Polity controlled by monopolistic business houses
IMAGINE that you are seriously rich. You could buy anything you want. Would you not want to buy power? I do not mean electricity here. I am talking about hard political power, which emanates from various apparatuses of the state and the political system. We have a name for this process of purchasing state power. It is called corruption.
Till the mid-1980s, it was clear that power in India flowed from the barrel of the babu’s pen. The political-bureaucratic class and the intelligentsia surrounding it acted as hegemons within the ruling elites, which included the industrial, mercantile and landed classes. It was in the interest of the power elite to keep the economic elite in check, through a system of licences, quotas, and price and trade control. This meant that even the biggest corruption scandals were about puny amounts compared to what happens now. Bofors, for instance, was alleged to be about Rs 64 crore, which is less than a thousand crore rupees today.
From the mid-1980s, India’s policy regimes shifted to promote private enterprises. Planning gave way to profit motive. This automatically made the neta-babu class less powerful. Paradoxically, this increased corruption instead of curbing it. Throughout the dirigiste period of ‘Nehruvian socialism’, the state had little to offer to private players, other than a few licences and protection from prosecution. Even in the case of citizens, corruption amounted to a few currency notes changing hands to get an out-of-turn telephone connection or an extra gas cylinder.
Liberalisation and privatisation opened up the entire domain of public resources to private players. Mineral deposits, mines, land, airports, roads, bridges, telecom lines, spectrum, and a whole host of other hitherto publicly-held assets could now be owned by the private sector. Since these amounted to massive transfer of wealth, each individual corrupt transaction ballooned in size. It also gave rise to a new class of power brokers, who arranged deals between people with power and those with money.
One visible result of this was the sudden explosion of real-estate prices from the late 1980s. The proceeds of corruption, which was usually in cash, was being parked in real estate, and that was driving a self-fulfilling boom in that sector. As prices went up, everyone wanted to invest in a house or a plot, which, in turn, made real estate an even more store of black money, which again pushed prices up. Later, the financial sector played a similar role as black money got ‘whitewashed’ through various illegal methods and found its way into the stock market.
This long-drawn-out process peaked in the mid-2000s. Public savings and credit found its way into the pockets of sections of India Inc, in the form of financing for mega infrastructure projects. This was the basis for a record investment cycle, which as we now know, was nothing but a credit-fuelled bubble that ultimately resulted in the mother of all bad loan crises.
It was in the interest of the ‘Nehruvian’ elite to not let productive assets get concentrated in the hands of the mercantile industrial class. Liberalisation reversed this, allowing for, indeed fostering, ever-widening economic inequalities. Now, we have reached a stage where those who occupy positions in state apparatuses embody the ideology of India Inc. Even if politicians at the top can make or unmake individual business houses, they are beholden to the mercantile industrial elite as a whole to remain in power. This has been true for at least past 20 years.
Politics today is ruled by the mercantile-industrial-media complex, in close coordination with international finance capital. As society has got increasingly ‘mediatised’, the corporate-controlled media both mainstream and on the Internet is playing a major role in manufacturing consent and channelling the politics of the governed. The concentration of monetary and political power has reached unprecedented levels, such that the entire polity is now controlled by a few monopolistic business houses. It is in the interest of this ruling class monopoly capital, finance capital, pro-monopoly politicians and bureaucrats, corporate-controlled media, pro-corporate ‘experts’ to undermine the independence of other arms of the state, and bring all of them within the hegemonic domain of capital.
Can this complete capture of power in all its forms state and civil society be challenged? One way it could happen is if the internal unity of the ruling classes breaks down due to an external crisis. For instance, if a large number of members of the ruling elite feel that its interests are not being served by the current regime, they could seek alternative alliances.
The UPA lost power precisely because of its inability to provide steady returns to the ruling elite. India Inc found its profits shrinking and there was a growing worry that the UPA was moving to the left, with its plans for installing a legally guaranteed rights-based system of redistributing both income and political power. There was opposition within the Congress to the party’s perceived anti-big business line, with many senior leaders thinking that this was suicidal.
The current government has not taken such missteps. It has ensured that the ruling elite has no reason to complain. Profit rates have shot up, even though the overall economy has faltered. In nominal terms, India’s GDP grew at an annual rate of 9.8 per cent between 2017-18 and 2022-23, while profits of NSE 500 companies the 500 biggest listed companies in India grew at 17.6 per cent. The difference is even bigger in the 2020-23 period; our GDP grew at an annual rate of 10.7 per cent, while corporate profits grew at a whopping 34.3 per cent.
At the same time, the government has ensured that the poorest people have access to subsistence-level support in the form of free foodgrains. This keeps both the top 1 per cent and the bottom 30 per cent satisfied, if not happy. The growing concentration of the media ownership with a few corporate houses helps keep the message on point. If there are any signs of a crack, it is right in the middle white-collar workers who have been squeezed between the two ends.
The author is a senior economic analyst
