A third way

  • Nepal’s economy must borrow from both neo-liberal and social democratic orientations
A third way

Jun 25, 2014-

Nepal is semi-capitalist. Nepal has completed a capitalist revolution. Nepal is capitalist. Nepal has been capitalist for a long time. Most of us believe at least one of these statements. We cannot all be right; this is social ‘science’, not a literary quest where perception supersedes reality, so maybe 75 percent of us are wrong.

But who is right? Simply ask ‘What does a capitalist society look like?’ For this, I would like to go beyond rigid Marxist definitions that focus on the stages of history or who controls the means of production. Instead, let us examine other essential features of a capitalist state, including the existence of a pervasive and secure labour market for livelihoods and sophisticated, comprehensive and regulated financial markets.

The Nepali economy

Shifts in historical periods, such as from feudalism to capitalism, are no longer as sharply demarcated and a society may have traditional, feudal and capitalist features at the same time. Hence, let us move on from 18th century Marxist definitions. Simply put, in a capitalist society, people’s major needs (for example, jobs) are met by the market. This is not the case in Nepal, where even if jobs do not come from feudal lords neither do they come fully from the market. We have a large subsistence economy (non-profit production of commodities with family as the production unit), meeting our needs through non-market and non-state institutions (ie families, communities, NGOs), and even these do not fully meet our needs.

Moreover, Nepal’s economy is about 96 percent informal. It resembles a peasant economy more than a capitalist one. However, ad hoc capitalist features exist and hence, the term semi-capitalism, a common rather than Marxist phrase. If this term is problematic then let us call it peripheral or early capitalism, but not capitalist.

Doing so will skip capitalism’s emergence altogether. Imaginary historical leaps and wishful thinking that a word will create the reality, as if by magic will not bring us closer to capitalism.

Thankfully, when Baburam Bhattarai declared that Nepal had completed a capitalist revolution, columnist Khagendra Sangroula quipped ‘Where and when comrade?’

I cannot dwell on all the indicators currently in circulation for analysing our state but Bhattarai’s argument, that a capitalist revolution is complete because the monarchy has been abolished and a political system of federalism accepted, is disappointing. Forget technical terms, just note that it was the monarchist and non-federalist United Kingdom that gave birth to the industrial revolution, Marx’s source of inspiration. Capitalism thrives in any kind of political system, be it China, the UK or the US. Bhattarai also says that federalism is required for historic, lingual, ethnic and regional identity of oppressed jaatis/janajati. However, the free market wants to be free, not shackled to a caste, gender or region. Its rise coincides with increased individual rights, not group-cultural rights.

Capitalism’s transformation

Even if we disagree whether Nepal is capitalist, many agree on the necessity for it to be so. Let us be mindful not to copy the  West’s example from the 18th and 19th century. In the last 100 years, the West itself has transformed that crude form of aggressive capitalism to a broad framework of welfare capitalism. This merges both liberalism and socialism, primarily through welfare state arrangements guaranteeing social rights. Even if such arrangements are continually attacked by both those on the Left and the Right, its basic tenets are irreversible, whether in Scandinavia or in the US.

In his seminal work, the Danish sociologist Gosta Esping-Anderson identified three worlds of welfare capitalism in the advanced capitalist world. These could be distinguished by the level of commodification (dependence on market) on key services. Primarily, capitalism commodifies while socialism decommodifies (decreases dependence). For example, the state steps in when the market fails to provide a livelihood or ensures that social services are provided by it. But welfare states protect only essential services, not everything from the market. Moreover, the former are not fully protected, some more than others—the US the least and Scandinavia the most. Contrary to the dominant notion, a welfare state does not necessarily follow economic growth, but has been a precursor to it.

Unfortunately, the global narrative is misleading: the West derides socialism and state intervention while simultaneously embracing its welfare structure. US President Barack Obama put his political life on the line for Obamacare amid an Australian backlash against Prime Minister Tony Abbott’s $7 rise in Medicare. Abbott’s aim was to protect welfare from market influence—he will possibly lose the next election for this. But due to faulty narratives, these medical and education services are privatised in Nepal, especially by big corporations. Sadly, these are promoted as Western. This narrative must be corrected.

Still, in Nepal neither the state—take the fact that our leaders travel overseas for health check-ups while common citizens die for a lack of treatment—nor the market—take the recent abuse of ambulances and ICU services by private providers) works for the poor. Hence, neither stopping private nor public services is the solution.

On the one hand, state services are non-existent, ineffective or corrupt. On the other, private services are unaffordable, corrupt and increasingly stratifying Nepali children into two classes of citizens, ie through the education system. In fact, informal institutions like NGOs, despite their weaknesses, work for the poor. (Millions were spent on treating KP Oli and the President, for example, while it was NGOs that supported Rihana who was burnt alive by her husband; but I will not dwell on NGOs for now). The point is that we are in a precarious situation of having to reform and use all these institutions at the same time. The challenge is making creative policies that are simultaneously non-stratifying, decommodifying and declientelising (independence from NGOs)—an immensely difficult task.

A Third Way

This is where Nepal can benefit from newer theories referred to as the ‘Third Way’ (not simply mixed economy but its distinct form), New Left or new forms of social democracy popularised by Tony Blair and Anthony Giddens. These are fluid systems overriding the traditional state v market divide, hence accommodating both the Right and the Left without reverting to the debate. According to Giddens, the way forward is to borrow from both neo-liberal and social democratic orientations to shape new politics that is both business-friendly and socially empathetic while avoiding the dogmatic extremes of unconditional deference to market forces or uncritical endorsement of the welfare state.

While Bhattarai has taken up this line recently, his past statements have not matched his actions. In fact, he creates his own definitions, which contradict his ideologies. If he really means and understands what this entails, it should be welcomed. Nepal’s other political parties will also benefit from sticking to this framework. It is broad enough to give each party a distinct political space, but narrow enough in its overall orientation so as not to make futile grand theorising debates. Focus will shift to applying this framework to everyday issues like a Medicare model, education system, housing policy—boring topics, perhaps, but exactly what politics should be about.

Surely, there cannot be a better consensus for the Left and Right than through a ‘Third Way’ model. Unfortunately, those on the Right continue to lecture us on how capitalism is the only way forward while the Left cannot get over a communist ideology hangover. Sangroula criticises Bhattarai’s suggestion of merging socialism and neo-liberalism as a ‘bichitra ko misawati’. However, the best line goes to Pradip Gyawali for saying that ‘neo-liberalism and socialism are so different that their fusion is like a desire to grow a radish and cauliflower from the same hybrid seed but instead, getting the root of a cauliflower and the stem of a radish’. If this is the best Gyawali can come up with, I suggest he try farming.

There is nothing ‘bichitra’ about merging neo-liberalism and socialism. It does not give us paradise but for millions stifled by poverty, it will do for now and it will indeed be radical.

Khadka is a PhD candidate at Monash University

Published: 26-06-2014 08:54

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