Co-Written by Annesha Mukherjee & Satyaki Dasgupta
The popularity of Prime Minister Narendra Modi saw a rise according to India Today’s ‘Mood of the Nation’ poll. Similar results were also observed in Gaon Connection-Lok Niti-CSDS survey. Some of the economic policies that his popular government has introduced since the advent of COVID-19 include three Bills on agricultural market reforms, three labour code bills, and auctioning off coal mines for commercial mining.
These policies are in confirmation with the mainstream economic theories which discourage government intervention because it leads to inefficiency in the market. These theories advocate for flexible labour laws which are claimed to encourage private investment, employment opportunities and economic growth. Along similar lines, the India INC has supported the changes in labour laws because they enable employers to operate more ‘freely’. Moving towards free markets for agricultural produce by doing away with any kind of government intervention, is supposed to ensure greater prosperity for the Indian farmers. Additionally, privatisation of coal mines is expected to facilitate the Ease of Doing Business in India.
To be able to appreciate the full impact of these policies, it is imperative to understand the workings of the prevalent system. This system has in its heart the profit-maximising motive of big industrialists. In the labour market of our economy, on one hand there are workers who have only their labour to sell, and on the other hand are these big industrialists who require this labour for their production process. However, the latter also hold private ownership of factories, machineries, and other such factors of production, making them capital-owners and allowing them a higher bargaining power than the workers. The profit-maximising motive of capitalists can be served by minimising the wages to be paid to workers over which they have direct control, unlike other costs of production like rents which are often determined exogenously. Any technological progresses made increases the productivity of the workers. But, without a corresponding increase in workers; wages, any increase in productivity and hence, profits, is accrued only to the capitalists. Thus, in such a system, it is always in the interests of capitalists to keep workers’ compensations at a minimum, thereby exploiting them, because that necessarily translates into higher profits. Some properties of such a system at work can be observed in the phenomena of increase income inequality, increase in temporary contractual employment and lower wage shares.
When we view the functioning of our economy through this lens, we understand that the policies advocated by conventional economic theories essentially gives the right to capitalists to maximise their profits through greater exploitation of workers. With the introduction of new agricultural, labour and mining policies, the government is merely acting as a facilitator in this process.
Impact on Coal Miners and Tribals
One of the new government policies is the auctioning off of forty coal mining blocks in Eastern and Central India, which were ‘off limits’ till now. Workers in coal mines generally work in very harsh, unsafe and precarious conditions. On owning the coal mines, capitalists will have no incentive to provide safety precautions or even higher compensations to the workers. In fact, they might even employ women and children at extremely low wages. In the absence of government intervention and in a bid to reduce their costs, capitalists will only seek to maximise their profits through greater exploitation of coal miners.
With the aim of expanding their production process, capitalists might acquire the neighbouring coal-rich areas which are typically inhabited by tribals, thereby dispossessing them of their land and livelihood. Although the process of dispossessing tribals from their land is not a new phenomenon, the government was earlier responsible for rehabilitating them. However, with the government relieving itself of its responsibilities, capitalists will have no such incentive since they are not accountable to people. Consequently, being dispossessed from their lands and having only their labour to sell, the tribals will join the ranks of the swelling pool of unemployed labour force. This is expected to push down wages. The entire process of dispossessing tribals will only serve to aggravate their impoverishment.
Thus, with the auctioning off of coal mines, the rights of the tribals over their lands stands unacknowledged. The inhabitants now stand at the risk of being dispossessed in the name of development, which is now supposed to be furthered by capitalists. The introduction of this policy shows that the government is merely acting as a lapdog of the capitalists, and any further investments made in these coal mines necessitates the impoverishment of the workers in the mines, and of the tribals who have been inhabiting these lands till now.
Impact on Farmers
One of the many criticisms of the newly introduced Farm Bills is the apprehension of a corporate take-over of agricultural produce. These corporates are effectively the big capitalists we have been referring to in our article till now. It is being argued that these policies will phase out the Minimum Support Price (MSP) provided to farmers, which would earlier be regulated by the government. However, with the possible doing away of the MSP, hoarding of farm produce by big capitalists, and no regulation of essential food prices, the prices of agriculture produce in general, and of essential food in particular, will be now dictated entirely by these capitalists. Consequently, an overall increase in the prices is expected, thereby leading to a fall in real wages.
Additionally, with the phasing away of MSP and the mandi system, there will be no administering of the prices received by famers for their produce. As a result, this will have a considerable impact on the small and marginal farmers who constitute 75 percent of the farmers in India. It will become increasingly difficult for them to meet their costs of production due to lower prices received for their produce. In effect, they might be compelled to sell their lands. Some of them might end up as casual workers in the agricultural sector, while others might give up farming altogether. Either way, once they sell their lands, they will be joining the burgeoning unemployed labour force, because similar to the case of dispossessed tribals, they too will have only their labour to sell.
Thus, introduction of the new Farm Bills is yet another government policy which is heavily skewed towards the big capitalists, with increasing impoverishment of the famers – through their loss of livelihood and by reducing them to penury.
Impact on workers
The three new labour bills have been introduced with the motivation of facilitating the Ease of Doing Business in India. One essential way in which this is being done is by easing the procedure for the capitalists to hire and fire their workers. This is primarily paving the way for greater contractualisation of the workforce. The temporary nature of contracts smoothens the process of firing workers, while the provision of minimum or no social security benefits encourages capitalists to hire workers. Contractualisation is thus one of the many ways of making labour laws flexible, which is often claimed to encourage investments, employment and hence, economic growth. But what is often ignored in the process is how it increases the vulnerability of the workers due to no income or job security. In fact, the assumption that workers will be hired elsewhere immediately after being fired from a job or after the termination of their contract, is presumptuous in the context of the Indian economy which has been witnessing jobless growth for quite some time now.
By reducing the cost of hiring workers, increasing contractualisation leads to falling wage share of workers and consistently increasing profit share of the capitalists. Moreover, the proposals of increasing working hours made by some states shows that the achievements of decades of workers’ struggle are being attacked directly. Along with contractualisation, the requirement of increased percentage of employees to form trade unions in workplaces, will further reduce the bargaining power of the working class as a whole. This will aggravate the vulnerability and docility of workers, since they will be increasingly dispensable to the whims and fancies of capital.
Thus, we can see the socio-economic impact of capitalism as two sides of the same coin. On one side there is the constant promotion of ‘Ease of Doing Business’ by hankering for new investments through tax incentives and other supply-side policies. On the other side, there is the associated vulnerability, docility and exploitation of the working class. Therefore, anybody who sympathises with the recent migrant crisis, cannot be in favour of any pro-capitalist policies. When the government acts as a broker for capitalists with the introduction of new policies in crucial sectors of our economy, it may help the Prime Minister’s popularity but it also legitimises the exploitation of workers, who are the most indispensable part of the society.
Annesha Mukherjee is a PhD Research Scholar at Centre for Development Studies (JNU), Kerala
Satyaki Dasgupta is a Graduate Student at Colorado State University, Colorado
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