Enough Is ‘Not’ Enough: Is Kerala Poised For Social Darwinism?  


The row over the appointment of Harvard Professor,  Gita Gopinath, as Economic Advisor to the CPI(M)-led Left Democratic Front (LDF) Chief Minister of Kerala, Pinarayi Vijayan, has thrown open an ideological foray within the left camp. The veteran leader V S Achuthanandan had written to the CPI (M) central leadership expressing his concern over her appointment. In his letter to the party General Secretary, Achuthanandan questioned the appointment saying that Gopinath’s neoliberal positions were at odds with that of the CPI(M) in particular and the Left in general. He indicated Gopinath’s endorsement of the economic policies pursued by the United Progressive Alliance (UPA) government and the BJP-led Narendra Modi government as a reflection of her neoliberal economic agenda. Renowned economist and former Vice Chairman, Kerala State Planning Board, Prof Prabhat Patnaik was also reported to have expressed his concern over the appointment. Several social scientists and party officials also raised a lot of questions regarding this.

But the CPI (M) Politburo, however, in its meeting held in Delhi on 31 July seemed to have adopted a policy of non-intervention on the issue even as some of the members of the PB expressed their reservation on the issue. This has been criticised in the context of the party’s basic position on many issues of India’s economic policy, including on the question of land acquisition bill, FDI in vital sectors of the economy etc. While the party’s national leaders are generally united on issues of national concern, the state leaders seem to have taken a different road, apparently under the notion that the ground situation in Kerala is all that is beyond control given the troubling time with the ailing state economy. Finance Minister TM Thomas Isaac’s position on the goods and services tax (GST) Bill is also another example. This has obviously created an ideological dilemma for the party and its ruling dispensation in Kerala.

It was not long ago that the CPI (M) Politburo member Prakash Karat asserted that “it is only by building a powerful movement against the economic policies of the Modi government and the RSS/BJP communal agenda that an alternative Left and democratic alliance can be built. The Congress party cannot be a part of such an alliance given its basic policies.”He said that “those who advocate an alliance of the Left and the Congress see the struggle against the rightwing offensive only within the parliamentary-electoral framework. They reduce the fight against the rightwing communal forces to electoral battles. What is required primarily is the political and ideological struggle against the rightwing forces. This struggle cannot be divorced from the fight against the neo-liberal policies. The Left parties do not have a sectarian approach regarding this struggle. In the fight against the neo-liberal policies and against communalism, the CPI (M) and the Left should strive for the widest united movements and struggles of the people.”  While Karat talks about a fight against the neoliberal policy agenda, the new Economic Advisor of Kerala’s chief minister, Gita Gopinath, is already categorical about her position on a variety of issues favouring a neoliberal option.

In a recent note, she said that “the hard work of the Modi government and the Rajan-led RBI has enabled India to distinguish itself among emerging-market economies. As countries like China and Brazil have slipped in their economic management, India signalled that it is a mature economy, where prudent macroeconomic decisions are taken based on technical expertise, not political whim. This raised its profile in the international arena substantially.” Gita also said: “Since taking office in 2014, Modi has spent more time than any of his predecessors selling the so-called Indian dream to foreign investors – efforts that have helped to spur a surge in capital inflows. The recent announcement that India will now, for the first time, allow 100% foreign ownership of firms in a broad swath of industries further reinforces the message that India is open for business.”

In the ‘Delhi Economics Conclave 2013’ held in Delhi, when the UPA government was in power, Gita argued that the IMF could play an important role in the Indian economy. As “the multilateral organization, unlike the US Federal Reserve, the IMF’s job actually is to care about the global economy. It is to care about the balance of payments promise of countries. They are supposed to be the organization that steps in if there is a self-fulfilling crisis happening in a particular country. But the problem right now is that the IMF is a highly stigmatized institution. Even the suggestion that you might approach the IMF could actually worsen the things for the country, much more than helping the country. It means that IMF is a last resort. You go to the IMF only when things are absolutely hopeless. Now I would hope we could find well solution to this because IMF was set up precisely to help countries that are being subject to vagaries of finance but that is not how it functions at this point.”

The CPI (M) party leaders are emphatic about their opposition to the ‘Washington Consensus’ and the role of the IMF and the World Bank in India’s policy making. However, the question of the role of international financial institutions has emerged in Kerala, with some indications already in air that the new LDF government would go for big loan from such agencies. In that case, Gita Gopinath may likely to play the role of a brand Ambassador of the ‘Next Kerala.’

This, however, is seen as an attempt to push Kerala to an inescapable trap of debt and distress. The experiences of some of the Third World economies are in order.  Many would have forgotten the experience of Trinidad & Tobago. All came to light with the Caribbean economist, Davison L Budhoo, trained by the London School of Economics, who worked for the IMF in Washington, writing a 150-page  letter of resignation as an economist on the staff of the IMF in order to raise public clamour for the Fund’s reform. In his address to Camdessus, the head of IMF, Budhoo wrote:

“Today I resigned from the staff of the International Monetary Fund after over 12 years, and 1,000 days of official Fund work in the field, hawking your medicines and your bag of tricks to governments and to people in Latin America and the Caribbean and Africa. To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind’s eye is the blood of millions of poor and starving peoples.”

Budhoo had accused the IMF of using statistics as ‘lethal’ weapons, elucidating how, on behalf of the Fund, he had been involved in ‘statistical malpractices‘ to inflate the numbers in IMF documents to convert  Trinidad & Tobago – a country endowed with oil resources –  into unstable economy. He charged the IMF with attempts to double an important statistic measuring labour costs so that T&T would seem “unproductive” even as  the IMF had fairly good estimates.

Once Budhoo’s accusations loomed large, the T&T government decided to undertake independent investigations to verify if the IMF data were manipulated. To their surprise, it was found that they were completely correct: the IMF had intentionally inflated and even made-up numbers with a view to smashing up the country and bringing it to its feet.  The IMF’s programme in Trinidad and Tobago was an illustrating case and in his resignation letter Budhoo made this point: “We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about (the) economic and financial performance of that country.”

Hardly ostentatious in his approach, Budhoo came out  in open – in sheer disappointment about the organisation where he worked for more than a decade: “The IMF was never designed to help the Third World or end poverty. It was established by the Bretton Woods conference of 1944 to restore economic and financial order to the Western world. There was no element of compassion for humanity in its formulation. The Fund’s aim is first and foremost to secure the interests of developed countries.” Budhoo reasserted that the IMF and World Bank have been vital structures in an economic order that is aggravating Third World poverty, the debt crisis, and a flight of capital from developing to developed countries which has soared in recent decades.

The IMF package for Trinidad and Tobago was an example of how IMF policies worsen Third World poverty. This programme would require harsh measures –  removal of state subsidies from basic agriculture, health, education. The Fund also sought to cut the public wage bill (increase unemployment); lift import controls (allowing an influx of consumer goods, thereby undermining local production); privatize national industries at outrageously discounted prices; raise interest rates (also hitting the competitiveness of local producers); and remove exchange controls (‘so that a privileged few could legitimately drain the country of the few remaining dregs of foreign reserves’). ‘Quite frankly, our “program” is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce,’ writes Budhoo. “It’s like a terrorist attack, you know, splashing around rifle fire and bazookas and even nerve gas indiscriminately so as to get the highest death toll in the shortest possible time.”

Budhoo also unearths why the IMF never insists cuts to defence, police or public control measures instead of to basic services and subsidies for the poor: “It’s one thing to push around countries and say, “OK you have to treat the poor that way.” But with the arms industry you are talking about very powerful people – both inside and outside the country. They won’t be pushed around. They are supposed to be among those who benefit. The US being a Fund shareholder and the staff taking its cue from the US, who is the Fund to tell a country to limit its arms expenditure? You can tell them to let people die, but not to limit their arms.” Budhoo obviously has more to say about the Ghost of the Bretton Woods machine.

The IMF and World Bank appear as independent international agencies that seek to benefit struggling economies. But, over the years, they have been taken over by economists dedicated to Chicago School’s neoliberal moorings and their interventions underline very clearly the social Darwinian dimension of ‘prostrate or perish.’ The Harvard Professor cannot say for certain that T&T will not be repeated in Kerala (with or without the largesse of the global agencies).  Already a state with highest unemployment in the country, Kerala has too many irons in the fire. While T&T has only 1.3 million people to handle with, Kerala has 34 million, with another 4 million in-migrants eking out their livelihood. The ‘model of development’, of which Kerala has for long been boasting beyond all proportions, is now in a melting pot of uncertain menus. In any case, Budhoo’s warning signals should be eye opener.

The author is Professor, School of International Relations and Politics, Mahatma Gandhi University, Kerala. He can be reached  at [email protected]

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