so on. Tags that White considers in detail are `informal' and `black economy'.

To White, it's the bus and factory owners, traders, officials and politicians who are "key players in India's accumulation process — together with the workers and other people engaged in a vast range of small-scale production and trade." To find this, she stoops under `low-thatch awnings' and adjusts her eyes to "the gloom of traders' and money-lenders' offices, with their large safes, banks of phones, gaudy calendars and pictures of the gods," and also sees "local businessmen stuffing rolls of banknotes into the hands of election candidates".

Thus, the author relies on `field economics' — that is, "studies undertaken on a small scale, at a micro level, with long field exposure" — to ferret out stuff for her book. White writes that the goods and services consumed by the vast bulk of the 88 per cent are income-elastic basic wage goods; "the only conspicuous product of corporate capital is clothing." She discusses the different dimensions of "the matrix of social institutions through which accumulation and distribution take place."

A by-product of White's study is an analysis of `contemporary capitalism' — with an alarming finding: that, in `liberalisation', political control has not gone but only changed; and that the change is "not as self-evidently beneficial as those who have unleashed liberalisation would have us believe."

The chapter on workforce emphasises that the social structure of labour is such that it is easy to control but hard to organise. White questions the fundamental premise of India's competitiveness as lying in low cost of labour. "India's large reserves of cheap labour cannot constitute the foundations of a modern, globally competitive economy," writes White. Right, because such a strategy presumes that the majority of labour will remain poorly educated and nourished. Quite unfairly, therefore, low costs bet on `fragmentation of the labour force', apart from `suppression of political and trade union rights.'

Isn't the state doing anything? The state is only "profoundly ambivalent towards the assetlessness of labour," writes White. "On the one hand, it lends support to business at labour's expense, all the way from the ring-fencing of unorganised labour to the close relations between the promoter families dominating big business and the nationalised banking institutions."

What about the middle-class or the `intermediate' segment? Earnings of this class are an amalgam of both reward for labour and payment for risk-taking, as Michal Kalecki pointed out. For example, "the bureaucracy comprises salary-earners, but since officials are also assumed to derive income from bribes, fraud and the private sale of state goods such as licences and sanctions, they are de facto self-employed and earn a fee from the provision of their services."

Intermediate classes, or ICs, are `a numerically powerful coalition' that's not transient, says White. And there are groups within the ICs. "Upper fractions of the ICs and regionally-based `non-monopoly' capital may develop a new set of interests — in regional stock exchanges, regional lobbies and regional political parties — to compete with apex `monopoly' capital," is a statement that can explain why top down initiatives fail to deliver.

In the discussion of `informal economy', the formal euphemism for something half-black or grey, White recounts what has happened in Karachi, which has progressed "from being a pleasant, planned colonial port of some 4 lakh people to a multi-ethnic megalopolis of 12 million, the biggest city and the commercial hub of Pakistan."

Relax, because this is not about India: "Half the population of Karachi has seized the land it lives on illegally and has gained access to water and electricity `by stealth'; that is, by means of an elaborate set of social relations of corruption and fraud."

While it may not be difficult to find parallels here, White concedes that "parallel system of taxation and provision that `shadows' the State," is both "hard and dangerous for researchers to penetrate." Development policy has to tackle the `obstacles to a democratically determined accountability,' concludes White.

"Nature knows no pause in progress and development, and attaches her curse on all inaction," said Johann Wolfgang von Goethe. To avert the curse and let Gandhiji's `law of life' work, we may have to get India Working.

Economics@TheHindu.co.in

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