Desicritics Author: Ananya Mukherjee

Does Globalization Cure Crony Capitalism?

Ananya Mukherjee — Sun, 1 Apr 2007 00:14:44 EDT

During his keynote address at the Steel Summit 2007 organised by the Ministry of Steel and the Confederation of Indian Industry (CII), the Indian Prime Minister made some interesting observations:

A comment has been made recently that most of our business leaders who have become billionaires seem to be operating in either relatively protected business environments, in oligopolistic or monopolistic markets or are dealing in scarce resources. If this observation is true then someone could say that we are promoting crony capitalism. That certainly should not be the case. (full speech available at pib.nic.in)

Now, what exactly is crony capitalism? It is somewhat more complex than corruption, although that distinction is often not made. Let us start with none less than Gary Becker and Richard Posner:

Crony capitalism is a system where companies with close connections to the government gain economic power not by competing better, but by using the government to get favored and protected positions. These favors include monopolies over telecommunications, exclusive licenses to import different goods, and other sizeable economic advantages. Some cronyism is found in all countries, but Mexico and other Latin countries have often taken the influence of political connections to extremes.

Of course, much of the discourse on crony capitalism is associated with Asia (in particular in the wake of the Asian crisis) and Latin America. Paul Krugman has been one of the few US economists to talk about cronyism in the US. In 2003 he wrote in an NYT column entitled Who's Sordid Now?

Cronyism is an important factor in our Iraqi debacle. It's not just that reconstruction is much more expensive than it should be. The really important thing is that cronyism is warping policy: by treating contracts as prizes to be handed to their friends, administration officials are delaying Iraq's recovery, with potentially catastrophic consequences. ... It's rarely mentioned nowadays, but at the time of the Marshall Plan, Americans were very concerned about profiteering in the name of patriotism.. Iraq's reconstruction, by contrast, remains firmly under White House control. And this is an administration of, by and for crony capitalists.

While at the wake of the Asian crisis everyone was keen to show how the Korean miracle was really no miracle at all and the crisis was really an effect of the cronyism that went unnoticed until then, one critical question about the so-called "cronyism" went unanswered. It was raised by Alice Amsden in her pioneering work: why is that in South Korea, an extremely tight nexus between the state and business could bring about such tremendous increase in growth rates whereas everywhere else it has only resulted in the enrichment of a few at the cost of national development? Authors have offered many different answers. Amsden's own answer was that the South Korean state was able to get businesses to contribute to national development in exchange for the favours it granted them. Nothing as given for "free". I have argued in my book, Indian capitalism worked quite differently from Japanese of South Korean or Taiwanese capitalism. In these miracle economies, the focus of the state was on macro-economic growth and businesses were forces to operate in sectors, and with prices and costs where macro-economic growth would be maximized. The emphasis was not on corporate profits, but on maximizing revenue and productivity and capacity utilization. This focus away from profits and on growth was the most important thing the state could extract from business in exchange of all the resources it supplied. In India, and in most parts of the world, the state simply supplied subsidized resources to its corporations and the corporations did what was in their interest: increase profits by whatever means possible, in most cases through practices such as cartels, creating barriers to new competition, and price manipulation. In East Asia, innovation and maximization of productivity were the only means to corporate growth (the data comparing profits in India and East Asia are quite illuminating, the methodological problems of comparing profitability not withstanding). Of course, the brunt of this was born by East Asian workers, who gained much by way of income, but lost a lot by way of rights and political freedoms.

In India, the state focused on creating many procedural and bureaucratic controls on business, which could all be bypassed if you were large enough a player but became insurmountable barriers for the small entrepreneur. This did little to create a synergy between corporate growth and profitability, macro-economic growth, productivity and innovation. Hence profits and corporate growth were commendable, a strong and well-developed core corporate economy emerged, and yet this did little to help growth rates or productivity.

Globalization was supposed to cure these ills, by forcing the state withdraw from its regulatory role. Really, did it? Well, if Manmohan Singh is asking that question, then surely I cannot be blamed for being skeptical.

"Ethnic" Media: Do I Want to Live in This Ghetto?

Ananya Mukherjee — Thu, 15 Mar 2007 01:55:46 EDT

Recently I wrote in a post that mainstream media in the West appears to have two main strategies for representation of minorities. One is the burgeoining (yet old) trend of developing "ethnic media". The leading figure here is of course the BBC. The Toronto Star has now decided to do something similar. It is about to launch Desi Life: "a unique, exciting new glossy magazine aimed at the South Asian community, that will showcase movers and shakers in the South Asian community with regular features and columns on the trends here and in South Asia". Is this a welcome development?

I don't know. On the one hand, I see the possibility that by potraying success, it will help break the stereotypes about South Asian immigrants. But this is not an unmitigated blessing. For example, The Star has an excellent track record of presenting issues of race and discrimination to the Canadian mainstream. Is this still going to stay the same? How would people react to the contradictions? Of the stories' success, glitz and glamour on the one hand and discrimination on the other?

As I see it, the ethnicization of media further limits the possibility of the development of a truly multicultural entity, which goes beyond simple co-existence of different groups and movers towards the creation of a true community. In this "true" community, there will be no need for a desi section. Columnists and reporters, irrespective of their geneaology, will write about issues of all Canadians. Desi culture, or African culture, or Latin American culture would be equal interest to everyone, although different people would relate to it differently. Geographically distant lands will be written about without exoticization, as if they were next door, as if their inhabitants were normal human beings. Wars would be supported or resisted according to whether they were just, and not according to who was writing about them and so on.

Academia has already seen the effects of such specialization. It is great that almost in every university we now have departments of "South Asian Studies", other areas studies, "ethnic" studies, "indigenous" studies etc. Although the entire endeavour of "area studies" has gone through a significant critique and transition, there is still an overwhelming tendency to teach about the issues of these "other" countries in specialized courses only. China and India, of course, are slowly becoming exceptions to this rule, but not because of the right reasons, in my opinion. The categories "China/India", or worse still "the Chinese/the Indians", are taken as monoliths which represent simple characteristics (and lead to flawed arguments as in The World is Flat).

Is it me, or is this forward march of ethnic media really a backward step? Does this really gel with the idea of a global world, a seamless web of cultures, and the claims of all embracing cosmopolitanism? Or is it simply a matter of revenue?

Children: Ethiopia Better than Asia?

Ananya Mukherjee — Sat, 10 Mar 2007 00:37:36 EST

Here you have India growing almost 10%, supposedly gaining on China and providing one of history's greatest investment stories. And yet, Indians figured even worse in the (UNICEF) report than Ethiopia and on a par with Eritrea and Burkina Faso in the area of malnutrition.

-- "Where even Ethiopia is doing better than Asia", The Economic Times, March 3, 2007

When I stumbled on to this headline in the Economic Times, I decided to dig out some more data from the UNICEF database comparing India, China, Ethiopia, Eritrea and Burkina Faso. While I am somewhat uncomfortable in using countries as "benchmarks" of disaster (and Africa seems to be a frequent victim of this act), it seems quite worthwhile to examine how India looks in terms of the comparisons mentioned in the article.

Take a look: it is every bit as bad as the article suggests, and even worse. In addition, levels of inequality are the highest in China, but quite comparable in India and Ethiopia. India has the highest percentage of its under-five population suffering from severe-to-moderate malnutrition (about 47 percent), the highest percentage suffering from severe malnutrition, and so on.

And there is no redress in sight. In today's Hindu, Jean Dreze tells us that the budget allocation for the Integrated Child development scheme (ICDS) in 2007-08 has not increased at all: it remains the same as a proportion of GDP. Accordingly, the Government of India will be spending less than Rs.5,000 crore for its 160 million children under six. By contrast it will spend Rs.96,000 crore on defence.

Yes, increased allocations would certainly help. But what is at stake here is not simply a matter of fiscal allocations. At stake here is the overall vision of development itself. Very popular now are the ideas of "inclusive growth", "the bottom of the pyramid", "the triple bottom line" and their likes.

Inclusive growth is of course a simple empty uttering of a master politician. The others are motivated by the belief that the the vast numbers of the poor must be portrayed as an economic opportunity. In fact, I see all around this infectious new 'economism' everything must be portrayed as profitable.

(Most blatant is perhaps the discussion around female foeticide. As part of its Women's Day collection, the Times of India suggests that the girl child must be made an economically attractive option if foeticide is to stop).

Painting victims of injustice as a market or an asset? Children suffering from malnutrition as potential consumers of packaged babyfood? Perhaps baby food manufacturers can lobby Chidambaram for an increased allocation towards child health to be spent on babyfood? That would be "inclusive growth" in the best possible way: the growth of these children would include the growth of babyfood manufacturers, global and Indians. The government will finance a food distribution scheme for the "severely malnourished", by taking away from another public service.

In the mean time, either nothing will change for the parents of the "moderately malnourished", or they will slip into the severe category. (Recall that 46 percent - i.e. almost half of under-fives suffer from moderate to severe malnutrition, according to the UNICEF/NFH survey).

Canada: The Most Popular Country in the World!

Ananya Mukherjee — Tue, 6 Mar 2007 10:09:23 EST

Canada ranks first in a world popularity poll on attitudes toward 12 major nations. The survey

polled more than 28,000 people for the BBC World Service, asking them to rate 12 countries as having a positive or negative influence on the world. The countries on the list included: Britain, Canada, China, France, India, Iran, Israel, Japan, North Korea, Russia, the United States, and Venezuela. Canada was viewed positively by 54 per cent of respondents while 14 per cent held a negative image.

So what explains this popularity? The only analysis the piece provides is that Canada is viewed as a "soft" power", whose image is not tied to military intervention. Very interesting, at a time when public opinion in Canada is growing against its involvement in Afghanistan. As The Economist (March 1, 2007) reports in a piece "Accentuating the Positive":

Canadians are nowadays queasy about having an army that actually fights. Most would prefer their soldiers to do pleasanter things, like doling out food, rebuilding shattered villages or donning blue helmets for traditional UN peacekeeping. That may be why, when asked about support for the NATO mission to Afghanistan, where Canadian troops have done more fighting than rebuilding since being sent to Kandahar province last year, almost half say they want the mission abandoned and the 2,500 troops home [...] This is anathema to Stephen Harper, the Conservative prime minister who in his first year in office has beefed up the defence budget and extended the Afghan mission by two years to 2009. Echoing America's president, George Bush, Mr Harper has said repeatedly that Canada will not "cut and run" but stay in Afghanistan until the job is done... But as the leader of a minority government, Mr Harper cannot afford to ignore public opinion, especially when the voices calling loudest for retreat come from the vote-rich province of Quebec.

The Economist of course can not care to ponder over why Canadians may disagree with their government: they must be queasy! Perhaps they worry about little things like the death of their soldiers over a war which is neither justified nor efficient? The same reasons why many Americans have come to oppose the war?

As evident from The Economist piece, Harper's unique advantage at this point in time is that he continues as big brother would like him to, and still looks wonderful by contrast!

Water and the Indian Woman

Ananya Mukherjee — Sat, 3 Mar 2007 00:31:08 EST

Initially when Water was released, I was inundated with all sorts of questions about whether it represents Indian reality. Then when it did not win at the Oscars the other night, I got another set of queries and opinions. Then finally, when I was interviewed for a television show on February 28 on the theme of Indian women, I appear to have surprised some people by not talking about Water.

I, for one, was happy that the host did not raise it, as were some others who watched. While in my opinion Water is in fact a rather poor representation of the Indian reality, it is not fully clear to me what its appeal is to the global public. There is of course some appeal in watching cinematized tales of victims of "tradition" or other structures of oppression (such as Born into Brothels, although this was considerably less cinematized than Water). But I suspect that for the majority, it is simply a matter of discovery. "I had no idea" is a common refrain I have heard.

The phenomenon is not as well known as the issue of dowry deaths, bride burning or foeticide. I think this is what has attracted most attention, and this is where I think the film is rather problematic in its depiction of reality. It appears to be frozen in time; its static quality leaves viewers with the sense that this reality has not changed between the time at which the film is set and contemporary India.

True, for some women (34 million according to the film) the reality has not changed. But what does that say about India, especially when looked at in conjunction with the myriad struggles that Indian women have waged and continue to wage?

What is worse, the film never mentions that this practice is prevalent only amongst Hindus, and not amongst all Indians, and not even amongst all Hindus. If the purpose is to create awareness about the plight of India's Hindu widows, a much more complex tale needs to be told. My intention is not to minimize the significance of the suffering in question, but to ask for a less passive and static portrayal of Indian women, not only in films but in all media coverage.

Interestingly, the media continues to focus either on Bollywood, or on elites or at the other extreme on the hapless women who are being burnt and ill-treated. No wonder it appears as an impossible contradiction to the global public.

Instead, how about we turn our gaze to a large number of South Asian women who are active agents of political change? Why are their stories not told? Some of my heroines are: Rashida Bee, Teejan bai, Aruna Roy, Girija Devi, SEWA, Muktaran Mai (Pakistan), and Jahanara Begum (Bangladesh).

Who are yours?

A Third Canada?

Ananya Mukherjee — Wed, 28 Feb 2007 00:12:36 EST

As you might know, Quebec is preparing for elections in March. Not surprisingly, the questions of Quebec nationalism, cultural distinctiveness, sovereignty and its relationship with "English Canada" are being invoked by different parties in different ways. I suspect this debate will also figure prominently when federal elections are called.

Every time I hear the words "French" Canada and "English" Canada, I wonder about the Canada I live in. Let us call it the Third Canada. Obviously not a geographical territory, this Third Canada is distinguished only by its lack of distinctiveness. It exists both within the other two Canadas and outside them. Its inhabitants, while diverse, share some common characteristics. Many of them are "visible" minorities, though not exclusively so. They are "visible", and yet obviously not distinct enough, culturally or linguistically. They can speak neither English nor French "well enough"; their degrees have little value in the Canadian workplace; they cannot play hockey, cannot stand the winter and hate to shovel; their children love this country and would never want to "go back". I have heard this Canada's voice only rarely in the conversation about national unity, if at all.

While the demand for increased autonomy and decentralized governance are undoubtedly desirable social objectives, I find it difficult to see how in today's Canada, the claims of one minority, based on "cultural distinctivenss" can be prioritized. There is much more at stake here than the slippery slope of increasing claims for autonomy from competing minority interests. Two questions are at issue: the justification behind the quest for autonomy; and the relationship of the decentralized, autonomous structures to the "nation" - or the broader collective - in which they are embedded. This in turn begs the question as to what constitutes that collective.

To me, a collective such as the nation is defined most fundamentally by the understanding of social justice on which it is premised. One can think of a number of such understandings of justice, but let me mention two. I draw upon the work of Iris Young, well-known critical philosopher of our times. The first is a distributive paradigm which defines social justice as the 'morally proper distribution of social benefits and burdens among society's members'. This paradigm is most concerned with the distribution of wealth, income and other material resources, but often also extends to non-material social goods such as rights, opportunity, and power. Indeed, the precise goal of the distributive model is to accommodate political demands within existing sets of social relations as manifest in property rights, gender relations, division of labor and cultural norms.

By contrast, one can think of a transformative model of social justice, that is, an understanding of social justice where existing social relations can be altered beyond what is possible through a simple redistribution of rights and resources. Of course, in practice, the transformation of existing social relations may often start with a redistributive process. The point of the transformative perspective is not to make such redistributive the ultimate goal of social change, but to take it as an initial point in a continuum of progressive social change.

Historically, while liberal models have focused on distribution amongst individuals, now there are fairly well-developed liberal theories about group rights, which speak specifically to the question of "identity". Identity in this framework is understood as a set of attributes which distinguish one social group from another (such as culture or ethnicity). A distributive model distributes rights amongst group according to such attributes. All claims to group rights (such as autonomy) must be exclusionary: it must exclude those who do not possess certain attributes.

A transformative notion of justice can not value or devalue, a priori, such particular claims, but will require that we examine the social structures and the underlying nature of the social relationships from which such claims emanate. In this case, this will require that we examine the nature of the Canadian multicultural model: not only as an ideal as its proponents insist, but as a lived reality shared by all Canadians. That many Canadians experience multiculturalism as a universalization of norms associated with one or two cultures is not simply a failure of implementation. It indicates the troubled (if not impossible) co-existence of multiculturalism with unequal treatment Canadians in political and economic processes. Such inequality can not be addressed simply through the redistribution of rights, so long as rights are conceived simply as 'possessions' rather than as rules which indicate how people must relate to one another, not as isolated individuals, but as members of a collective who share not only an ideal of social justice but also a similar lived experience of that ideal. In this framework, identity ceases to be related to specific attributes, but instead, becomes relational and dynamic, able to express social priorities as they evolve.

I think it is critical that we seek to deepen Canadian democratic structures to reflect the concerns of justice and equity, rather than continuing on the path of 'identity', 'distinctiveness' and 'culture'. The political capital from the latter may well have been exhausted.