How are the farmers protests in India related to India?
As many of you will know, the one-way net-transfer of wealth from India to Britain amounted to $45 trillion USD. This plunder happened largely at the expense of the Indian farmer who paid taxes to the British colonial regime, which then used one-third of those taxes to purchase goods from India for export while pocketing the exchange earnings (read Utsa Patnaik’s piece).
This is the formative historical experience that defines postcolonial India. In the postcolonial era, the US could no longer simply expropriate wealth from one-fifth of the world’s population as Britain could. What it can do is simply print money to import goods from the rest of the world to the point where it is now, a net-importer of capital & goods with the largest net-external debt.
The US needs the third-world to churn out primary commodities in exchange for US dollars, thereby backing the value of the US dollar, which India is willing to do.
These problems did not begin with Modi. From 1991 onwards, India liberalized trade, thereby allowing its agrarian economy to be re-ordered in the image of foreign purchasing power. From 1947 to 1991 the net per-capita foodgrain availability in India rose, but afterwards began to fall, largely because farmers transitioned from producing food crop to cash crop for export. This drove up food prices for the average Indian.
Nonetheless, India retained some level of state planning, including minimum support and procurement prices so that farmers could have guaranteed buyers for their grain. These reforms by Modi undermine those protections, including the ability of farmers to collectively bargain with the help of price-floors. It puts millions of individual farming households at the mercy of a handful of private monopoly grain purchasers.
The real problem in India is that to pay for the expensive luxury-item imports of India’s top wealthiest 10-15%, India has to export a commensurate amount of goods. In my own lifetime the Indian Rupee has devalued against the US Dollar. It used to be that 1 USD bought 25 Indian Rs. but now that latter figure is 73 Rs.
This reflects the reality that India’s current deficits have grown over the past 20 years. How does India pay for its expensive imports? By deflating the incomes of farmers.
The are not only my opinions, these are also the opinions of Utsa & Prabhat Patnaik, two of the most influential Marxist political economists in India today, and of India’s most influential rural reporter, P. Sainath.
Even when the deficits narrow, like they did from 2012 to 2016, the currency continues depreciating. According to Prabhat Patnaik, this is because domestic food-price inflation causes general inflation, which compels Indian elites to take their money out of the country, which then causes the Indian Rs. to depreciate further, resulting in a downward spiral.
I am fully aware that many of these protesting Indian farmers are “kulaks” in the sense that many are landowners, i.e. Jatts in the case of Punjab. But ask yourself the question, if they’re forced by corporate monopsonies to accept lower prices, what will they then pay the landless agrarian proletariat who are largely Dalits? This is why Jatts & Dalits are united on this issue (see link).
Bit of a derail, but herein lies the baffling ignorance of anyone who condemns North Korea for cutting itself off from the rest of the world, without realising the economic logic behind it, which is that national isolationism greatly helps backward countries to develop according to a mercantilist industrialisation plan. At an extreme level, foreign exchange reserves are entirely controlled by the state, which then prioritises the importation of capital goods.
To pull this off, it’s better if your population don’t know about the consumer cornucopia that exists across the outside world. This explain why when I was in North Korea, the slogan we kept seeing was “we envy nothing in this world”. Obviously for India such extreme isolationism is next to impossible given the cosmopolitan character of India that has prevailed since antiquity.