New Internationalist

After the alien exploiters…

Issue 093

The trickle down theory was ‘an abstraction’ and ‘reaction’s weaponry to befuddle the basic issues’ writes Ashok Mitra, who delivers a blast to Third World countries’ ‘own indigenous set of exploiters’. Peter Adamson follows up with a farewell to the Old Testament of Development and an appraisal of the New.

Photo: Neil Sullivan
Photo: Neil Sullivan

The alien exploiters are gone. Here and there.. now and then, attemps to prove a point do persist: the neo-colonial tentacles in the Third World are supposedly as firm as they were in imperial days and much is made of native agents acting for the entrenched presence of foreign enterprise in the echelons of government. Such statements may be correct, either wholly or partly, in the context of this or that country. It would nonetheless be un­reasonable to claim that the continued state of penury and squalor to which vast masses in the Third World countries are condemned is the exclusive result of neo­colonial machinations. No, they may be underdeveloped in other respects, but, bless them or curse them, these nations certainly have the capability to produce their own indigenous set of exploiters.

The pattern is remarkably similar in most countries. The colonial rulers, on leaving, transferred power to assorted middle class groups. A lot of polemics has been, and continues to be, expended over the make-up of these groups: rivers of dialectic flow over such issues as to whether the dominant element amongst them consists of the rural or the urban bourgeoisie, whether big landlords take precedence over rich peasants, or whether amongst the urban bourgeoisie the monopoly capitalists are more important than the so-called intermediate classes.

In a number of Latin American countries, the dominant reality is the concealed or revealed patronage extended by the US Central Intelligence Agency or the United Fruit Company or some other transnational company to specific groups and classes who control the strings of power. But it doesn’t matter which country you have in mind, certain features are ubiquitous.

The ownership of the overwhelming proportion of arable land is concentrated in the hands of a miniscule percentage of the total population. Most of the organised industrial units - particularly those producing consumer goods — are owned by a few families who also control the export-import agencies. The internal distribution of key and basic commodities is controlled by yet another combination of these same families. The civil service and defence establishments too are linked, almost incestuously, to these bourgeois groups. Not unnaturally, the leadership of the ruling political groups is also a monopoly of these families. In countries where the facade of parliamentary democracy is maintained, the major political parties, which alternately hold the reins of power, often heavily overlap in terms of family ties.

The privileged call to the privileged: feudalism coexists cheek by jowl with assorted capitalist ventures. Overt homage is paid to other deities too. This is not hypocrisy, but realpolitik. On occasion, socialist and left-sounding jargon emits from political platforms. On occasion, stress is laid on the crucial role of the public sector. Clarion calls to the people to capture the commanding heights of production and distribution appeal to governments of the socialist bloc, who rush headlong to offer financial and technical assistance to infrastructural projects located in the state sector. Nothing suits the elite group better. The building of these facilities calls for chunky investments where the rate of return is low; let the socialist countries - a sucker is born every minute - take care of them.

Since the government is controlled by the elite groups themselves, such facilities as power, irrigation water, fertilisers and transport will be supplied at below cost to private industries. Power will be in the public sector but the alumina plants invariably will be in the private: and power for the alumina plants will be guaranteed at a heavily subsidised price.

This is the ‘arrangement’. It has been honed into a fine art in 60-to-80 so-called underdeveloped countries over the past 30 years. Industry and commerce have become, in consequence, the domain of a limited few. Similarly, in agriculture, not only is land closely held. Irrigation water, produced and distributed under state auspices, reaches only the land of the richer peasants. Fertilisers sold at lowered rates go to the same set of farmers: higlr-yielding varieties of seeds are intended again for the same groups; cheap credit flowing either directly from the government or from the banking sector which, again, is controlled by the state, is once more reserved for the affluent farmers.

A moratorium is usually placed on land reforms of all kinds. To avert the calamity of rising levels of production leading to a crash in prices - which would affect adversely the interest of big farmers and traders - a state marketing agency usually buys up the excess crop at artificially high prices. And, of course, most direct taxes are taboo because they hit the rich.

Assets breed assets. High incomes bring in still higher incomes. Little wonder that in only a handful of countries has the distribution of incomes and assets become even marginally less unequal in the course of the past 30 years. The rich have inherited the Third World.

Facile theories about the poor also benefitting from the ‘arrangement’ are soon exploded. Name one country in the Third World where farm wages have kept pace with farm prices, or where the rate of increase in the money earnings of industrial workers has matched the rate of increase in the profits of industrial employers. The so-called Green Revolution has meant a bonanza to traders and surplus-earning farmers, but for the vast majority of the agrarian community - the small-holders who cannot raise a surplus and the land-less workers - it has spelled disaster: market prices of the foodgrains they consume have shot up while their wages have not. Nor can one claim that employment has grown with the rise in output: the regime of harvester-combines and such­like has put paid to any such possibility.

In this milieu, the poor - dazed, mildly­objecting onlookers for the most part - have been unable to unfurl the banner of revolt. Revolt is the function of discontent, discontent is the function of awareness, and awareness is the function of literacy; some elite groups have taken extra care to keep the children of the poor away from schools and literacy programmes. Education too must not trickle down!

Frequently, in international forums, passionate speeches dilate on how under­developed countries are being cheated by the advanced industrial world: the goods of the poor countries are not allowed free entry in the industrial West, and the price at which these commodities are sold is kept artificially depressed through oligopolistic devices. The Good Samaritans - and there are plenty of them - are aghast at these perfidies; sentiments, noble and profound, ooze from the pores of the air­conditioned, velveted walls of conference buildings.

Yet consider the implications of, let us say, a higher level of prices for primary products. The advanced industrial countries are made to pay higher prices. Therefore the incomes - and assets - of the exporters of such products from the poor countries ‘increase; this increase is shared with the rich manufacturers and farmers. How does one assume that, following this increase in the income and assets of rich traders, farmers and industrialists, the poor people in the poor countries will also benefit? How does one assume that wages will go up, that there will be more housing for the workers, more of social security benefits, less of exploitatory labour practices? Precisely the contrary may well happen. The wages which a poor worker in a tea plantation or a paddy field obtains is the result of a bargaining process between the employers and the workers. Since the bargaining strength of the employers goes up with the enlargement of their incomes and assets because of the rise in the price level of primary commodities in the world market, they may now, quite conceivably, even manage to lower further the wages of the poor workers. There could be no question of a trickle down effect here.

This is not a specious hypothesis, but a generalised experience. In Third World country after Third World country, real wages have declined consistently - or stagnated - over the years. In contrast, those who control the means of production and distribution have progressively prospered; many have increased the size of their real assets 30, 40, 50 times in the course of a bare 30 years.

The so-called trickle down effect is therefore an abstraction without any empirical correlate. It is reaction’s weaponry to befuddle the basic issues.

Ashok Mitra is Finance Minister in the Marxist state goverrnnent of West Bengal, India.

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