Indian Prime Minister Narendra Modi

The old lefty observation that the only newspaper worth reading was the Financial Times was never more true than in the age of decadent neoliberalism. The typical Trot of yore always had the FT or The Wall Street Journal tucked under their arm, because they knew that the news sections of such papers had to tell the truth about world politics, so that investors could make decisions based on accurate information. Guff about freedom-loving capitalist dynamism and animal spirits could be exiled to the op-ed pages; if you had $50 million in cocoa futures, you wanted to know that starving farmers in West Africa were about to rise up and seize the crop.

There’s a great example of this in this week’s Economist, with a comprehensive report on India’s middle class, and one very important fact about them: there isn’t much of one. The rise of India’s middle class has been trumpeted for years, 300-400 million rising from rural poverty to, etc, etc, all of it modeled on the boasting about China’s new middle class, and all of it with a not-so-subtle point: see, we did it without nearly as much of the blood and chaos China had to go through.

Trouble is, China’s new middle class is a real middle class: people whose parents were, or are, threadbare peasants, now living in apartment buildings in big cities, working in manufacturing, admin or knowledge work, watching cable TV, buying cars and motorbikes, taking holidays at home and abroad. India’s ‘middle class’ is nothing like that. China’s GDP per capita began to take off in the early 1990s, when both it and India had purchasing power parity GDP per capita of around $2000 (in 2011 prices); China’s is now $16,000, while India’s is just below $7000.

That, in turn, means a great division in what being middle class means. In China, it equates to about $20-$30 a day income, enough to make discretionary purchasing in volume available to hundreds of millions. In India, the mean annual GDP per person is just $1700, and 80% earn below the mean. Only around 80 million of India’s 800 million adults earn $10 a day or more.

That yawning gap is expressed most visibly in different consumption patterns. India remains a society where discretionary consumption is the preserve of an elite. China has one car or truck for every eight people; India, one for every 45. There are 100 Starbucks in India — and 3000 in China, with three new stores opening every two days. The smartphone revolution is yet to occur in India, with Nokia-era tiktak phones the norm for those who can afford them. Online retail, after a surge in 2015, barely grew at all in 2016-17, a sign that is has quickly tapped the English-language market it is centred in.

What’s driving this gulf in purchasing power and spread? Inequality, fuelled by neoliberalism, of course. For decades, India was run on nationalist socialist lines, a system that allowed it to make vast strides in agriculture, and its capacity to feed its population, while limiting industrial and retail development. From the ’90s onwards it lurched into a programmatic neoliberalism with shock doctrine privatisations and deregulation. The result has been soaring inequality.

[Rundle: how do you solve a problem like neoliberalism?]

In the 1950s, the middle 40% controlled 45% of national income, the bottom 50% had 20% of it, and the top 10% had 35%, falling to 30% by 1980. Those ratios reversed in the early 2000s: the top 10% now control 55% of national income, the middle 40%, 30% of it, and the share of the bottom 20% has fallen to 15%. This wipes out many of the gains created by the overall increase in GDP. China’s income gap has been nothing like that; its top 1% have 14% of the wealth, compared to 22% for India’s 1%.

Yet these figures hide an even greater disparity. China’s guided state-capitalist development has always had a Rawlsian liberal dimension, in which those most disadvantaged by capitalist transition had compensatory services extended to them. Thus, though rural China suffered from the drive to urbanisation, it has had medical services extended to it, now reaching 100% of Chinese (indeed, much of this occurred during the Cultural Revolution, when thousands of medical students were exiled to the provinces; by 1976, life-expectancy in China was in the mid-60s). Recently, a form of modest social security payment eligibility has been extended to 100% of the population.

Nothing like that is occurring in India. The half-billion rural poor have been offered no systemic pipeline to the cities, as occurred in the five-year plans China instituted when it returned to genuine Marxist policies in 1979 (Maoism is many things; as a philosophy of government, rather than revolution, Marxist it ain’t). That transition occurred at a stage of technical development and world-market demand that made mass proletarianisation possible — factories full of people banging bits of metal into new shapes.

That possibility is now passing, with the growth of automation and consequent productivity rise; there is going to be no market for half a billion rural Indians to become metal-bangers. A small core of India — about 100-200 million — has lifted off, tying its relations to the world market, and leaving 800 million or so in a hybrid pre-capitalist world. With no steered redistribution, the divide of life-chances is stark. Most children have primary schooling at most, and 10-15% remain fully illiterate. And 38% under the age of five are malnourished with regard to neurological and muscular development, due to poor nutrition and underfeeding.

That is, quite simply, the failure of capitalism, if capitalism is applied as a dominant policy and not as part of a wider, steered approach to development. In India, on the pavements, you will be stepping over the great grandchildren of the people your great grandparents stepped over. Nothing like that has occurred in China.

[How did more than three-quarters of the cash in India become worthless overnight?]

These simple calculi are not the last word on development, happiness or meaningful existence of course. China’s dilemma is that it has created something of a modernist nightmare, hundreds of millions unmoored from traditional life — which it proposes to steer with a suite of new totalitarian social control tools. India, by being resistant to modernity, has left myriad forms of life in place, from which new hybrids of modernity and tradition might spring — ways of life which may well be able to avoid the worst of modern anomie, while tackling the brute rule of nature over human existence.

But there has been a high price to pay, in the millions of unnecessarily starved, dead and diseased of India — stretching back to the liberalism-caused famines from the 1860s to the 1940s. Nor will those dead get their due; their dying lacks the spectacle or grotesquerie of directly politically caused famines, and so is bypassed as an occasion for moral reflection — a measure of the fact that, in the 20th-century and this one, political aesthetics led ethics. There is no Solzhenitsyn of everyday squalor. The Economist’s wrap-up of the issue reminds us of the second part of the “read the FT/WSJ” adage — that the rationality of their news pages was in inverse proportion to the deranged ideology of their op-ed pages. 

The Economist’s solution in its leader? Indian online businesses need to have more sites in non-English Indian languages. Ha, yeah that’ll fix two decades of neoliberal dedevelopment. We are well on the way to the point where even The Economist doesn’t believe The Economist anymore — and that can be taken for the neoliberal order in general.   

*All statistics taken from, or derived from, figures quoted in The Economist story, “The elephant in the room“, 13/1/18, pp. 16-18.

Peter Fray

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