Monetary Manipulations as Fascist Instrument

T G Jacob

The governmental action of demonetization of high denomination currency constituting more than 85% of total money in circulation at the time of demonetization, and the reaction of those who are aspiring to occupy the seat of power, both are rhetorical in form and content. The government is incessantly repeating that this "painful" measure is for the good of the people in the long run because it is a measure against black money/corruption which means that money that has escaped taxation is to be brought to its coffers. Black money is equated with the source of corruption and hence demonetization is to be seen as a "bold", "revolutionary" surgery to eliminate corruption which is generally considered as a gangrene infecting the whole society. As corruption and black money are all-pervading at all levels in the society this argument is expected to carry much weight with the people, especially the vast majority of people who are leading a hand to mouth existence ever at the fringes. Inequality in income and consumption levels is probably the highest here in the whole planet and those who are rich are expected to be hoarders of money which is again equated with wealth. The government expects to reap political advantage from this dichotomy through attacking black money, which it says, legitimately belongs to the underprivileged.

This populist angle of demonetization is supplemented by liberal doses of "patriotism" too. External forces bent upon destabilizing India (read—Pakistan) are printing counterfeit currency and using it to finance terrorism. Hence demonetization will cripple such destabilization efforts and combined with assault on black money/corruption will catapult India to the position of a prosperous world economic and political power. Thus demonetization becomes mandatory if Indians are to progress and everyone must wholeheartedly support it, even if it creates temporary disadvantages in the short-run, in the larger national interest. Here again the government is exhorting the people to take up the gauntlet of patriotism. By direct implication those who are opposing demonetization are obviously unpatriotic. Here the rhetoric closes the circle, there is no way out, at least from the rhetoric. It has to be repeated until some new catchy rhetoric is invented. In fact this is what the prime minister and his government is doing now.

The opposition to demonetization is mainly on technical grounds. The argument is that this measure is taken without sufficient preparation (what preparations should have been taken remains vague or unsaid) resulting in great misery for the common man. The main opposition party or the regional parties do not oppose attack on black money or fake money which they simply cannot do. They only harp on the pecuniary sufferings of the common man resulting from such an arbitrary measure. Here it is to be noted that it is not just demonetization that is imposed on the people but also restrictions on liquidity, i.e., limits on the quantum of money that can be withdrawn from banks. This has especially hit small retail trade, unorganized employment sector, and small farming sector. All these are significant components of the macro economy with the result that a downward slide in macroeconomic indicators is only logical.

The main opposition party was the erstwhile ruling party whose periods of dispensation saw the opening of the economy to global capital enthroned as the key state policy. This opening up of the economy to imperialist globalization generated enormous scope for sleaze money which came to be accounted as necessary cost of any mega project. Corruption was always there but it assumed massive proportions and got established as a structural characteristic only as the economy got into the trajectory of imperialist globalization. For any mega project kickbacks became establishment costs. And the present ruling dispensation came to power with the active connivance of the local and global agents of imperialist globalization on the understanding that a no holds barred approach to imperialist globalization will be put on the tracks. They are doing it too. That was why slogans like "make in India" were advanced. But unfortunately, due to the global factor of recession showing no marks of alleviation and becoming a permanent characteristic of imperialist capital, such slogans became damp squibs on the ground level. It is under such a situation that demonetization with draconic controls over money circulation is imposed. Of course, this monetary policy has resulted in increasing the economic debilitation of large sections of people. At the same time those sections which are poor in the absolute sense are not so much directly hit. The majority of the people whose income levels are below the poverty line, whatever it may mean, are in any case not very familiar with currency of high denomination. It is the intermediary classes that suffer from not having sufficient cash. The top deciles do not suffer at all. Not much of black money is in bundles of thousand-rupee notes stashed in mattresses or pillows. It is converted into high value commodities like gold and real estate properties or parked in global tax havens which are great beneficiaries of Indian black money. Deposits of Indian origin in Swiss banks are estimated as higher than all others' deposits put together.

One of the grand promises of the present government was rehabilitation of the colossal quantity of money parked by Indian businesses and speculators in foreign enclaves. The capability and political will to do this is naturally subject to basic doubts especially when fantastic statements were made by the would be prime minister that every citizen of the country will be given several lakhs of rupees each when the money is brought back from abroad! Rhetoric had become absurd even before the new government came into being. Even no serious enquiries were made to ascertain how much money is parked abroad or who the black marketeer of currency are. Now, with the diversion of demonetization the question of money in foreign bank accounts has been quietly brushed aside. New rhetoric has taken centre-stage.

Forget the tamasha of foreign bank accounts. What about Indian banks, that too, public sector banks? 2015 reports show that more than 433 borrowers had unpaid loans of more than Rs 1000 crore each. The total came to Rs 16.31 lakh crore. These loans are mostly from public sector banks and as Mr Vijay Mallya candidly stated even the premier public sector bank, State Bank of India, is as good a criminal as himself because the bank knew very well the impossibility of getting back the money advanced. These bad debts came to 3.6 lakh crore in 2016 and between 2013-15 public sector banks wrote off Rs 1.14 lakh crore worth bad debts. In other words, on the eve of demonetization the banking system in India was facing a serious viability crisis of non-performing assets or bad debts or outright robbery. What is the government doing with these robber barons who are invariably corporate speculators? What did the American financial system do when corporate financial speculators showed collapse trend in the wake of the 2008 crisis? They pumped federal resources to the tune of billions to desperately avoid a whirlwind of economic collapse. In India the corporate robber barons do think that money in the banking system is their own and they are making merry with lakhs of crores of public money. Now the media is all agog with the jubilant exclamations like "banks are flush with money". Now they are once again in a position to advance lakhs of crores to corporate speculators to achieve 'growth rate'. The prime minister is exhorting the banks to liberalize credit to the credit-less! He even said to hopelessly destitute, unemployed, uneducated riot-material youth that all this money is theirs!

The melodramatic declaration of demonetization was preceded by a consultation with the chiefs of armed forces. When demonetization resulted in the expected senseless inconveniences and sufferings for the bankable masses there were no violent protests. The opposition political parties were only interested in cashing in on the misery for votes. The lack of violence was promptly interpreted by the government as support for the governmental measures. "Cashless economy", more stringent steps against corruption and black money, "modern" economy etc became regular headlines. Compulsion of electoral politics is assuming prominence and the ruling dispensation is very much involved in projecting fighting corruption and black money as an electoral plank. Other political parties seem to be running out of steam. The social democrats are of course producing regularly expected noises like "war on people", "pick pocketing" and other such irrelevancies. They themselves seem to be recognizing and getting resigned to their irrelevance. In any case, they are conspicuous by the absence of any serious political program to counter the right wing offensive. Mass mobilization and agitation is for quite some time absent from their politics and they are quite comfortable and contented in their niches. In any case, they are at home with the economic strategy of imperialist globalization as their long innings in power in Bengal amply proved.

The reality is that there is not even a single 'mainstream' political party in the country that has any alternative program to imperialist globalization. The ruling regional parties are competitively promoting imperialist globalization projects. This is the most valid objective reason why rhetoric like what is bandied about now does not invite any immediate response from the people. Characterizing it as support for the government is, to say the least, very premature. Devaluation and demonetization are not new in the history of this country and both had been done in the past by the present main opposition party. Devaluation of the rupee was done at the express wish of the international super bankers to serve the interests of global capital.

Now the drastic demonitization of high denomination currency and the deliberately tardy manner in which the replacement is done may look like madness but it is madness with a plan behind it. Money in circulation has been grabbed and the economy has been plunged into a flux. The arguments of black money, counterfeit money have been exposed as populist gimmicks and no amount of repetition is going to reduce the gimmick character. Indian economy is plunged deep into the mechanics of imperialist capital that now it is not necessary for super banks like World Bank or IMF to prod and direct policy initiatives. Both these organizations stand discredited in the eyes of the people of the world to the extent that the terminology of "IMF riots" has become part of the lexicon. IMF riot is the euphemism for mass protests triggered by the imposition of IMF prescriptions on poor countries. More than the discrediting on policy level top executives of these organizations are themselves being exposed as personally corrupt and unscrupulous. Even more important, the lobbying industry has developed into a major money spinning enterprise on the world level. Global capital now relies heavily on lobbying firms to get their projects get through. Firms like APCO Worldwide are masters of this business and they have proved their worth by lobbying for nuclear energy, genetically modified technology etc which were otherwise experiencing downward spiraling. It is APCO Worldwide that is currently lobbying for Monsanto-Bayer conglomerate in India. It is the same firm that is devising schemes for sustaining the present ruling dispensation in power. It was also involved in consultancy work in the last election for the BJP. It is only logical to think that demonetization is also their brain child devised with an eye on hoodwinking the people and project the rulers as fighters against black money and corruption. It is worthwhile to remember that such lobbying firms work with governments or major political forces and their range of prescriptions vary from inventing populist slogans to engineering large scale riots, wars etc. The nation is steadily advancing on the track of neocolonialism. Now people do not need the fig leaf of World Bank or IMF, lobbying firms are enough. For one thing Monsanto and their like are determined to break Indian agriculture so that these GM giants can colonize it. Their ultimate aim is to corporatize Indian agriculture as a whole. Measures like demonetization are bound to hit the farmers hardest by severely curtailing their liquidity which was already suffering chronically. The market mechanism has already turned small-scale agriculture into an uneconomic proposition and demonetization is certainly bound to exasperate the situation further. Farmers abandoning agriculture has already become a visible trend in India. The lobbying for widespread propagation of genetically modified seeds and its accessories is gaining momentum and when such lobbyists are involved in deciding basic policies concerning the economy like demonetization it is to be expected that this vast agrarian market is meant to be converted into a field for GM companies to reap super profits at the cost of the producers and consumers and the country as a whole.

It is not only the farmers who are directly hit. The large number of retail traders who generally possess very meager working capital are also at the receiving end. Digital economy naturally excludes this vast section and the time honored village trade melas and mandis. Digital transactions can at best be introduced in urban centers with large outlets filled with patented goods. For the last many years the efforts of global retail conglomerates to occupy the Indian market was very much visible and the small retailers had been agitating against the entry of these retail giants like Walmart. Demonetization and the propagation of retail e-trading for daily needs of the people is clearly aimed at corporatization of retail trade, something that the corporates had been demanding all through.

Corporatization of both producers' and consumers' markets is sought to be given a tremendous boost through demonetization. Small traders, or what it called 'unorganized traders', can look forward to ghettoization.

It is not only the global retail giants and agro industries that stand to gain enormously. The information technology industry is another key partner in the game plan. All the digitization programs directly cater to the expansion of their market. India is often wrongly talked about as an emerging 'IT giant'. Actually India is a heavily dependent outlet for the global IT industry. Its cheap labor and land gives great scope for the global industries for outsourcing labor intensive office processes and over a period of time it has emerged as a main destination for what is called the "IT coolie work". This is far from claiming that it is becoming an IT giant. India's IT industry is making profits for global corporations. Whether it is Tata Consultancy Service, Wipro, or Infosys, the story is the same. Computer hardware is least developed in India. Indian IT industry is compradorism at its worst and anyone working in any business process outsourcing unit will tell that it is the most degrading sort of coolie work that he is doing. And this whole sector has no organized labor power. It has always been "hire and fire at will".

The new drive at digitization is bound to be a boost to the sagging IT industry worldwide. Earlier also there were attempts to create a new massive market for the global IT industry. Aadhar card is one such attempt. This country has any number of identity cards and the average citizen is expected to eternally run after newer and newer identity cards. It is surrealism as far as identity is concerned. Even before one identity card creation and distribution is done another one is proclaimed and the citizen is expected to procure that too. This is an ongoing tamasha but a costly one. Of course, it gets revenue for the IT industry which obviously means companies like Microsoft. Now with the proclaimed digitization of transactions the global IT companies and their agents like the Tatas are being offered a gold mine. This running after 'identity' also makes the people feel that they are eternally under watch, a politically fascist gimmick.

Thus it is clear that demonetization is not a neutral affair. It has gainers as well as losers. Politically the government expects that the rhetoric on fighting black money will enhance its voter appeal. The government admits that demonetization is creating hardships for the common man. But it is all for the long term common good. The opposition parties think that the sufferings of the common man will make him vote against the ruling party. In all these claims and counter claims the actual issues remain hidden. The fact is that not even a single political party in India enjoying some sort of power or aspiring for some sort of power is against imperialist globalization and its agents, i.e. global capital and its comprador agents. Demonetization is for their advantage and those who want 'growth' through them simply cannot lead any people's movement against economic fascism. The vast majority of people—the farmers, workers, small traders—are left in the lurch.

There is yet another angle to demonetization. The political executive was prepared to meet any challenges to demonetization with armed might. The pre-demonetization consultation with the armed forces chiefs and the apparently unnecessary display of paramilitary in West Bengal toll booths showed this possibility. A poignant comment by the finance minister showed it. He said that demonetization did not result in even a ripple of discontent though it seems to have been expected. In other words the people are a frightened lot and they can stand any amount of suffering. In this case demonetization also becomes a barometer of how far the screws can be tightened with impunity and even political gains can be gained from this tightening by telling lies. This is no doubt bordering on psychopathic behavior which can be expected from institutionalizing weapons like communal riots and pogroms in political management. The calculation that no political party will be able to galvanize the people against such an authoritarian, fascist attack on the common man proved valid and no doubt this has given a boost to the ruling dispensation. In fact, they could state with self-righteous indignation that those who are opposing such a "revolutionary" step like demonetization are those who are black money hoarders. The elections do not really corne in as a significant variable because the issues are much deeper. It is the class character of the state that is the real issue. If the ruling party wins in UP it will be taken as an acceptance of economic fascism and license to go ahead more intensely on the same path and diversify the screw tightening.

Frontier
Vol. 49, No.31, Feb 5 - 11, 2017