Pratap Bhanu Mehta: State and Capital Modi government has added an insidious dimension to the nexus
The relationship
between state and capital is an important capillary of power in a modern
democracy. This relationship is governed by many contradictory impulses. In a
democracy, politicians need capital for elections and for sustaining politics
as a career choice. But politics also has to be responsive to the demands of
social legitimation. There is a second issue. There is often a tension between
seeking policies that favour particular businesses and policies that favour a
level playing field based on principles that produce growth. The third tension
is between the imperatives of looking business friendly on the one hand, and
incorporating genuine public goods into regulation on the other — like
environment and human rights. These tensions are perennial in any democracy.
The UPA mismanaged
these tensions. Corruption had reached a point where the demands of social
legitimation had become nearly impossible; the state became an outright
plutocracy. This spawned not just an anti-corruption movement that
delegitimised Congress at the time. It led to a whole series of hit and miss
judicial interventions. The inability to meet the demands of legitimation
produced a policy paralysis of sorts. The second tension was manifest largely
in the way the government doled out credit. The exercise of discretionary power
in this area brought the banking system to its knees. It produced a protracted
crisis that continues: Private investment is still tepid. And third, on labour
and environment, the government doled out symbolic protections but, by and
large, capital had the upper hand... The BJP, therefore, had
the task of re-managing these tensions.
The jury is still out on whether India
is less plutocratic than before. But the BJP has sought to manage the tensions
by three devices. The first lesson they learnt from the Congress debacle was
this. During Congress rule, individual Congressmen were benefitting from using
state power, but the party was losing. This was double jeopardy for the
Congress. On the one hand, it meant lots of Congress leaders were exercising
their individual channels of influence without the benefit accruing to the
party. The result was that individual Congressmen were rich but the party was
poor. This still haunts the Congress. On the other hand, the system created a
free-for-all which magnified perceptions of corruption. The BJP has the
advantage that its state-capital dealings are more centralised, so the more
benefits accrue to the party and its centralised leadership, it also has the
advantage of reducing the appearance of transactional corruption since, if the
party has an efficient resource mobilisation strategy, it can often afford to
rein in on more transactional corruption by individual leaders. The second
device was to create new instruments like electoral bonds that are opaque to
the public but provide a new channel of financing. Third, it tried to occupy
the space of anti-plutocratic politics with decidedly mixed results.
Demonetisation was one element of this gambit. There has also been a slew of
measures that empower governments to go after economic offenders (attaching
properties, making bribe-giving as much an offence as receiving it). But the
results are yet to accrue… read more:
