For Black money free India, end the marriage between bad business and bad politics

black.pngBy Prof Kamal Nayan Kabra*

Black money is essentially  a popular name for black economy. By now it has ‘evolved‘   into  a grey ,  that is an indistinguishable  mixture of black ( i.e. , illegal-immoral) and  white ( i.e., legitimate –moral) political economy . Also it continues to be among the major  factors holding back inclusive development of India. Evidently, such a pattern of growth in the midst of a booming  grey system would be  highly volatile , non-sustainable and  entail heavy and unjust socio-economic and environmental costs. Along with the above ,growing integration of the Indian economy in global financialized markets  foreclose the prospects  of effectiveness of the recent fairly noisy anti-black money measures.

However, given  the long-run  disruptive  and anti-social mafia-infested role of the  black component of the grey  system    anti-black measures are a practical imperative, both for unearthing the  old  hordes as also for  seriously limiting, if not preventing, the genesis of this ubiquitous phenomenon  except as a marginal  deviant  episodic phenomenon.  After all, experience shows that the exponential, all-encompassing  growth of the grey phenomenon has coincided both with the  neo-liberal, globalization   and state policies of  further disequalizing  growth and  bestowing  discretionary state largess on the  existing super  corporate  oligopolies which rule out fair and impersonal competition. Little surprise,  global  scale cronyism  is flourishing  and  democracy has been turned in to a virtual plutocracy.

The most glaring negativity of it all is  state protection against failure (by long term legal system of limited liability, irrespective of  corporate shenanigans and  anti-liberalist bailing  out policies under the pretext  that such units are too big to be allowed to go under. It means  propping up of a system of private appropriation of  profits with social or state absorption of   losses. This  is a ‘normal’ part of capitalist crisis management , as can be seen lately in the popularity of the policy of negative  interest  rates. Actually as the crises intensify the logic of markets and  private  capital accumulation is often  made to stand on its head.

As we see below this is among the factors that  make neo-liberal growth  a contribution to adverse inclusion of the general public.  What follows therefore is that the root cause of the  grey system  have been left untouched, nay have been given additional elixir of discretionary favours conducive to growth fetishism and private  super high speed amassing of  massive  fortunes by the corporates and the political bosses.

Hence the phenomenon that needs to be unraveled in order to  see the possibilities and limits of curbing  the grey political economy is why and how this scourge  of our    socio-economic existence  got better of the   hitherto applied economic,  legal and administrative remedies (both during  pe-1990 and post 1990 periods) and their implications for the current  endeavours.

Ignoring such social-scientific reasoning,   one sees  how frequently publicized quantitative guesstimates of the  growing size of the black economy  as  a proportion of the GDP(presumably in nominal terms which render overtime comparisons  of its size meaningless)  amount to  sensation-mongering  and obfuscation.  What has to be  understood is how and why the grey political economy as both a cause and consequence of  the  mixed economy statist growth model and its regulatory capture  by the  intensified power  and reach of corporate oligopolies jointly with the  political classes  and the international mentors of both the hegemonic  groups  continue to fail the masses. It means those who sabotaged state-led  growth as also state-facilitated corporates–led growth get rewarded by grabbing the   privileged  leadership of the economy.

What cements the crony   anti-people distortion as reflected in the  processes of “phishing for  phools” ( a colourful term for black transactions coined by two Nobel laureate economists) are the processes of volatile cyclical  growth  spawned by the animal spirits. The  dominance  in India of financialization  and organized speculative activities in the midst of declining farm sector surrounded by  the vast sea of unorganized businesses  led by penny capitalists under the rule and with the connivance of   various political classes who have made politics a thriving lucrative business  are the essential elements for   understanding the sham and a shallow character of the recent anti- black economy policies.

The short point is we need a detailed and no-nonsense control and social accountability of  both the corporate form of organizing business and practically unregulated  political parties to run our  democratic polity. Except  mobilization of the common people for a real democratic polity and  economy there  are hardly any routes for  genuine people-centric development cleansed of the scourge of bad money-bad politics. We still do not seem to have learn the lesson from the  aborted late 1940s  Income Tax Investigation Commission which could have  to an extent nipped in the  bud the seeds of  our perverted politics and economic management.

If it is not  going to be understood as crying over spilled milk one may suggest how a lot of positive  energization of democratic polity and development could have emerged  by means of enthronement of a genuine peoples agenda of post-independence  rebuilding of India of our dreams. In the absence of  such factors, our system of democratic planning for development was bound to meet its Waterloo at the hands of the black economy and the  narrow-base    increasingly top-heavy  high command oriented even dynastic politics with close ties with the  top corporate groups and   blessings of the former colonial masters. As a result, the minimum basic needs of the people were  made a distant  dream by the  grand illusion of trickle down growth.

Populism  as grand democratic development deceit  became  the public face of the actual processes of gushing up of the gains of growth. Inevitably in course of time rampant corruption   infested grey political economy threatened to become the undoing of even the  corporate and statist agenda by undermining its own viability and sustainability. All these  top level churnings were  happening  at the  increasing cost of the left-outs of economic growth. It is by now well known how we failed to have faster and  cleaner growth capable of providing the basic necessities of every Indian –a dream which  keeps moving  away as we approach the promised date.

This  is  well known recent history, narrated , among others, by so many official enquiries as well, including the stories of joint shenanigans and scams  by  the corporate and political classes.  Hence until a regime of   social controls and accountability is instituted for the political parties and the corporate sector, the other  steps howsoever essential and even effective in their narrow range , would ultimately boomerang.

This in inherent in the policy of falling back on private Indian and foreign corporates-led  markets-guided intensely disequalizing economic growth as a good in itself. The grey political economy flourished distorting both democracy and development  by excessively narrow base  control over the goodies flowing from such growth.  What  got sacrificed was the social  imperative   to get over long  standing adverse outcomes  regarding   lack of fair and adequate livelihood for the labour force,  social and environmental security, sustainability and public investments for capability building for  joint  attainment of their civic and other rights.

On the contrary, the economy, BOP  and public finance of  India    became increasingly exposed to the depredations of the illegal and underhand external outflows of the black wealth in global  tax havens by means  of shell companies by both the  corporate giants and the crony-corrupt political classes along with  page three  celebrities.   Hence it is time we moved towards genuine  efforts to dethrone the duopoly of bad money married  to bad politics.

*Well-known veteran economist



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