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Looking At Kautilya Beyond The Realm Of Realism

By Atul Bhardwaj

08 December, 2012

The blurring of lines between the nationalist and Comprador Bourgeois

Money is more powerful than the military. It is perhaps for this reason that Kautilya, one of India’s foremost philosophers on statecraft had said, “From the strength of the treasury the army is born.” Many scholars belonging to the ‘liberal realist’ school casually equate the strength of Kautilya’s treasury (as it existed in the 4th century BC) with the “comprehensive national power” of the 21st century Chinese state.[1]

The assumption that the key to the treasury is always in the king’s (the one who exercises the monopoly over violence) pocket, leads one to see the state as an omnipotent power that acts in the geo-economic sphere, independent of the non-state actors or the class that controls the purse strings. In fact, what appear to be assumptions are, in “Gramscian terms, the ideological apparatuses”[2] that are invoked by the ruling elite to hide the power that global finance capital exercises over domestic rule.

The powerful thought leaders of the bourgeois brigade use various techniques to control dominant discourse and limit their analysis by merely quoting Kautilya’s “strength of treasury” logic, without actually going into the detail as to who controls the capital and therefore, war. For example, realist foreign policy often omits the impact of HNWIs who own assets equivalent to one-fourth of the Indian GDP and deliberately camouflage the parochial class concerns of the big bourgeois as national interests. This is done to obviate any probe into the comprador character of the national bourgeois. As Karl Marx says in The German Ideology (1845), “The ideas of the ruling class are, in every age, the ruling ideas: i.e. the class which is the dominant material force in society is at the same time the dominant intellectual force."

Post Cold War, the elite consciousness has been shaped by a sense of triumphalism that has emboldened them to institutionalize the bourgeois relations to obliterate all possibilities of a revolution that may result from growing income gaps. We are currently living in a geo-economic environment, where, as Stephen Gill says, “the identification of a nation-state with the material interests of its own 'national capital' is more problematic. In economic terms, this system is increasingly instituted by a deepening interpenetration of capital, both functionally and geographically. At the political level, there is policy interdependence which is the counterpart to the economic internationalization processes, as well as more integral, and more organic alliance structures binding the major capitalist nations together under American leadership”[3]

Using Lenin’s phrase, the “treachery of (bourgeois intellectual) leadership” lies in manipulating discussion and halting analysis at a point beyond which the sources of their power would lie exposed. It is for this reason that the geo-economic narrative refuses “to look more closely at the global capitalist system and the transnational capitalist class, both locally and globally.”[4]

To understand the “treachery” of the comprador class, let us see what happened in 1757, at the Battle of Plassey, where Siraj-ud-Daulah, the independent governor of Bengal, Bihar and Orissa was defeated by the East India Company army, thus paving the way for colonization of the Indian sub continent. The popular primary reason for defeat was the betrayal by Siraj’s trusted force commanders, Mir Jaffar, Rai Durlabh and Yar Lutuf Khan, who were bought over by the British.

Popular history ends with Mir Jaffar attaining the status of an iconic conspirator, thus diverting attention from the role of Siraj-ud-Daulah’s bankers, the chief conspirators, who invited the East India Company to establish their roots in East India. The conspiracy hatched by the money-lenders has largely remained hidden because the class to which they belonged controlled the “material force in society” that had the capacity to monopolize intellectual discourse.

Aakar Patel writes a fairly detailed account of the role that Jain and Hindu baniyas played along with the British to cause a regime change in east and west India. Patel highlights Jagat Seth’s (Siraj-ud-Daulah’s banker) involvement in the Battle of Plassey. Seth lent money to the Nawab, who in turn provided security for business and also collected tax. Out of every four rupees of tax collected by Siraj-ud-Daulah, three rupees went as loan repayment to Jagat Seth. As usual, Siraj-ud-Daulah was facing a cash crunch and Jagat Seth the banker thought it was time for a regime change. History records that Seth paid Robert Clive to defeat Siraj-ud-Daulah and install Mir Jaffar. This marked the first coming together of the Indian capitalist class with transnational capital.

The class to which the likes of Jagat Seth belong continues to be as powerful as it was in the 18th century. Even in the 21st century, their descendants continue to guide the economic and strategic destinies of India. Of the top 60 Indian dollar billionaires, roughly half belong to the Jain and Hindu baniya community, which constitutes just about 1% of the Indian population.[5] Recently Forbes magazine carried a pictorial story on how Indian business elite are interconnected through marriages and business deals.[6]

A more extensive and similar case study is done by Zeitlin and Ratcliff on the dominant class of landlord capitalists in Chile that not only controls politics but also represents foreign capital and this class “has not been a threat to imperialism, but its bulwark”. The study brought out that “within a ‘central core’ of just 137 individuals linked by kinship and intermarriage were found 51 percent of corporate executives belonging to major capitalist families while 82 percent of executives with no capital in their families were outside of this central core.”[7]

This central core in the developing and the under developed world is linked and protected by the chief guardians of capital who occupy the center of gravity in the developed capitalist world. The core of the capitalist world that is as old as capitalism wonderfully combines the power of money and the military. Towards the fag end of the 19th century, the invention of the Maxim machine gun changed the course of African history and British imperial fortunes. Rothschild, the banker, was intelligent enough to understand the power of ‘Maxim’ and the need to monopolize its production capacities. In 1888, Lord Rothschild, the board member of Maximum Gun Company, funded €1.9 million for the merger of the Maxim with Nordenfelt Guns and Ammunition Company. The merger agreement precluded Nordenfelt from producing guns for next 25 years. The result was that in WWI, barring the US, all militaries fought each other with Maxim guns. [8]

Incidentally, when India was reeling under a backbreaking foreign exchange crisis, the Indian government approved the acquisition of one light aircraft carrier in 1955. The first carrier Hercules built by Vickers Armstrong, a Rothschild company for the Royal Navy during the Second World War was dumped on India by the comprador as well as national bourgeois elements both within and outside the government. And the same class sold to gullible Indians the idea of being a great Asian power; the desire to become a great power riding piggy back on American shoulders continues to resonate loud in Indian strategic circles.

Nehru was one of the advocates of India becoming the leader of the under developed world. He probably thought that the communist victory in China had opened the floodgates for India to play the leadership role in Asia that American had envisaged for Chiang-kai-shiek. Nehru was also aware that closeness to Soviet Union could also be used to further his appeal among the anti-colonial movements. Nehru believed that by adopting a non-aligned policy he could possibly be the “proverbial clever calf that could indulge in simultaneous suckling of two udders”[9] as popularized by Polish economist Kalecki.

Nehru’s confidence flowed from the strength of his treasury, which at the time of independence was as strong as £1,134 million (Rs 1,512 crores). Even after payments to British and Pakistan, by 1949, India had £621 million (Rs 828 crores).[10] The nationalist bourgeois that was as aware of the brimming coffers as Nehru was, proposed through the ‘Bombay Plan’ that India rely on extensive imports for rapid industrialization.[11]

The Bombay Plan was compiled by the key members of the Indian industry (JRD Tata, GD Birla, Kasturbhai Lalbhai, Purshottamdas Thakurdas and Shri Ram) and their key directors like John Matthai, Ardeshir Dalal and AD Shroff. The plan inspired India’s first Industrial Policy Resolution of 1948 and subsequently continued to influence India’s five year economic plans till early 1960s.

One of the key members of the Bombay Plan drafting committee was John Matthai, he went on to become India’s first railways minster (incidentally, World Bank’s first loan of $34 million was meant for Indian railways) - and the second finance minister of independent India. Such was the influence of big bourgeois on India’s political economy that Mathai was chosen to head India’s first State Bank of India when it came up in 1955. When Nehru chose his first finance minister, it certainly was not from the socialist ranks, instead he chose, Shanmukham Chetty, an economist who had been awarded the Knight Commander of the Order of the Indian Empire in 1933 and who had served as the Diwan of Cochin Kingdom till about 1941.

Incidentally, in 1944, the Indian delegation that participated in the formation of the World Bank consisted of luminaries who were to play a crucial role in independent India’s economic and trade policy - Sir Jeremy Raisman, Finance Member of the Government of India led the team that had - “Sir C. D. Deshmukh (Governor of the Reserve Bank of India, later to become India's Finance Minister), Sir Theodore Gregory (the first Economic Advisor to the Government of India), Sir R.K. Shanmukhan Chetty (later independent India's first Finance Minister), Mr. A.D. Shroff (one of the architects of the Bombay Plan) and Mr B.K. Madan (later India's Executive Director in IMF).”[12]

These cross connections led EMS Namboodiripad to conclude that Kalecki’s categorization of intermediate regimes did not apply to India because here the classes were aligned differently at the time of dismantling of British empire - “the big business (was not) predominantly foreign controlled (and had) a rather small participation of native capitalists". EMS further goes on to say that power never passed on from the British into the hands of progressive forces. Instead,
“It was the bourgeoisie, headed by big business and in alliance with the feudals, that got into the seats of power…The evolution of the economic and political thought of Indian nationalism from the early pioneers (Ranade, Naoro-ji, Dutt and so on), through the 'moderates' and 'extremists' to Gandhi and Nehru shows that a national (as opposed to comprador) bourgeoisie was emerging and rapidly growing. This bourgeoisie class was systematically forging a two-sided relation - there were conflicts and contradictions, but within the broad framework of friendship and co-operation - with imperialism and foreign capital externally, and princely rulers and feudal landlords internally.” [13]

If the dismantling of the British Empire had opened up opportunities for the big bourgeois in India, it had also exposed them to challenges. Having lived under imperial patronage for over a century, the Indian capitalists were apprehensive of the Congress Party’s ability to keep communism away from Indian shores. During the making of the Bombay Plan, Lala Shri Ram wrote to P. Thakurdas:

“I am afraid that this sabotage may any day start of private property also. Once the Goondas know this trick, any Government … will find it difficult to control it. Today Mahatma Gandhi may be able to stop it, but later on it may go out of their hands too.” [14]

In the early years of independence, Indian business had skillfully cloaked its capitalist concerns and alignments with foreign capital by accepting the state to be in the driver’s seat of the economy. This was done to placate and prevent the looming specter of communism from descending on the subcontinent. Taking lessons from the bourgeois approach to tackling communism, Nehru, too befriended Soviet Union. This unnerved the Indian communists who abandoned B T Randive’s revolutionary approach and adopted a more accommodating tone towards Nehru. This was Nehru’s finest political stroke - he kept the US state secretary Dulles happy by causing confusion within the communist ranks - and also Khrushchev smiling by talking socialism and anti-imperialism.

Contrary to the popular belief, immediately after independence, India followed a free market economy - import licenses were distributed freely- that led to foreign exchange crisis in 1957 - and then we liberalized more because we were forced to seek IMF and US Aid.[15] Since there are no free lunches, India had to pay a price – and the price probably was a war with China. In a December 7,1956 telegram from the US embassy in India to the State department, JS Cooper the then US ambassador to India explicitly stated, “Externally, India almost certainly faces readjustments of policies in which factors within its economy are compelling influences…Nehru, therefore, comes to Washington in a sensitive position of weakness. He and his advisers know that they have fumbled internationally, that UK no longer represents acceptable alternative leadership to US, and that they are in grave economic difficulties. (Latter point driven home during Nehru’s holding finance portfolio this year plus recent indoctrination by planning commission.)” To complete the co-relation between money and geo-strategy, Cooper concluded in his telegrams, “We feel strongly that “moment of history” has arrived which if seized and exploited, can give US much firmer anti-Communist and anti-Red China counterpoise in India.” That moment did arrive for the US when Nehru changed his stance on China and allowed Dalai Lama to reside in India – opening up the avenues of direct confrontation with China.

In just a decade after independence, India had been reduced to a financial state where it was standing with a begging bowl in front of foreign capital. In the first decade after independence India had only got a total amount of $611 loan from World Bank. However from 1960-69, overall the Bank lent India $1.8 billion.[16] It may not be coincidental that India fought three wars with its neighbours during the decade of 1962-1972.

That India followed a socialist track after independence is a myth that has been propagated by the media and intelligentsia. It was only for a brief period in the 1970s that Indira Gandhi tried to rein in capitalist tendencies, else India had always welcomed foreign capital since 1950s in accordance with World Bank’ President Eugene Black’s prescription: “India’s interests lies in giving private enterprise, both Indian and foreign, every encouragement to make maximum contribution to the development of the economy particularly in industrial field.”

Such has been the impact of the myth that even the mainstream communist parties of India have refrained from identifying the comprador tendencies of the Indian national bourgeois and at best called them "dependent" or "collaborationist”. However, the ongoing transatlantic economic meltdown and its impact on the world have exposed the inherent frailties and contradictions of the capitalist world order - bringing to fore the relationships between the global capitalist class.

Take the example of Greece, where the common person is being told to tighten his belt for the country and on the other had you have 2000 odd tax evaders who have been abandoning their sinking nation with impunity-stashing away their wealth in Swiss banks. As Kostas Vaxevanis says, “The crisis in Greece wasn't caused by everyone. And not everyone is paying for the crisis. The exclusive, corrupt club of power tries to save itself by pretending to make efforts to save Greece. In reality, it is exacerbating Greece's contradictions, while Greece is teetering on the edge of a cliff.”[17] According to New York Times, “about 120 billion euros in Greek assets lie outside the country, representing an extraordinary 65 percent of the country’s overall economic output.”[18]

The so-called nationalist bourgeois turning comprador is not limited to Greece alone. This chameleon like behavior of the propertied classes is a worldwide phenomenon; even the Indian elite who top the global “tax dodgers’ corps” and have hidden their money in tax havens like Mauritius, Lichtenstein, Switzerland and British Virgin island could go to any extent, even plunging their nation into war to save their money. Paradoxically, the conservative analysts who denounce the Marxist term comprador bourgeois in relation to American imperialism, use it freely against growing Chinese capitalism; which has yet to turn imperialist by adding a military element to make its money trample over nations across the globe.

Highlighting the new comprador class in Australia, Ashok Malik a, right wing analysts gives the example of Clive Palmers, an Australian businessman who got a $6-billion loan from a Chinese bank and then signed a US$ 60 billion, 20-year coal deal with China. In return Clive gave the Chinese, “US$8 billion EMC (engineering management and construction) contract for the project” and openly blamed the CIA for putting spokes in the contract with the Chinese.[19] The same people who see business transactions with China to be anti-national, justify the increased US military presence in Darwin, Northern Australia as a normal realist option against the Chinese threat.

Economics and politics are about human welfare. “Just as war is too important an activity to be left to generals, the material welfare of peoples is also too important to be left to economists alone.[20] Military’s nexus with mercantilism and markets must be broken. The strategic analyses must not allow the “comprador-cum-financial oligarchy” concerns to be conflated with collective national concerns. It should become unnatural and inconsistent for every government to “allude to the importance of protecting commerce of the country, by means of a powerful navy.”[21] For wars to stop being a continuation of political economy by other means, the multitude would have to stop giving up their lives to establish trading monopolies and financial oligarchies.

[1] Sanjay Baru, “India and the World: A Geo-economics Perspective”, National Maritime Foundation Lecture, India Habitat Centre, New Delhi, October 26, 2012, http://maritimeindia.org/sites/all/files/pdf/NMF%20Lecture%20-%20Baru.pdf

[2] Stephen Gill, “Intellectuals and Transnational Capital”, The Socialist Register, 1990, pp 290-310

[3] Stephen Gill, p.295

[4] Leslie Sklair & Peter T Robbins, Global capitalism and major corporations from the Third World, Third World Quarterly, Vol 23, No 1, 2002, p 83

[5] Aakar Patel, “The peculiar pedigree of the business class: The peculiar pedigree of the business class”, Mint, 14 April, 2011, http://www.livemint.com/Opinion/tDRJXCAEsoYMxdtSnZDoGJ/The-peculiar-pedigree-of-the-business-class.html

[6] Prince Mathews Thomas, How India's wealthiest are connected socially, Forbes India, 6 Nov, 2012, http://forbesindia.com//article/richest-indians-in-2012/how-indias-wealthiest-are-connected-socially/34077/1
[7] Jeffery M. Paige, “Coffee, Copper, and Class Conflict in Central America and Chile: A Critique of Zeitlin's Civil Wars in Chile and Zeitlin and Ratcliff’ s Landlords and Capitalists, The University of Michigan paper, presented at the Annual Meeting of the American Sociological Association, Chicago, Illinois, August 20, 1987, http://deepblue.lib.umich.edu/bitstream/2027.42/51115/1/347.pdf
[8] Niall Ferguson, Empire: How Britain Made the Modern World
[9] Sanjay Baru, “India and the World: A Geo-economics Perspective”, National Maritime Foundation Lecture, India Habitat Centre, New Delhi, October 26, 2012, http://maritimeindia.org/sites/all/files/pdf/NMF%20Lecture%20-%20Baru.pdf
[10] The Problems of Plenty, 1947-56,RBI History, Vol II, p.593, http://rbidocs.rbi.org.in/rdocs/content/PDFs/90037.pdf

[11] Amal Sanyal, “The Bombay Plan: A Forgotten Document”, Contemporary Issues and ideas in Social Sciences, Vol 6, No 1, June 2010, pp1-31
[12] The World Bank In India, published by PRIG, (Public Interest Group) Delhi, http://www.ieo.org/world-c2-p1.html
[13] E. M. S. Namboodiripad, On "Intermediate Regimes" Economic and Political Weekly, Vol. 8, No. 48 (Dec. 1, 1973), p. 2134

[14] As quoted by Amal Sanyal, from Shri Ram to Thakurdas, P. T. Papers,
[15] Dealing with Scarcity, 1957-63,RBI History, Vol II, pp.625-656 http://rbidocs.rbi.org.in/rdocs/content/PDFs/
[16] The World Bank In India, published by PRIG, (Public Interest Group) Delhi, http://www.ieo.org/world-c2-p1.html

[17] Kostas Vaxevanis, “Greece gave birth to democracy. Now it has been cast out by a powerful elite”, The Guardian, 30, October 2012 http://www.guardian.co.uk/commentisfree/2012/oct/30/greece-democracy-hot-doc-lagarde-list

[18] Landon Thomas Jr., “In Greece, Taking aim at wealthy tax dodgers”, The New York Times, 11 November 2012.

[19] Ashok Malik, “The New Compradors” The Hindustan Times, 03 September, 2012
[20] Mahmood Mamdani, “State, Private Sector And Market Failures”, Pambazuka News, 29 July, 2012, http://www.countercurrents.org/mamdani290712.htm
[21] Edward P. Stringham, Commerce, Markets, and Peace: Richard Cobden’s Enduring Lessons, The Independent Review, Volume IX, Number 1, Summer 2004, pp. 105-116

Atul Bhardwaj, Editor- Purple Beret, New Delhi http://purpleberets.blogspot.in




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