TATA, VEDANTA, POSCO
Industrialisation at any Cost
[Based on a talk given at Lattice 2013, the annual symposium of PGPEX students in IIM Kolkata on 25 October, 2013.]
It is really encouraging to
see students at IIM Kolkata hosting a
symposium on the human cost of industrialisation. The acknowledgement that industrialisation involves a human cost and that this cost may often outweigh the presumed benefits, is a welcome departure from the dominant discourse in the country today which aggressively advocates industrialisation at any cost.
Before proceeding on the subject, let us note that the term industrialisation is used too often very loosely. Any objection raised against any specific project, whether on behalf of the people who are liable to lose their land and/or livelihood or on environmental grounds is often generalised as a blind opposition to industrialisation to avoid a rigorous analysis of the impact of the project in question or avoid the democratic processes of transparency and accountability, and most crucially, consent of the people who stand to be affected most directly and immediately.
The difference between the setting up of individual industries and the concept of industrialisation is important to note. One quick look at the composition of India's GDP and engagement of work force, and it becomes clear that even after more than six decades of Independence India can hardly be called an industrialised country. While talking about the human cost of industrialisation one should also be alive to the human cost of lack of industrialisation in the form of mass under-consumption and deprivation and retarded and uneven economic development.
In 1951, agriculture accounted for 55 percent of India's GDP, manufacturing for 15 percent and service sector for the remaining 30 percent. Two decades later, the figures were 44, 23 and 33 respectively. In 1991 when India pressed the deregulation button, the GDP composition was 31/26/43, and after two decades of deregulation and massive corporate incentive and exemption, the figures stand at 15, 28 and 57 respectively.
This clearly shows that while the share of agriculture continues to decline, manufacturing is virtually stagnant and it is only the service sector which is really expanding. Also, while the industry share grew from 15 to 26% during the early years of planning and public sector, it stood still during the period of unabashed wooing of private capital and foreign investment.
On the face of it, this direction of the Indian economy may appear similar to that of advanced industrial economies like the US or UK where the service sector accounts for close to 80% of GDP and agriculture has been reduced to only around 1 %. But the conditions in India are simply not comparable to those in these advanced industrialised counties because close to 60% of India's population continues to depend on agriculture for livelihood. And one must remember that agriculture and service sectors in advanced industrial economies are also heavily industrialised whereas in India these sectors are still predominantly non-industrialised and unorganised.
In many respects, China is the only country with which India can and should be meaningfully compared. India and China are similar in that the share of Agriculture in China's GDP is also declining and that of the service sector is growing. But the similarity ends there—the biggest dissimilarity is in the share of industry or manufacturing which remains the driving force in Chinese economy. Yes according to latest figures, manufacturing accounts for 45.3% of China's GDP followed closely by the service sector with a share of 44.6% with agriculture remaining a distant third at 10.1%.
The difference between the Indian and Chinese experiences lies not in the presumption that India being a 'democracy' shows greater respect for environmental concerns or for protests against land acquisition while China just bulldozes every opposition. In truth the kind of forcible land acquisition that has gone on in India for decades and if the latest legislation seems to be relenting a bit in terms of direct state-led acquisition it is only because it believes the state apparatus can take the back seat while the corporates call the shots.
The difference between India and China actually lies in the fact that while the Indian ruling elite refused to de-feudalise Indian agriculture and the predominantly agrarian Indian society, China accomplished an anti-feudal revolution and democratised its agrarian relations and rural society. The result is while China could create a huge home market to support extensive industrialisation while the industrial sector absorbed the surplus population released from agriculture, India had little to show on this score by way of comparison with China. When advocates of rapid industrialisation see the opposition to land acquisition or insistence on environmental protection as the main roadblocks they are simply barking up the wrong tree.
In proposing the topic for this symposium, the organisers have wondered if India could have a model of industrialisation that reconciles the three P's—profit, planet and people. Well, it all depends on the overall context in which one is visualising industrialisation. If the terms of industrialisation are to be decided and dictated by capital, there can be only one P which is bound to dominate everything else. Capital is all about profit-seeking—through the circuit of production if necessary, by any other means if possible. In fact, capital increasingly hates to be locked in a long-term productive commitment, and looks to fly at will to greener pastures, accumulating as much as possible by dispossession or by sheer fraudulence or cronyism.
Any consideration for the planet or for the people cannot come from within capital, it has to come from outside and will have to be enforced by the state. Let us look at three recent cases of popular opposition to three specific projects—the abandoned Tata project in Singur, the Vedanta mining mission which has now been stalled by the Supreme Court in Niyamgiri and the POSCO project for which acquisition is going on defying all relevant laws and sustained protests of the people, and the point will become abundantly clear.
In Singur, opposition came up from the local peasants, sharecroppers, labourers and other people whose livelihood was threatened by the project. Eminent economists questioned the prohibitive costs of the project. The Tatas just did not bother to respond to the issues and the state government unleashed brutal force to complete the acquisition. This 'factory-wahi-lagayenge' attitude could only be likened to the 'mandir-wahi-banayenge' battlecry of the vandals who demolished the Babri Masjid. After the social and political balance turned overwhelmingly against the acquisition, the Tatas abandoned the project and fled to Gujarat but are still holding on to the land, on which they now owe an answer to the Supreme Court.
The Vedanta bauxite-mining project on Niyamgiri hills evoked angry opposition from the local tribals, environmentalists, anthropologists and a whole range of people who believe in the rule of law and care for human rights. Several laws of the land clearly ruled out such a project. But the corporate might of British-based Vedanta which had the services of someone like P Chidam-baram till he became the Finance Minister in 2004 would just not listen. After years of sustained local resistance and international protests, the Supreme Court finally referred the issue to the palli sabhas and people now know that all the twelve palli sabhas picked for the sample have rejected the project.
While the palli sabhas seem to have won the battle to stop the disastrous Vedanta project, in the case of POSCO similar resolutions have been defied and land is being acquired at gunpoint. Land in this case means the site of a rich ecosystem complete with beetle vines, paddy fields, coconut orchards, and fish ponds. Recently when Phailin struck Odisha, it emerged that horrifyingly 1.7 lakh trees have been felled to facilitate land acquisition for POSCO which has made the Odisha coast much more vulnerable to cyclonic devastation.
As capitalist entities Tata, Vedanta and POSCO have different backgrounds and track records. The Tatas are one of India's oldest and most established corporate houses, POSCO is a well-known steel major from South Korea and Vedanta is an upstart British company of Indian origin which has made it big by amassing massive fortunes through mining and political connections. Yet one finds all three of them behaving equally stubbornly in the face of widespread objections to some of their projects—this is the standard response of capital where profit overrules everything else. And this is why in a capitalist context non-profit considerations can be introduced or enforced only from without and this is where the role of the state and society comes in.
A state that puts corporate interests above all other interests, serving as an organ of corporate greed, functioning as a corporatocracy—government of the corporations, for the corporations, and by the corporations, with big corporations manipulating ruling parties as 'apni dukaan', to use one of the most candid phrases from the revealing Radia tapes, cannot be expected to minimise human cost or environmental degradation. For that to happen one needs to get out of the neo-liberal policy trajectory which revolves around unrestricted freedom for capital and adopt at the very least a vision of social welfare which puts the interests and needs of the people at the heart of the economy. In other words, 'profit first' must give way to 'people first'.
But to really put the people at the centre of the economic policy, the first question is if capital is really indispensable for industrialisation. When it is said industrialisation without capital, certainly it does not mean industry without machinery, industry without technology, industry without funds or even industry without management. These attributes do not define capital. Capital is that concentrated and contradictory social power which ensures appropriation of the fruits of socialised production in private hands. It is indeed eminently possible to have industrialisation without capital and capitalism, and this is what socialism whether in its 20th century version or in its ongoing 21st century version has been attempting to achieve.
The socialist experience of industrialisation resolved the riddle of socialised production and private appropriation by placing production under collective ownership. But barring a few inspiring exceptions it failed to qualitatively distinguish itself from the capitalist model of industrialisation in terms of the associated human cost by way of dispossession or environmental degradation or in terms of participatory and democratic management. However, the state did use the surplus generated through industrial production for infrastructural development and welfare measures to ensure a general improvement of living standards that went a long way to reduce and balance the human cost.
Socialist experiments today are in a relatively advantageous position to minimise the human and environmental cost of industrialisation. Technological advances, increased awareness about environmental aspects and above all, the valuable experience of past efforts have laid the foundation for a more environmentally sustainable and pro-people pattern of industrialisation under socialism and this is the challenge that all future models of socialism will have to fulfil.
Vol. 46, No. 29, Jan 26 -Feb 1, 2014
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