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8/5/2007 12:55:05 PM
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Views expressed here are author"s own and not of this website. Full disclaimer is
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(The author is a Professor in International Economics in Nagasaki University, Japan)
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Amartya Sen’s observation on the recent land-grab movements in India to create Special Economic Zones should be analyzed in a proper light. Sen made the comment that for economic development industrialization must proceed irrespective of whether it may destroy fertile land because industrializations in the developed countries previously have destroyed a lot of fertile lands and that was the price of progress. Sen has ignored a basic point.
The dispute of the farmers against the oppressive governments in Singur, Nandigram, Orissa, Chratisgrah, Andhra Pradesh, and Narmada Valley in India is not a war between industry and agriculture or between progress and conservatism but between basic human rights and a government determined to create a pure capitalistic heaven by taking over poor people’s only possession of a little land and a home without paying proper compensation. The dispute is not restricted to West Bengal. The introduction of Special Economic Zones (SEZ) would put India into flames everywhere when the poor 80 percent of the population now understand that they have no choice but to fight in order to survive against the combined might of all political parties, whether CPI (M), Congress or the BJP, who are now acting as agents of the India’s true ruling class, the captains of Indian industry. In India the land Acquisition Act of 1894, a colonial act of the British Raj to take over lands for any purposes, is now being used to take away lands from poor farmers to give these to mega rich private companies for their real estate business, which does not serve public interests.
For industrializations land is needed, however, those who are losing their land must be compensated properly. A proper compensation implies at least compensations for lost home, lost assets, lost professions and lost regular income. Thus, those who have lost home and land must receive from the government a new home or apartment, value of the land taking into account the possible appreciations over the next decade and a new job or regular monthly payments to compensate for the loss of income. In Singur the government is paying a maximum of 1.3 times the value of the land, although the price of land is becoming double in every five years or less. There is no promise of a new job or regular monthly income or a new house. There are no provisions for lost education for the children of the farmers. Thus, the declared compensations are highly inadequate. That is the source of the dispute.
There is a second argument as well from the point of view of overall economic policy. Industrialization just for the sake of it is not justified. It is essential to look at the costs and benefits of setting up an industry. In Singur for example, about 14,000 families are being evicted from about 1000 acres of land, as given in most newspapers. Out of those 12239 persons are landowners; the rests are landless tillers. If we assume only one person per family was gainfully employed in farming, the number of job losses are 14,000 minus those who are not dependent on farming for living. However, only about 4000 people, mainly from outside West Bengal, will be employed in the proposed Tata Motor Company in Singur. Even if we assume that another 2000 may be employed in motor-parts industry and the service sectors to support the industrial activity in Singur, the total number of job-losses would be huge. Thus, there is a net welfare loss in terms of net job destructions in Singur, which the government has not yet addressed. From this point of view it is better for the government to tell Tata Motor Company to go elsewhere in West Bengal, when according to the government about 14 percent of the land in West Bengal is not under cultivation.
The same argument is much more valid for the Haldia Special Economic Zones in West Bengal, which demands more than 20,000 acres of land. Already 250,000 people were evicted in Narmada Valley, thousands if not millions will be evicted in Orissa, Jharkand and Chratisgarh or Hariyana in India to make room for the Special Economic Zones creating millions of destitute on the streets, just like in China where possibly 150 million people are now unemployed destitute. Thus, it is essential to ask whether we really need this type of economic growth and industrializations where the people would not gain much.
Industrialization in the Developed Countries in the age of Empire :
Industrialization in the developed countries in Western Europe including UK did indeed destroyed a lot of fertile lands, but at the same time they had encouraged and financed their evicted farmers to go to foreign lands, in North and South America, Oceania, and Africa to kill the local people and take over their lands. Indians in North and South America, Africans, Australian aborigines, Maoris were systematically killed over the last 250 years to make room for thousands of evicted farmers from every Western European country. Even Japan had sent away its evicted farmers to Manchuria, Korea, Taiwan, Brazil and Peru. It is not possible for the evicted farmers from India today to go to USA, Canada, Australia and New Zealand to kill the white farmers to take over their land. Thus, this absurd logic given by Amartya Sen, that it is natural to expect evictions form fertile land if a country wants to built industries, has no meaning. Where would the evicted farmers of India go to have any alternative employment?
Industrialization in the Developed Countries in the post Second World War Period:
However, Amartya Sen has ignored the industrialization process in the developed countries after the end of the colonial period. After the Second World War, it was no longer possible for the Western European countries or Japan to colonize foreign lands for their own people to move over. Thus, severe land use planning and regional planning were introduced in every developing country to preserve fertile lands and areas of natural beauty and induce industries to move to the areas of high unemployment and infertile areas, so that valuable lands can be preserved for agriculture. At the same time various forms of subsidies and price supports were introduced for the farmers along with total protection from foreign imports in every developing country. Central planning for agricultural production became the norms in the European community, USA, Canada, Australia and Japan in which the government effectively protect the farmers by giving a stable price for their products, subsidize production and compensate for the loss or over production. These types of protections are now so important for the developed countries that the governments of these countries are prepared to even ruin the prospects of the World Trade Organization just to maintain the level and quality of protections for the farmers in all developed countries.
Thus, Amartya Sen is quite wrong to suggest that the developed countries have ignored agriculture in preference for industries. That was never the case. The declining number of people engaged in agriculture was due to a combination of factors. Industrialization process, emigrations to the former colonies, consolidation of land holding sometime in a very brutal way as observed in USA during the 1930’s depression years, and mechanization of agriculture have reduced the attractions of employment as farm labourers.
Harmony between Industry and agriculture:
However, agriculture is still very important for Europe, where it is a way of life for many people. The prosperity of agriculture in the developed countries since 1950s and the attractive landscapes are the results of effective agricultural land use and environmental planning. Companies are not allowed to set up industries where they like but they have to comply with the environmental regulations. Industries producing dangerous products or using hazardous process, chemical and nuclear industries are not allowed to be anywhere near major centers of population.
In the east European countries outside the former Soviet Union, who were mainly agricultural before 1950, industrialization took place in a planned way without causing any unemployment or evictions of the farmers. In the Soviet Union itself agriculture flourished along with industrialization that had started in 1929. In 1931 grain production was 69.5 million tones. In 1940 it rose to 118.8 million tones. The peasant population, rising from 120.7 to 132 million between 1926 and 1940, was able to feed an urban population that increased from 26.3 to 61 million due to industrialization in the same period. The consumption of the farmer in the collective farms rose from its pre-collectivization period by 125 percent for bread and flour, 147 percent for fruit and vegetables, 148 percent for milk and dairy products, and 179 percent for meat and sausage. Collectivization and a planned economy allowed the Soviet Union to survive the barbaric war waged against it by the German Nazis. Between 1942 and 1944, 12 million hectares of newly cultivated land were sown in the eastern part of the country.
This progress properly reflected the sustained rise in investment in agriculture. It increased from 379 million rubles in 1928, to 4,983 million in 1935. Agriculture"s share in the total investment increased from 6.5 per cent in 1924 to 18 percent in 1935. Thus, it is possible to sustain rapid industrialization along with prosperity in agriculture. There should not be conflict exist between industry and agriculture in a planned economy. Both in planned economies of the Eastern Europe and mixed economies of Western Europe and Japan, agriculture and industry flourished simultaneously.
Absurd Logic of Amartya Sen on Bengal Famine of 1943:
Amartya Sen however, is interested in the high theories of individual values and social choice but not on these complexities of economics. Whenever he has entered into the messy environment of real life, his analysis or explanations of real events are also nothing but messy logic. The best example is his analysis of the Bengal Famine of 1943.
The famine in Bengal in 1943, according to Prof. Prasanta Mahalanobis, had caused the death of about 5 million people directly. Another 4 to 5 million were indirectly affected. Even the British organized Famine Enquiry Commission Report suggests the death toll of about 3 million. Amartya Sen has reduced that figures to only 1 million without giving any explanation. Not only that, he has a novel explanation as well for that famine.
That famine was caused when Winston Churchill has declared that Bengal alone would feed the British forces in India and in the Middle East. All imports from the rest of India were banned. Agents of the government have started buying and confiscating all food grains and all means of transport even bicycles in a "scorch-earth’ policy in response to the expected arrival of the Azad Hind Fauz and the Japanese Army. Japanese authority in Burma has offered to send 10 million tons of rice without any condition for the famine affected people of Bengal but that was rejected. The government simply removed the hungry people from Calcutta to ignore the problem of mass starvation.
Amartya Sen thinks that was not the cause. The cause, according to Sen, was that due to the war-efforts a lot of people in Bengal got a lot of money from the British. When they have started eating too much, those who have no such money were starved to death because of very high price of food.
Sen wrote (in World Development, Vol 8, no 9, 1980, pp 613-621):
“In a poor community take the poorest section, say the bottom 20 percent of the population and double the money income in half of that group, keeping the money income of the rest unchanged. In the short run prices will rise sharply since the lucky half of the poorest group will now fill their part-filled bellies. While this might affect the food consumption of other groups as well, the group that will be pushed towards starvation will be the remaining half of the poorest community, which will face higher prices with unchanged money income. Something of this nature happened in the economy of Bengal in 1943”.
Thus, according to Sen, Bengalis were responsible for the famine in 1943, as they had eaten too much. He who can even think of this bizarre explanation, it is not surprising for him to put the blame of the evictions of the poor farmers in Singur or Nandigram on the shoulder of the poor farmers themselves as they are stupid enough not to understand the evolutionary process of Globalization.
Globalization and Welfare:
Amartya Sen supports Globalization. Does Globalization increase welfare? The problem of the evicted farmers exists not only in West Bengal but also all over India today. The cause is not promotion of industry as opposed to agriculture but a false economic idea imported from the U.S., which disregard a planned and balanced economic development but promote a capitalistic development of the reformed economy that automatically invites evictions and exploitations of the poor. China is the best example of the success story of Globalization, but what welfare the Chine people are enjoying now.
The so-called experts say India needs to get rid of its prohibitive labour policies, which are designed to protect the weakest members of the society against unrestricted exploitations by the private-sector employers. Special Economic Zones where Indian labour laws and tax laws are not applicable is the answer, according to these proponents of "economic reforms’.
There are many restrictions on foreign investors in China. They must have a Chinese partner company; they have to export a substantial part of their production; they cannot raise finance from China; they in many cases supply defense-technology to China in return for permission to invest in China. Still the foreign companies are going to China as they can use the Chinese workers as they please. Chinese workers have no trade union rights or any basic human rights. Workers who have tried to form independent unions or lead labor protests have been imprisoned for many years, and were severely punished or killed (www.amnestyusa.org/business/chinaprinciples.html). Thus, China is a fascist capitalist country with its economy driven by the foreign capitalists with an insignificant (less than 2 percent) private sector of its own.
Exploitations of the workers are the basic elements of Chinese economic policy. As a result, increased foreign investments do not add to the social welfare of the people of China, but to the economic welfare of a small minority of people in China who are connected to the government, army and above all the Chinese Communist Party. China is using the state power to suck the blood of the workers to enhance its attractiveness for the foreign investors. Should the people of India emulate China to increase economic growth, which would not benefit the people at large, but small elite of India? This is the fundamental question one should ask Amartya Sen, who has spend most of his life explaining the philosophy of welfare but now he is supporting a system that stands against the basic welfare of the people.
The exit policy or the right of the employers to retrench is a part of the so-called "flexible labour market policy’, because of which multinational companies are investing in the special economic zones of China and other emerging market economies. This is the corner stone of Globalization The flexible labour market includes some other characteristics as well: temporary job contracts instead of permanent job, outsourcing of most of the activities, contract labourers, hiring of home based workers and so on. The idea is to save money by not paying pensions, medical benefits, leave entitlements, and complete freedom of the employers not to take any responsibility for the workers. Employers also do not need to have office facilities or factory premises if they can contract out most of the activities. As the employees do not know each other and suffer from the chronic fear of being unemployment, organized trade union activities cannot take place. The employers are at the mercy of the employers and the market forces. China, since it has started her economic reform to transform itself into a pure capitalistic economy, has a flexible labour market with flexibility organized and implemented by her ruthless state machine. India wants to emulate that in the special economic zones in its drive towards Globalization.
Foreign investments are neither necessary nor sufficient for economic development. Both
Japan and the Soviet Union have achieved spectacular economic development with very little or no foreign investment. Indonesia and Thailand have received massive amounts of foreign investment but they are still very poor.
Privatization and downsizing may not lead to economic revival but the result can be just the opposite. China by exploiting the workers and driving out peasants from their home have gathered massive amounts of foreign currency to be used by a minority while the majority of the people are destitute. In China, high economic growth has not touched the majority of the people who are losing whatever economic security they earlier had.
In India situation will be the same with the recent drive for more economic reforms through the creation of Special Economic Zones (SEZ) by evicting farmers, when the majority has not benefited from the "economic reforms’ during the last fifteen years of reforms. This policy will create mass unemployment in a country where employment opportunities are scarce. A country cannot be considered a great economic power if the people are unemployed and destitute and children are without education.
In India, after independence there was no land reforms except in recent years in West Bengal, Kerala and Tripura. However, these land reforms are flawed as it has created thousands of very poor marginal peasants who are now unable to maintain their land holdings due to their debt obligations. The number of landless agricultural labourers are rising in West Bengal and in India on a massive scale. About 80 percent of the population of India are poor by the accetable international criteria, of having less than $2 a day. Most of the poor in India are in the rural economy or they live as destitutes in the urban areas. The only way to solve their problem is not to create small private land holdings but collectivization of agriculture with state supporting every aspects of the life of the people in the rural areas. Rural poverty was abolished in the Soviet Union within two decades by 1940 because of the socialization of agriculture. In this case industrialization can proceed without causing any hardships for the farmers.
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