Vol. XLI No. 38 September 17, 2017

MNCs and Third World States

Prabhat Patnaik

DR Timothy Wise, a well-known expert on agriculture based in the US, tells an instructive story about Monsanto and Malawi, a country currently in the process of finalising its seed policy. In Malawi, as in most other third world countries, peasants have traditionally stored their seeds from the previous harvest for their next planting, and have met and exchanged seeds among themselves in local seed-fairs. When they do get seeds from other peasants at these fairs, these seeds become their own and do not have to be re-purchased every year, unlike the seeds bought from multinational corporations like Monsanto. And since peasants are always engaged also in improving the quality of their seeds through their own local-level experimentations, some of the seeds they develop are truly of quite outstanding quality, such as for instance an orange maize variety developed by local peasants in Malawi.

The agriculture ministry of the Malawi government recently issued a notice that in the local seed-fairs where peasants congregate, only those seeds could be sold which had been registered with the government, which meant commercial seeds that were typically the property of multinational corporations, rather than the local seeds whose exchange among peasants had been a traditional practice. This basically meant a suppression of the informal seed market and its replacement by the formal market dominated by MNC seed-suppliers. It also meant forcing the peasants to get into the clutches of these MNCs, for whenever they would seek to diversify their seed sources, they would henceforth have to purchase perforce from these MNCs, which insist that their seeds have to be purchased afresh each year. And since the MNCs that supply seeds also insist that pesticides too must be purchased from them, for otherwise they cannot vouch for the yields of these seeds, once the peasants get into the clutches of the MNCs for seeds, they also become more comprehensively dependent upon them. The Malawi government’s notification about seed-fairs therefore was not just a violation of farmers’ rights; it was meant palpably to further the interests of MNCs at the expense of the peasants on the plea that old “primitive” practices had to be abandoned.

But the amazing part of the story is that Malawi’s new official seed policy had been written by two authors one of whom happened to be the country director for Malawi of Monsanto itself! In other words Monsanto was actually writing the Malawi government’s seed policy whose effect would be to hand over the peasants into its own clutches. To call this a case of “conflict of interest” is an understatement. A more blatant case of an MNC using the government for its own benefit at the expense of large numbers of peasants can scarcely be imagined. This indeed is what “globalisation” has come to signify at present.

Lest it be thought that its smallness and its absence of a democratic tradition makes the Malawian State more open to being solicitous of MNC interests, what is happening in India despite its large size and long democratic tradition is in essence hardly any different. The Modi government, almost echoing its Malawian counterpart, wants to get rid of the old “primitive” habit of cash transactions among people, by coercing them into cashless transactions which entail forcing them into parting with their meagre resources to boost the profits of those multinational financial companies that arrange such transactions. To be sure, as far as we know, there have been no representatives of companies like Paytm dictating government reports, if any, that recommend such a move, as was the case with Monsanto and Malawi. But the fact that Paytm came out with full-page advertisements on the morning of November 9, 2016, within hours of Modi’s demonetisation, hailing the move, suggests a closeness to the government that could well parallel Monsanto’s closeness to the Malawian government.

The third world States have thus come full circle now. In the aftermath of decolonisation, the newly-independent States that came into being, even as they were promoting capitalist development, sought to defend not just the domestic capitalists against foreign multinationals but also the domestic petty producers, including the peasantry, against foreign capital, and even to an extent the domestic big capitalists.

In India the State interposed itself between the peasantry and big capital, both domestic and foreign, in several ways. The new seeds that came to the peasantry, which for example underlay the “Green Revolution”, were adapted from foreign varieties for local conditions or were directly developed by government research establishments and distributed through a government-run extension service. Government agencies undertook procurement operations at remunerative prices, not just in food crops, but even in commercial crops, where the various commodity boards carried out market intervention. Public sector banks which accounted for the bulk of the banking system took the lead in making institutional credit available to the peasantry. And other important inputs too were made available to the peasants, at subsidised prices, through the efforts of the government.

With the pursuit of neo-liberal policies all this was withdrawn. The State retreated from its role of defending and protecting peasant agriculture, a role that no doubt had benefited the landlord and peasant capitalists far more than the other segments of the peasantry, but a role that nonetheless had kept multinational agribusiness and the domestic monopoly capitalists at a distance from the agricultural sector. This so-called “withdrawal of the State” which was in effect, though implicitly, a promotion of the interests of the domestic and foreign big business, opened up agriculture to encroachment by the latter.

We are now witnessing further “progress” along these lines, where the third world State explicitly aids and abets, through open coercion, a process of primitive accumulation of capital that squeezes peasants and petty producers for enhancing the profits of big business. Demonetisation in India, though it was sought to be justified through arguments that it would curtail the black economy, arguments that were mere red herrings (though some in the government may have been gullible enough to believe them), was essentially an aid to such a process of primitive accumulation of capital.

It is hardly surprising that in this phase when the third world State is deliberately encouraging a process of primitive accumulation of capital by domestic and foreign big business at the expense of domestic petty producers, representatives of the latter actually decide on behalf of the government the very policies that benefit them. They operate not just through the World Bank or other similar organisations, but directly by having their representatives on government bodies and committees.

This was first tried in India in 2004-05 when the UPA-I government’s Planning Commission had appointed a number of advisory committees and put representatives of foreign companies on them. There was however a massive uproar in the country on this issue, since it constituted a clear case of “conflict of interest”. Since that government depended on Left support for its survival it was forced to retreat, which it did by simply disbanding all the advisory committees.

But we have come a long way since then, when even having corporate representatives on government bodies appears to be a merely minor matter. Corporates which have financed the Modi government’s ascent to power, now have a direct say on government policy as they extract their pound of flesh in return. A spate of privatisation measures is reportedly imminent, with the Niti Aayog even suggesting a withdrawal of the government from the sphere of healthcare. The stifling of dissent, the assault on criticism, the rampant authoritarianism that the Modi government is resorting to are not unrelated to this. As the economic crisis accentuates in the country and the  government’s utter helplessness and incapacity in the face of it becomes manifest, both the authoritarianism it is imposing and its pandering to foreign and domestic big business will also increase.