Wednesday, January 4, 2017

Forced Demonetisation and Cashlessness by Fiat: Creeping Fascism and its Popular Ideological Receptacles

Sanjay Kumar

The withdrawal of eighty six percent of currency notes by the Modi government has been an administrative fiasco. It is clear that little economic thought, and only a political urge has gone into the exercise. Informal sector of the economy, which accounts for 80% of the employment and 40% of the national output, has suffered short to medium term damage. All cash dependent transactions, wages, wholesale and retail trade, agricultural purchase and sale, are at a crawl. Workers are not getting wages, factories are closing, mandis are empty. Crores of young and old working people are spending hours in queues at banks and ATMs to withdraw their own money now gone scarce.  Press reports count more than eighty deaths. Parliament of the country is in a limbo, because the prime minister thinks it below his worth to reply to charges by the opposition party MPs. While the ordinary people are suffering, the Nero like rulers are trumpeting the arrival of the nirvana of a cash less economy as the answer to India's economic ills.

Even while Mr Modi's government is solely responsible for this needless and widespread suffering, it would be naive to expect an automatic popular backlash against it. The politics of the ruling party does not fit into the patronage or identity driven models of its competitors that draw popular support on the basis of expected returns. Its closest template is fascist politics, which  is a very particular kind of authoritarianism. What distinguishes a fascist regime from other modern authoritarian regimes like military dictatorships is the popular support it is able to garner for its policies and depredations. Fascism is a leadership driven politics. Its agendas are set by the leadership, they are not a response to popular demands and expectations. Nevertheless, fascism generates popular appeal by carefully working upon popular anxieties, prejudices, desires and fears, and refashioning them as grounds for aggression against selected minorities, and a belief in an imminent deliverance under the personalised rule of a leader. Fascism is marriage of demagoguery with powers of the modern state, which make it different from other forms of right wing populism. It also should not be confused with orthodox conservatism. It is a blatant dance of state power, which hides its brutalities by invocation of novelty and a continuous disruption of what society has come to accept as normal. It is the spectacle of fast change, which disorients people and encourages them to willfully suspend every day rules of judging right from the wrong, and truth from falsehood. Many elements of fascist template are visible in the ruling party discourse on demonetisation: the shock and awe of sudden announcement by the PM himself in a national broadcast at TV prime time, praise for the 'broad shoulders' of a courageous and decisive leader (as the finance minister put it in a speech recently), a 'new normal' that will deliver Indians from the seventy year old evil of black money, etc.

A common conceptual mistake is to limit analysis of fascism to explaining what it does.  What gives it popular appeal are not its actions per se, but the way the fascist discourse draws upon already present elements of popular ideologies. The 'banality of (fascist) Evil', as Hannah Arendt called it, appears striking only as long as it is seen as the result of a political event, rather than an ongoing socio-political process. In the Indian context, an uncritical acceptance of communalism, casteism, patriarchy and national chauvinism as parts of everyday common sense of Indians have formed the ideological support base for the RSS work over decades. Anti fascist democratic forces have rightly attempted to counter these by directly challenging them, and by drawing upon the other inclusive elements of popular ideologies. Fascism, however is also fed by ideologies about state and economy. These have remained outside the radar of democratic forces so far. The discourse and politics over the recent demonetisation open up a window to the latter. Many of the elements of popular ideologies used by Modi government to create support are an enduring feature of Indian political formation, used by other political forces too. Anti fascist democratic forces need to identify and challenge these roots urgently.   

Another common misunderstanding is that a regime can be fascist only if it indulges in large scale violence and violation of citizens' rights.  This understanding takes state violence, which all states indulge in more or less, as a defining property of fascism, rather than one of the elements of its political character. The actual violence of fascism depends on the degree of crises faced by the status quo in the society, and strength of its political opponents. Nor can the arrival of fascism be dated with the electoral success of a party, or a leader. It is more fruitful to look at it as a socio-political process driven by specific parties and leaders. Success of a fascist politics should be seen in the direction it is able to give to the character of state power, and how deeply it is able to manage popular support for its programme.

The Artful Irrational: There were no economic reasons to withdraw currency at the scale done by the Modi government. Economic costs of such a move make no sense. Yet the quackery of demonetisation is being sold precisely as the medicine to take care of economic ills. As the chaos due to demonetisation unfolded, and government responded by hastily announcing more than one new rule about bank transactions per day (59 such rules have been announced till 19 Dec, 2016, during 40 days since PM's 8 Nov announcement), it became apparent that no homework and planning was done before throwing the sand of demonetisation in the gears of the economy.

A modern state bound by law, policies and regulations is an important actor of public rationality in society. It is expected to presuppose public scrutiny of its actions, and aid in this scrutiny by providing cogent explanations for its actions. At its minimum, any rationality is bound by an awareness of the objective cause-effect chain. Fascist politics gives precedence to its own internal logic over any public rationality. Without subjecting existing laws, policies and regulations, that  do not agree with its politics to any critical analysis, it easily labels them against the national interest. In India we have seen Hindutva doing this with reference to secularism. Demonetisation and the push for a 'cashless' economy show another aspect of Hindutva, not  directly related to communalism. This is a naked assertion of 'leader's wisdom' over any public reason. The driving logic behind these actions was to appear sufficiently 'bold' to do what has never been even thought before, and to be seen as ready to take a 'tough action' against entrenched interests. Spectacles of these kind need no justifications, they are their own cause, and their very execution is the only measure of their success. We had seen a similar internal logic behind the so called 'surgical strikes' against Pakistan in September. The anti-fascist democratic discourse in the country needs to not only counter claims of such actions, by proving the lack of any success against intended targets, but also explore reasons for the weakness of public opinion against such 'wisdom', and 'boldness'?

The point is public rationality otherwise too is marginal in the public life of India. Religious beliefs, superstitions, and caste, gender, regional and ethnic prejudices thrive not only in private lives, but through publicly organised fairs and functions, education system, entertainment industry, celebrity culture, etc. also dominate public discourse. Politicians of all hues thronging to 'spiritual' babas, swamis, gurus, munis, sect chiefs, etc. before elections is not a cause, but a proof of this domination. A concerted Hindutva strategy is to change the landscape of this domination. This is occurring at two levels. One is the aggression it has brought in to the push for its kind of religiosity. People raising objections against it are actively being hounded and legal cases are being slapped against them. Second is the effort to bring aspects of public life like nationalism, which to some extent have been under public scrutiny, under the rubric of its aggressive non-rationality. The 'demonetisation' and 'cashless society' are the latest  non-questionable beliefs for Hindutva, anyone questioning them is an anti-national according to it. 

The non-fascist aspect of Indian public sphere resides in its, howsoever weak, public rationality and  the diversity of its non-rational belief systems. The latter includes an acceptance of mutual co-existence. Hindutva fascism is attacking this diversity. Its strategy however is classic Brahminical. It is trying to create a hierarchy of non-rationalities in which its own non-rationality enjoys the highest place. While the arguments for mutual co-existence can work against Hindutva attacks on the other religious non-rationalities, with reference to the 'secular' part of its non-rationality a principled public rationality is the only viable alternative. 

State over Society: Changing the character of state power is an important aim of fascism. Despite the formally liberal character of Indian state, there are in fact a number of features of Indian political formation which help fascist politics. A deep rooted assumption of the victimhood and helplessness of people of India runs through its popular political ideology. True, occupants of the political pinnacles of state have to pass through periodic electoral tests, and the country has witnessed a number of popular mobilisations and even armed rebellions. However, none of them have even remotely been able to establish the practice of citizenship of people as rights bearing agents, as the classical liberalism of Indian constitution imagined, or as makers of their own social world, the idea at the core of revolutionary left. In stead, populism is the dominant form of political discourse. Even the 'aspirational classes', products of neo-liberal political economy, which are the main cheerleaders of Mr Modi, see their agency primarily in terms of making good of available economic opportunities, and are not motivated by any political vision. The obverse of the victimhood of people is the non-negotiated legal power of the state over society.

Even if the government of the day has a legal right to withdraw currency notes, the unprecedented move of the Modi government on 7th Nov, without any monetary crisis in sight amounted to a unilateral going back on the promise a currency note gives its bearer. By forcing people to deposit their notes in banks, and allowing only stringent withdrawals under confusing and ever changing rules, it palmed off people's money from their very hands. Modern state does not simply print money and give it to people as a 'social service'. A currency note enters the economic flow as payment by the state to non-state actors for services and goods rendered, or to fulfill its legal obligations. In strictly economic terms, Modi government's step is a legal loot, correctly seen thus by the former PM Dr Manmohan Singh. Yet that is not how even the political opposition to Mr Modi is looking at it. Hardships to common people standing for hours in ATM and bank queues, collapse of informal economy, etc. are highlighted. The immorality of the very act which brought forth these difficulties is rarely the point of criticism.

Indian political ideologies support suspicion of leaders, parties, and governments when a 'scam' for personal benefit is sniffed; not when the state fails to honour its part of the bargain with citizens, or even when it violates its own laws. There is a lack of popular moral compass to judge the state. This weakness of society against state is related to deeper and long term features of Indian society. The failure to 'annihilate caste', as Ambedkar imagined, has meant that a sphere of society wide moral concern has not evolved. This, for instance, is manifest in exceptional levels of every day cruelty. Even many poorer and war torn societies would not countenance the treatment meted out to weak, child workers, old, infirm, and destitute, which is taken as normal in India. It is not surprising that in the moral morass of India, the public immorality of Modi government is little noted.

Moral Rage, Mythology and State Power: Fascism projects itself as a project for moral regeneration. Classic forms of Fascism stoke moral rage against targeted minorities held responsible for real or imagined national failures and humiliations. Myths play an important role in this tactic, as glues to form a particular aggrieved 'people', targeted minorities as figures of Evil, and dreams of national and civilisational greatness.  Even while Modi government's demonetisation does not as a whole fit into the ideal type of a fascist maneuver, its elements come straight out of the script.

In his address to the nation announcing demonetisation, Mr Modi had straightway listed three targets; black money, terrorist funding and counterfeit notes, even while there was little concern for  the impending disruption to everyday economic activities. There was, and is, little evidence of demonetisation affecting these three in any serious way. Yet the moral story behind the step has been sustained in popular discourse because of widely shared myths about black money and corruption. Myths are neither true, nor false. They select and amplify part of a reality, provide frameworks to help make sense of the world, and give common referents for moral judgments. In a rapidly changing economy with gross inequalities, corruption and mass anxieties about the future; the notion of Black Economy performs many functions. Technically it refers to a real sector of the economy with source in corruption, crime and untaxed income. Different estimates of the black wealth in India put it at about 25% of the GDP. Data from income tax raids show that about 95% of this wealth is non-cash, mainly as real estate, gold and different forms of benami financial assets. There are also indications that the major chunk of the unaccounted wealth accumulated by Indians is actually held outside the country. A Global Financial Integrity study of post independence India, puts the latter at 72% of the unaccounted wealth. However, stashed currency notes as fruits of crime and corruption is an old trope in Indian popular culture. The image of notes stashed in pillows, used in 1978 during the demonetisation by Morarji Desai government, has now ballooned to notes stashed in mattresses, the image used by the current government. Recurrent reinforcements are occurring even in the midst of demonetisation drive, in the form of news flashes about stacks of even new notes discovered by Income Tax department. The idea of demonetisation as an attack on corruption has traction in popular imagination because of the displacement in the image of black wealth away from its actual forms to currency notes.

Why are currency notes the most suspicious form of wealth for Indians, despite being the essential fluid for every day market transactions? As a form of wealth, paper currency is abstract and depersonalised. While other forms of black wealth like the real estate, gold, ostentatious display on marriages, etc. have emotional appeals as objects of desire. Capital is wealth/stock in motion. The popular ideology of wealth in India sees it as static. The moral rage against stashed cash, assiduously used by BJP to sell demonetisation, is actually a pre-capitalist hold over.

Like the belief in cash being the prime form of black wealth, popular ideas about generation of this wealth are also very selective. Corruption at high places in governments, which has been the focal point of many popular movements, is actually only one of the sources of black wealth. Huge amounts of untaxed income are created along with legal and regular economic activity by corporates in the form of over-invoicing, round tripping, P note invetments in stocks via Mauritius, shell companies in tax havens, etc. Many of  these practices are integral to the workings of global capitalism. Even US corporates have stashed more than two trillion dollars outside in low tax countries. The recent penalty against Apple, the most profitable company in the history of capitalism, imposed by the European Union is related to its global operations routed through Ireland to avoid paying tax in the US. A big chunk of NPAs lying with Indian public sector banks have also been translated to black wealth. It is a measure of the lack of popular class consciousness about capitalist operations in India, that corruption by high government officials is seen as the prime source of black wealth.

The popular moral judgments on corruption have some unique features making them specifically amenable to populist mobilisations with anti-democratic potential. First is the lack of self reflexivity. It is always the 'other' who is corrupt. The mal-exercise of power of discretion by politicians and high bureaucracy is seen as corruption, but paying household maids less than the minimum wage, or even not paying them their wages with the excuse of lack of currency notes, as is happening in many middle class homes after demonetisation, is not seen as corruption. Second is the 'hush hush' mystery created about corruption, which makes discourses about it similar to soap-operas. Figures beyond imagination are bandied, ('every Indian will get so much if the money from 'this' scam is recovered!', etc.), however directly experienced concrete instances of corruption, the hafta local police charges hawkers, bribes given when a property is registered below its market value, or traffic violations, are not targets of popular discourses on corruption. Third, discourse on corruption confuses symptoms with the cause, and this confusion directly leads to popular allure of a 'strongman/woman' who will clean its dirt. Corruption by state functionaries is a result of lack of democratic accountability; that by corporates and smaller capitalists is a manifestation of power of money over public authority. Focus on particular parties and individuals, rather than systemic causes, opens the way for strongmen/women to walk in claiming instant relief.

Institutional Degradation: Institutional autonomy is a unique feature of liberal mode of governance. It is the life blood of latter's decentered authority structure. The centralising thrust of fascism degrades insitutional autonomies. Despite the last governor Raghuram Rajan's monetarist prejudices, much loved by international finance, the RBI under him was jealous in guarding its turf. Hence it was not surprising that he was forced out by the Modi government at the first opportunity. The new governor, Mr Urjit  Patel was either not taken into confidence on the demonetisation move, or he acquiesced meekly. In either case the autonomy of RBI has been badly mauled. Subsequent to the demonetisation announcement also, the job of forming and announcing new rules regarding restrictions on withdrawals etc. which fell in RBI's jurisdiction, was taken over by finance ministry. The 1978 demonetisation by the Morarji Desai government was implemented through an ordinance. Modi government has done away with even that nicety of parliamentary procedure, and pushed demonetisation through an executive order. As the washout of the recent winter session of the Parliament parliamentary deliberations are the other big casualty.

However, it should be noted that institutional and legislative degradation is a long standing aspect of Indian political formation, which is related to the character of political power in society. From panchayat gram sabhas to the parliament, India has over 2.5 million citizens elected to different state institutions. It is the largest body of elected representatives ever in the history humanity. The expansion and depth of representative institutions have changed the social bases of political power, and is much valued by erstwhile excluded groups. However, this expansion has not made the character of political power more democratic, and even while elected by the peoples, representative bodies lack legitimacy and moral authority in society.  This scenario is ideal for a politician like Mr Modi. The floor of a representative body like the parliament at which a leader has to listen to, or spar with opposition members on an equal footing, and which in the age of direct TV relay is effectively a public arena, is the last place any leader with fascist inclinations would like to be. By speaking on demonetisation in jan sabha, rather than the Lok Sabha, as he claimed in a rally in Surat recently, Mr Modi is only making a virtue out of the dire straits of representative bodies in the country, for his kind of politics.

Class Agenda of Demonetisation and the push for Digital Economy: Fascism claims to be standing up for the entire nation and the people, above fractious sectional interests espoused by other political parties. In an era when the idea of socialism had popular appeal, both Mussolini and Hitler had christened their movements socialist and berated the self interest of high capitalist class as part of the problem. Even the BJP in early eighties had declared its guiding philosophy to be Gandhian Socialism. No flirtation with socialism is needed in the neo-liberal era. Depending upon the society and its history, fascism always has a core of class agenda. This agenda is different from other parties that stand in favour of capitalism, which often is a source of confusion among people. Hatred for the poor and destitute is a complement of fascist aggression for power. This is an element of the ideology of lower middle classes and better off sections of the working classes; in India it is also fortified by caste prejudice. The ideology of the rich and super rich, which are securely separated from the poor, need not have the kind of hatred for the poor often seen in fascist politics.  Other class characters of fascism are attacks on organised labour, and the union of state and big capital.

In India, there is a direct correlation between the class status of an economic agent and the proportion of its market transactions in cash. Hence, working poor are the worst affected by demonetisation. All their market transactions, whether as wages, or daily earnings through petty trading are in cash, and have collapsed as demonetisation has sucked out cash. Small scale and medium enterprises have also suffered. The big capital and high professional classes have come out unscathed.

The exchange of currency notes between a buyer and a seller is costless for both of them. The cost of printing notes is borne by the issuing agency, which factors in this cost within its earnings as the center of finance in the country. The push towards digital transactions is forcing markets from such a very low cost transaction system towards a situation in which banks, digital transaction portals, electronic wallet companies, etc earn a fee from every transaction. It is forcing the system of transaction towards a captive market for corporations selling digital financial services, including consumer finance. The affluent in the country have been moving towards these service providers over many years voluntarily, mainly due to the ease of accessing these services despite their cost. The digital transactions are very different for the poor, who obviously lack cultural and technical resources to access digital transaction portals. Forcing them towards digital transactions through fiat is their state sponsored marginalisation. That the state is  also celebrating this transition, shows how cruelly indifferent it is towards the poor. At the other extreme is the corporate sector, which is waiting in the wings to profit from the forced destruction of the informal sector of the economy. 

Much is being said about the differences between the formal (meaning the state and big capital) and the informal sectors of the economy. The demonetisation discourse looks at it only in terms of the latter being outside the tax net. As a capitalist economy expands, economic enterprises have a tendency to move towards formal transactions for the sake of accessing national and global markets. This is happening in India too, and the process is only getting accelerated. However the significance of formal-informal difference has very different character when looked from the perspective of working classes. For them the key issue is whether the existing laws related to protection of workers' rights, security, health, contract work, minimum wage, provident fund etc. are being followed, or not. In this regard, it is observed that not only the informal sector, but formal sector enterprises too blatantly violate these laws. The big capital and Modi government have little interest in enforcing these laws, their concern is limited to bringing the informal sector within the tax net.   

Demonetisation and push for cashless economy have given a qualitative push to the class agenda of fascist politics. However, it must be noted that this agenda enjoys wider support. At the current juncture in India the class agenda of fascism is actually the same as that of neo-liberalism. All major political parties in the country have accepted the necessity of neo liberal economic order, even though on political and social dimensions there may be differences among them. The weak opposition to demonetisation and the push for digital economy at popular level is a direct consequence of the fact that public life in India is almost completely bereft of class issues, and forces fighting for working people's class interests have not been able to develop a viable political alternative to neo-liberalism.

Conclusion: Fascist project involves deep rooted changes in society and state. Its downward spiral feeds upon its own success and weakens internal forces able to counter it. As examples of Germany and Italy show, once societies get sucked into fascist vortex, it is very difficult to come out of its sinkhole. At stake is not any specific state policy, but the way popular classes imagine the society and their role in it. This requires anti fascist forces to widen and deepen their criticism of all aspects of social life which help fascism. Elements of popular ideologies which disarm people against fascist propaganda need to be identified and addressed urgently.


Sanjay Kumar teaches Physics at St Stephen's College, Delhi, and is associated with New Socialist Initiative and People's Alliance for Secularism and Democracy.


Post a Comment