Arundhati Roy raises a number of vital issues in her latest polemic Capitalism: A Ghost Story. She's at her strongest when describing the condition of places like Chattisgarh, where corrupt administrations have given over large tracts of land to industrialists through secret agreements; herded sections of the population into concentration camps; and created pro-government militias while branding all protestors Naxalites. Her larger criticism relates to think-tanks, philanthropic foundations and NGOs creating and maintaining a consensus about the way the world's economy ought to be run. I don't believe she's convincingly made the connection between the micro and macro picture. In fact, I find a number of her arguments faulty, error-ridden or plain dishonest. Here's a small sampling of those, with quotes from her essay in italics and my comments below these in normal type.
India’s 100 richest people own assets equivalent to one-fourth of the GDP.
While the figure is shocking, it is also a misleading apples-and-oranges comparison, because 'assets' relate to total wealth, while 'GDP' measures production in a single year.
In India, the 300 million of us who belong to the new, post-IMF “reforms” middle class—the market—live side by side with spirits of the nether world, the poltergeists of dead rivers, dry wells, bald mountains and denuded forests; the ghosts of 2,50,000 debt-ridden farmers who have killed themselves, and of the 800 million who have been impoverished and dispossessed to make way for us.
It is amusing to have Arundhati Roy include herself in the 'middle-class'. She's rich by any standards, a dollar millionaire many times over. There is, of course, a persistent belief among rich Indians that they are only middle-class, and to that extent Roy comes through, for once, as typically Indian.
The passage describes a zero sum game in which 300 million Indians have won at the expense of 800 million losers. There is, however, no evidence that those who are impoverished were better off in the past. India has for millennia been a land where most citizens lived in misery.
The era of the Privatisation of Everything has made the Indian economy one of the fastest growing in the world. However, like any good old-fashioned colony, one of its main exports is its minerals. India’s new mega-corporations—Tatas, Jindals, Essar, Reliance, Sterlite—are those who have managed to muscle their way to the head of the spigot that is spewing money extracted from deep inside the earth. It’s a dream come true for businessmen—to be able to sell what they don’t have to buy.
Roy focuses on mining throughout the piece, and this passage exposes a major fault line in her argument. Groups like the Tatas and Jindals are not among India's biggest exporters of minerals. They want mining leases to assure themselves of supply to their steel plants. There is a constant tussle, reflected in the minister in charge of mining battling the one in charge of steel, between indigenous manufacturers who want exports restricted and exporters such as Sesa Goa who want license to sell anywhere in the world. Roy's erroneous view of Capitalism as an efficient and single-minded monster cannot capture these conflicts.
... by now we know that the connection between GDP growth and jobs is a myth. After 20 years of “growth”, 60 per cent of India’s workforce is self-employed, 90 per cent of India’s labour force works in the unorganised sector.
Non-sequitur. The first sentence speaks about job growth as a whole, and the second shifts to self-employed and unorganised jobs versus organised ones. Has she considered that GDP growth might create opportunities for self-employed and unorganised workers? Sure, it would be good to have more organised sector employment, but that's prevented as much by outdated labour laws and short-sighted unions as by any failure in the market's functioning.
In the summer of 2011, the 2G spectrum scandal broke. We learnt that corporations had siphoned away $40 billion of public money by installing a friendly soul as the Union minister of telecommunication who grossly underpriced the licences for 2G telecom spectrum and illegally parcelled it out to his buddies.
The CAG's voodoo arithmetic has led to a lot of confusion, and Roy happily takes her place among the befuddled. She says corporations "siphoned away" 40 billion dollars of public money. No, they didn't. The money didn't actually exist. It is an estimate of what the government, in the GAG's view, might have earned, had it auctioned 2G licenses and spectrum, instead of following a first-come-first-served policy. The calculation of presumptive loss is itself seriously apples-and-oranges, using 3G prices as a benchmark to estimate 2G income. What laypeople don't seem to realise is that any money accruing to the government eventually comes from our pockets. If the government 'lost' 40 billion dollars, it was money that the telecom firms would have made back by charging us higher prices. Frankly, I'm happy the money stayed in our pockets and tariffs plunged so low that India ended up with the cheapest calling rates in the world.
Of late, the main mining conglomerates have embraced the Arts—film, art installations and the rush of literary festivals that have replaced the ’90s obsession with beauty contests... The Jindal Group brings out a contemporary art magazine and supports some of India’s major artists (who naturally work with stainless steel).
I was for a couple of years the editor of the contemporary art magazine Roy mentions. It was established before the Jindals owned mines. The Sajjan Jindal Group neither was nor is a 'mining conglomerate', but primarily a steel manufacturing business with interests in power generation. It is also wrong to claim the Jindal Group 'supports some of India's major artists (who naturally work with stainless steel)'. The artist most identified with stainless steel, Subodh Gupta, was part of a workshop in Jindal Steel's Vasind campus a decade ago. He has also featured regularly in Art India magazine. But those are very minor entries in his CV. I don't believe the Jindals have patronised any major, or even minor, artist, in the way, say, Harsh Goenka of the RPG Group has done. The Sajjan Jindal Group, by the way, does not manufacture stainless steel. Jindal Stainless is run by a different branch of the family.
But which of us sinners was going to cast the first stone? Not me, who lives off royalties from corporate publishing houses.
Wow, a moment of self-reflection after a decade and a half of pointing fingers. Though she says she won't cast the first stone, Roy chucks a number of missiles in the course of this diatribe. Since she's in an introspective mood, though, she might consider how her international travel would be possible without steel and oil; and how her home could be lit and her PC booted up without power from either burning coal, building dams, or splitting atoms.
What better way for usurers to use a minuscule percentage of their profits to run the world? How else would Bill Gates, who admittedly knows a thing or two about computers, find himself designing education, health and agriculture policies, not just for the US government, but for governments all over the world?
Bill Gates, who has donated far more than a minuscule percentage of his wealth to his Foundation, was among the most powerful men in the world long before he turned to philanthropy. Just because his foundation designs a few policies doesn't mean he runs the world.
Mohammed Yunus and the Grameen Bank brought microcredit to starving peasants with disastrous consequences.
Some of the sheen has come off the microcredit miracle, no doubt, but to suggest Grameen Bank has been a disaster is surely a mistake. Many of those starving peasants stopped starving as a result of access to credit.
The Ford Foundation established a US-style economics course at the Indonesian University. Elite Indonesian students, trained in counter-insurgency by US army officers, played a crucial part in the 1965 CIA-backed coup in Indonesia that brought General Suharto to power. Gen Suharto repaid his mentors by slaughtering hundreds of thousands of Communist rebels.
These kinds of statements most clearly demonstrate Roy's dishonest mode of argument. There are some chaps studying a course in economics designed by the Ford Foundation in Indonesia. A completely different group of 'elite students' supposedly plays a part in a CIA-backed coup. The details of the coup of 1965 have never been sufficiently revealed, but it appears to have been one faction of the army trying to take over the country and failing. I haven't read anything that suggests 'elite students' played a significant role in the operation or in the slaughter that occurred later. But by bringing anti-insurgent students into the picture, Roy creates a sense in our minds that the economics students have something to do with the coup, and, by extension, that the Ford Foundation was somehow involved in the Indonesian massacres of 1965 and 1966. But all the Ford Foundation had done was set up an economics course. It didn't kill any Communists, nor train anybody to kill Communists, nor even, as far as we can tell, train anybody in economics who later killed Communists.
Eight years later, young Chilean students, who came to be known as the Chicago Boys, were taken to the US to be trained in neo-liberal economics by Milton Friedman at the University of Chicago (endowed by J.D. Rockefeller), in preparation for the 1973 CIA-backed coup that killed Salvador Allende, and brought in General Pinochet and a reign of death squads, disappearances and terror that lasted for seventeen years.
More false history. The programme to train Chileans at Chicago originated in the 1950s. Salvador Allende gained power in Chile in 1970. In no sense or form were students from Chile taken to the US 'in preparation' for the 1973 CIA-backed coup. The Ford Foundation had no more to do with the coup in Chile than it did with the coup in Indonesia.
A conservative estimate of the UID budget exceeds the Indian government’s annual public spending on education.
Apples-and-oranges again. Roy appears to be comparing the UID budget for its entire multi-year rollout to an annual budgetary outlay. To provide a more accurate comparison, here are estimates for 2012-13 announced in Pranab Mukherjee's recent budget:
UID: 14232 crore rupees
Education: 48,781 rupees
Education, moreover, is a State subject, which means the total Indian governmental contribution to schooling is far greater than the 48,781 crores allotted by the Centre.
As US universities opened their doors to international students, hundreds of thousands of students, children of the Third World elite, poured in. Those who could not afford the fees were given scholarships.
The whole point of scholarships is to ensure that deserving students don't get left out just because they aren't part of the elite. Roy manages to twist this honourable aim to make scholarships part of a grand Anglo-American conspiracy to brainwash Third Worlders. "Those who could not afford fees were given scholarships" makes the entire grants process seem so easy from the recipients' perspective.
Armed with their billions, these NGOs have waded into the world, turning potential revolutionaries into salaried activists, funding artists, intellectuals and filmmakers, gently luring them away from radical confrontation, ushering them in the direction of multi-culturalism, gender, community development—the discourse couched in the language of identity politics and human rights.
Actually, for decades the billions poured into education programmes and cultural grants by the American government and its proxies failed to turn potential revolutionaries away from the path of radical confrontation. The real problem was that regimes that tried to do away with the market created far more misery and perpetrated far greater atrocities than the system they set out to replace. Eventually, most intelligent people understood that the practical failures of anti-capitalist governments resulted not only from sanctions, embargoes and CIA-sponsored insurgencies, but also from deep-rooted in-built drawbacks. Roy never acknowledges that long and bitter history of failure, except insofar as she purges her writing of anything that could be construed as a positive alternate vision.
Update, April 2: A couple of friends have pointed out that I come across as condoning the corruption of A Raja, and I can see why they see it that way. The 2G scandal is rather complicated, but, briefly, Raja's corruption involved getting firms licenses that would otherwise not have qualified under the established criteria, and blocking a couple of firms who would have qualified. He needs to be punished for this. My objection is to the idea that his acts constituted one of the greatest scams in India's history, a belief fed by the absurd 40 billion dollar figure the CAG dreamt up. Had the licenses been handed out sticking to procedure, the policy would have been preferrable in many ways to the auctions that are now going to be held for anything from spectrum to mining, following a recent Supreme Court verdict. Auctions tend to drive up prices for licenses to irrational levels, and hurt consumers because the costs are inevitably passed on to them.