SEZs:
Behind The Curtain
By Aseem Shrivastava
20 April, 2007
Countercurrents.org
“Few cities anywhere
have created wealth faster than Shenzhen, but the costs of its phenomenal
success stare out from every corner: environmental destruction, soaring
crime rates and the disillusionment and degradation of its vast force
of migrant workers…”
- “Chinese Success Story Chokes on Its Own Growth”,
The New York Times, December 19, 2006.
Within
the short span of a few decades China has become the envy of the world.
Corporate managers across the globe lose sleep worrying about “the
China price”. Real wages and working conditions rivaling those
of industrializing, pauperizing Britain two centuries ago have enabled
the country to leave far behind any global competitor who has to worry
about such inconvenient matters as labor laws and environmental regulations.
Thus has accelerated the inter-national race to the bottom that has
generated fear since the early days of this phase of corporate globalization.
The labor force in the global economy doubled overnight in the early
1990s (from 1400 to 2900 million) when China, India and the Eastern
Bloc nations joined it after the fall of the Berlin Wall, under Bush
I’s “New World Order.” If real wages and the share
of wages in national income have fallen sharply in recent times, and
if inequalities have risen dramatically at the same time, the answer
to the riddle lies in this quiet accretion, cashed in on by China-based
corporations who have set the pace. The logic of capital has inveigled
the entire world into a race of totalitarianisms – which inevitably
enrich the few and pauperize the many in every country.
Democracy is a nuisance for
capitalism. The success of China should demonstrate even to the most
ardent of liberals that capitalism works most efficiently under despotic
conditions. If capitalism coexisted with democracy in the Western world
for some decades, the rise of China shows it up for what it was: a coincidence
of history brought into relief by the fight for freedom and human rights
by large sections of the working population of the West since the early
days of 19th century British Chartism. The gains of working classes
were consolidated by the institutionalization of the welfare state since
Bismarck’s Germany first brought in social legislation in the
1880s. They took a big step forward with the implementation of Roosevelt’s
New Deal in the US in the 1940s. Much of this was made possible, needless
to say, by the spoils of war and imperialism, which enabled Western
elites to maintain labor aristocracies within their own geographical
boundaries. A prosperous domestic social peace was arranged on the ample
backs of Third World super-exploitation of labor – and maintained
internationally through arm-twisting “multi-lateral” agencies
like the IMF, the World Bank, GATT and the WTO. And when they failed
to work covert or military operations were always on the cards to ensure
the desired outcome for Western elites (a practice that continues unabated).
One of the big historical
gains of working classes in the West was universal adult suffrage –
the cornerstone of modern democracies. By 1964 – thanks mainly
to the heroic efforts of the Civil Rights Movement under Martin Luther
King – even the United States had it. After a while it became
all but natural for commentators across the political spectrum to associate
capitalism, in some umbilical way, with democracy and freedom. “History
suggests that capitalism is a necessary condition for political freedom,”
the anointed public intellectual of the day, conservative economist
Milton Friedman declared in 1962.
What history is revealing
now is something altogether different: that far from being the precondition
for political freedom, capitalism may be the growing thorn in the flesh
of democracy, a thorn that democracy nourishes in the very core of its
body-politic, a juggernaut of tyranny, remorselessly hungry for power
both within and outside the country, without which its appetite for
profits, growth and expansion cannot be met. As capital has had to bare
its fangs, the dove of freedom and democracy has flown out of the window.
The Indian predicament
It is in this global context
that India is having to chart its economic course.
In order to stand any chance
of success in a global field where China sets the bottom-line and the
long-understood practices of ruthless capitalist competition hold sway,
Indian policy-makers have no option but to fall in line with the heartless
rules of the game. It is vain to expect our leaders to then champion
democracy – except when they are in the opposition just before
elections. To subscribe exclusively to the growth imperative is to be
necessarily forced to sideline all other social or political goals and
sign on to the charter of (global) corporate tyranny. The private interest
– the hunt for ever higher profits, justified by the promise to
grow, invest and employ – is the public interest. No need to distinguish
between the two any more. Thus, unsurprisingly, as the unfolding logic
of capital has revealed its despotic character, even liberalism has
lurched feebly towards a quiet grave.
The situation is further
worsened by the fact that India’s policy-making elite since 1991
has all but willingly had its hands tied by its acquiescence in the
plans of global capital. Policy-making has been conducted under the
close scrutiny of the IMF, the World Bank and the WTO. This involves
many things. To please the IMF, social spending has had to be slashed
and the government openly expresses guilt in performing economic functions
which it is constitutionally bound to carry out. To keep the World Bank
happy the government has to open the door to “development”
projects of doubtful social value and destructive environmental effects.
To find the ear of the WTO it has had to sell the rural poor down the
river, allow subsidized Western imports of foodgrains, remove price
supports for farmers and dismantle the public distribution system, thus
(especially given the collapse of rural public investment in infrastructure,
one of the consequences of IMF-diktat) making it ever more likely that
more and more people will find agriculture an unviable option over a
period of time – and will be willing to sell their land to corporations
or the government.
This has meant that the government
has effectively receded from any promise of economic welfare or development,
indeed from any economic participation, which does not place corporate
interests at the very centre of the public agenda. According to The
Times of India there is public money to help Tata in its purchase of
Corus, but none to expand the employment guarantee scheme.
The meaning of the
Indian SEZ phenomenon
“When I expand,
it is always in a capital-intensive, and not in a labor-intensive direction.”
- Dinesh Hinduja, to Edward Luce of The Financial Times.
It takes only a little imagination
to sense the despair among Indian policy-makers today. They have had
to actually believe their own rhetoric – meant otherwise exclusively
for public consumption. Thus, despite mounting facts to the contrary,
it has become a virtual article of faith – with them as much as
with the politicians and the media – that trickle-down economics
actually works: that the only way to achieve economic development is
via corporate-led industrial growth which will generate employment.
Never mind that the modern sectors of the economy are destroying jobs.
That employment in India
was growing more rapidly in the 1980s, when the economy was growing
much more slowly than it is today, is of little account. That the entire
private organized sector of the economy has generated fewer than a million
jobs during the past 16 years (and still employs less than 9 million
people), when over 12 million people are getting added to the Indian
workforce every year should make our policy-makers worried whether we
will be a sustainable society at all in the future – whether we
will not dissipate ourselves in a welter of frustrated social violence,
the kind that Star TV had the misfortune of experiencing in Mumbai the
other day. None of this seems to alarm them.
And yet, how could it not?
22-year-olds fed on the dreams of unabashed consumerism are not going
to sit idly and watch the rich race past in their speeding cars. Thus,
it was not surprising when an ex-Union Minister was so taken by a 2000
visit to Shenzhen, China, where a Special Economic Zone has generated
huge amounts of unprecedented wealth during the past generation. 20-30%
has been the annual rate of growth, sustained over a quarter century.
Over 10 million people have found employment in an area the size of
Jaipur. The city has generated 14% of China’s exports. Who wouldn’t
want to be like it?
Or is it? Listen to The New
York Times correspondent after he returned from a field visit:
“…among Chinese
economic planners, Shenzhen’s recipe is increasingly seen as all
but irrelevant: too harsh, too wasteful, too polluted, too dependent
on the churning, ceaseless turnover of migrant labor. “This path
is now a dead end,” said Zhao Xiao, an economist and former adviser
to the Chinese State Council…After cataloguing the city’s
problems, he said, “Governments can’t count on the beauty
of investment covering up 100 other kinds of ugliness.” As the
limits of the Shenzhen model have grown more and more apparent, other
cities in China’s relatively developed east are increasingly trying
to differentiate themselves, emphasizing better working and living conditions
for factory workers or paying more attention to the environment. “Some
inland cities have started to provide migrants social security, including
pension and other insurance,” said Wang Chunguang, an expert in
class mobility at the Chinese Academy of Social Sciences in Beijing.
“In Chengdu, in Sichuan Province, residency controls are loosening
up and education for migrant children is getting more attention.””
The province of Guangdong,
where Shenzhen is located, recorded 10,000 protests last year –
in what is known to the world as a totalitarian society. It appears
that in China at least, SEZ is an idea whose time has lapsed. So why
is it that in India it is an idea whose time has arrived?
The answers are to be found
in the peculiarities of the Indian situation and the utterly odd world
in which our corporate and policy-making elites find themselves today.
The economy has been growing at a internationally impressive 8-9% for
about 5 years now. Indian corporations have become globally mobile units,
locating themselves in Eastern Europe and China, Bolivia and Equatorial
Guinea, acquiring companies in Europe and North America, mines and oilfields
in Africa, Latin America and Australia.
However, there is immense
corporate frustration – still – right here at home in India.
Some of the cheapest labor in the world is at their command. And yet,
because of the inconvenience of democracy they can’t be hired
and fired in sync with the impulses of the business cycle, as it happens
in China. Some of the most readily accessible natural resources are
at their disposal. Except that there is the nuisance of bureaucracy
in the shape of clearance of industrial projects by pollution control
boards and the Union Ministry of Environment and Forests. They have
firm control over the hearts and minds of politicians. But, from their
point of view, there are still too many taxes to be paid. There is infrastructure
in the country, but it is either in the city and already burdened or
it is near fertile agricultural land (and must be somehow acquired:
the reason that the conflict between agriculture and industry is arising
in SEZ land acquisition in the first place). And so on.
SEZs offer a relief from
this entire nettle of hurdles. All that can’t be attempted in
the civilized world outside will be the norm in SEZs. American corporations
routinely abuse labor and the environment in Shenzhen in ways unacceptable
to the Western world (though no one seems to mind the cheap shoes and
clothing). In India, SEZs will provide a profitable refuge from the
Indian Constitution, an effective waiver from democracy. The Development
Commissioner and the SEZ Authority will have overwhelming powers, making
local, provincial, national and international laws all but irrelevant.
“Little Chinas” and Shenzhens can be developed. Soon, after
their nominal success (inevitable, given the enormous range of concessions)
is visible to all, the clamor for more such spots would be heard. And
will be heeded. Unlike in China. Nandigrams and Kalinganagars will happen
from time to time, but so long as they don’t all happen simultaneously,
and too close to an election, one could “move forward” in
a stop-go pattern to accommodate the formal requirements of a democracy.
This is the plan.
What else does it mean? Recent
concessions (like the liberalization of foreign direct investment in
real estate), the rush of builders and developers to acquire SEZ land,
the fact that only 50% of the area under an SEZ has to be dedicated
to processing (whose definition is stretched liberally to include everything
from mining to agriculture), the fact that industrialists are all too
often being granted land well in excess of their production requirements
(whether Tata in Singur or Reliance in Dadri) all point in the direction
of an engineered real estate boom through SEZ growth. Huge amounts of
capital are pouring into the real estate market, both from within India
and abroad. Returns of 30, 40, even 100 per cent in many segments of
the market are becoming common – making Indian real estate markets
one of the most attractive places anywhere to invest for global finance
capital.
And the political implications
of SEZs? Far-reaching and monstrous. A real-time pilot experiment in
corporate totalitarianism is being launched through the high offices
of the nation-state which, if successful, will reduce the latter to
a mere clearance window between the corporate superstate in Washington
and the emerging archipelago of fiscally autonomous post-modern city-states
strewn across the country. As flags are raise once again in rajwadas
and princely states, the long-slumbering glories of Indian feudalism
may once again rise from the ashes under newly coined corporate brands,
fitting snugly into the needs and imperatives of global finance, shoring
up what would otherwise appear nakedly as capitalist stagnation worldwide.
With private airports, luxury
housing, super-deluxe hotels, world-class shopping malls and multiplex
plazas, SEZs offer us a window into the world of corporate consumer
dreams. They also portend the end of effective democracy in this country.
The surrounding sea of human
misery and squalor is bound to give rise to repeated and violent rebellions.
Which is why the private armies of security guards are being trained
and readied for approaching inevitabilities.
There are a thousand alternatives
to this impasse. But to discover them and forge the collective imagination
and will to develop them in practice will require a thriving public
culture of democracy – precisely that which SEZs are being created
to undermine. Globalization, far from bringing freedom to the world,
is taking it away – in the name of freedom.
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