CAPITAL AND LABOUR

CONTESTATION IN INDIA IN THE NEO-LIBERAL ERA

WAQUAR AHMED

ABSTRACT

This paper applies a number of social theories to understand

contestation between labor and capital in India in the neo-liberal era.
Examining the role of the state in redefining what is social and anti-social
in the context of activism on the part of labor, this paper analyses the
relationship between state and society in facilitating the embedding of a
neoliberal regime in India on the one hand, and the opposition posed by
labor to such processes, on the other.

INTRODUCTION

The dominant strategy in international trade and commerce has its roots
and motives in the furthering of interests of the Multi-National
Corporations (MNCs), based in the 'Developed West'. The MNCs
function with the motive of expanding their market and increase their
profitability. This strategy, also called the Schumpeterian Workfare or
Neo-liberal policy, tends to give primacy to capital over labor (Painter
1995; Peck 1999). The neo-liberal discourse is pushed forward not only
by the MNCs, but is strategically supported by the state(s) on which
MNCs have a substantial influence and further validated and promoted

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by supra-national bodies like the World Bank (Wade, 1996). The neo-
liberal agenda in developing countries are promoted as developmental
initiatives with the underlying argument in favor of free trade which is
expected to 'integrate' the world market, facilitating functional
integration of the world and international flow of finance (Friedmen,
1999). More often than not, the less industrialized countries are
projected as 'helpless' victims of the neo-liberal agenda. Surely, the 'West'
has an intrinsic interest in 'forcing' open the markets of the less
industrialized countries. However, not recognizing the role of the state,
society and interest groups in developing countries that facilitate and
promote neoliberalism (Bosco, 98; Park, 1998; Kleniewski, 1984) and
the agencies that oppose such a set up (Alvarez, 1997; 1998; Ribiero
1998) is equivalent to being oblivious to significant aspects in the
explanation of how the neoliberal economic regime is getting embedded
in these national economies. This paper examines the role of the state and
a section of the society as facilitators in the new economy on the one
hand and the opposition posed by labor to such a system on the other. I
have especially focused on the struggle between labor movement/unrest
and the role of the state in redefining what is social and anti-social in the
context of activism on the part of labor. In doing so, I have examined the
driving forces of the new economy where I have analyzed the conditions
that have been important in these developments. Secondly, I have
examined the struggle between the state and organized protests by labor
against the domination and prioritization of capital in India, which is
constitutionally obliged to move towards a socialist pattern of
development (see Preamble to the Constitution of India).

DRIVING FORCES OF THE 'NEW ECONOMY'

After attaining independence from British rule, India adopted the

socialist pattern of economy as a developmental strategy. However, it was
not until 1976 that socialism was envisaged as official state policy by its
inclusion in the Preamble of the Indian Constitution. While on paper,

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India continues to be a socialist economy, by the late 1980s India's

economic policy started undergoing transition as India started
'integrating' with the global economy. The general notion about this
transition is that this was on account of external influence from the
World Bank and the International Monetary Fund, as India's financial
position was weakened on account of a balance of payment crisis,
especially in the early 1990s. A point missed out in such an explanation is
the fact that increasingly, a section of the Indian population and those
who have a strong say in running the state, are of the opinion that it is
important to give primacy to capital over labor in order to 'develop' the
way the 'West' and the East Asian countries have done. I have examined
this dominant discourse following methods suggested by Foucault
(Burchell et al, 1991), i.e. hermeneutics which is a deep probing of
discourses for their hidden meanings and the archaeological method
which is the study of events: what actually was said and the rules that
made certain things sayable and interpretable at a given moment in
History. Drawing form Foucault (Burchell, et al, 1991; 143), who was
interested in critical reflection of governmental reason, I have examined
generally accepted economic rationality as political outcomes in
governmental reasons.
As capital becomes increasingly mobile, relocating to take advantage
of lower costs of the factors of production, has increasingly become a
norm - in India's case this factor being cheap labor. This coupled with the
fact that India has a large population which is conversant with the
English language, has provided fertile grounds for the growth of its
service sector, especially call centers, that is linked to and dependent on
the economies of the English speaking developed countries. This is an
age where cyber space has become very important. There has been
tremendous advancement in information and communication
technology, and in the context of the neo-liberal economy, technology
has had a very important role, especially when one talks about the
relocation of service sector industries to India. However, a conventional
distinction between the social and the technical & the material in this

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context is a faulty one. Technology is not a black box around and against
which social action flows, but is a part of the network in which the neo-
liberal economy operates (Law, 1991). The necessity of capital to locate
where labor is cheap, the technological advancement in the field of
information and communication, the presence of a large and cheap labor
force conversant with the English language and the burgeoning rich and
middle class population having the aspiration of attaining material
comforts of the kind available to people in Europe and North America,
are all part of the network in which the neo-liberal economy thrives.
Looking at these conditions as linked in a network seems more logical
that dividing these conditions into necessary and contingent.
Here, one cannot miss out on referring to Hardt and Negri's (2000)
argument that although nation-state based systems of power are rapidly
unraveling in the force-field of world capitalism, globalization cannot be
understood as a simple process of de-regulating markets. Far from
withering away, regulations today proliferate and interlock to form a
supranational order which the authors choose to call 'Empire'. The term,
as is used, refers not to a system in which tribute flows from peripheries to
great capital cities, but to a more Foucaultian figure: a diffused,
anonymous network of all-englobing power. In this sense, numerous
developing countries cannot be viewed as being exploited by the
'Empire', rather, the diffused form of power spreads its tentacles to
empower certain groups within these developing countries. These
groups are as much a part of the 'Empire' as the MNC with its
headquarters in the United States or the supra-national organization like
the World Bank, the World Trade Organization, etc.
Various kinds of contestations within India have had important roles
to play in its economic transition. Despite the fact that India's economy
was ravaged under colonialism, it did not lead to the elimination or
disappearance of the elite. The colonial government promoted feudalism
since this made tax collection autonomous and simpler. After India
attained independence, it was this feudal class that was economically and
socially advantaged, and was able to usurp power through the state

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(Rudolph and Rudolph 1987). As economic disparity remained large,

the section of the population that could be termed as elite or rich
remained small. India's 'green revolution' in agriculture in the 1970s,
was followed by the emergence of a class of farmers who became rural
elites as they benefited substantially from the new technology, which
again had a class and regional bias (Rudolph and Rudolph 1987). This
was because this new technology in agriculture was relatively expensive
and only farmers who had the money to make initial investments could
benefit from this increased agricultural productivity.
The cities too saw the emergence of a 'middle class', a group of
people who had the purchasing power to acquire consumer durables.
Most of those constituting this middle class population have been
employed in factories or the service sector. Similarly, the country came to
have a relatively large group of medium to small-scale entrepreneurs who
had initially benefited from the state's protectionist policies. Thus, by
the time the economic transition was in its incipient state, India had a
substantially large population consisting of people who had money or
had accumulated some capital, and along with that, had the aspiration to
accumulate more. This class was not satisfied with the rate at which
money-making opportunity was growing in India and they were
vehemently opposed to the high taxes that the state levied on their
incomes. By the time economic transitions started taking place in India,
a section of the population, especially the entrepreneurial class, those
employed in high-end, high-paying jobs in private companies and the
educated but unemployed youth, wanted it. These groups have by and
large benefited from the 'new' economy. They form a powerful pressure
group that ensures that the government continues to facilitate and
promote a policy that has adversely affected the rural poor (Patnaik,
2004) and led to the loss of jobs of a large number of workers who were
employed in public sector organizations.

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HEGEMONY AND RESISTANCE

Foucault (Burchell, et al. 1991) points out that modern governmentality

is characterized by a pulling back of the state and an increasing delegation
of control over its citizens to the local, microscopic level of power. Under
the free-market regime, the state seems to disappear, yet a pervasive
disciplinary power is exercised over people's lives in the workplace, at
home, in parks and literally everywhere. Increased freedom is granted to
the citizen, but that freedom is governed and manipulated by ever-more
sophisticated forms of power. It is the free self-regulating individual who
is the object of governmentality (Burchell, et al. 1991). This idea of
Foucault ties up well with Lefebvre's (1991) concept of oeuvres, which is
about the production of knowledge of institutions of all that constitutes
society. I am especially reminded of the media dictated production of
knowledge and rationality and state dictated ideas of social and anti-
social in India - unionization and strikes are increasingly being accepted
as anti-social and anti-developmental. The 'science of policing', specially
self-policing, is being increasingly promoted by the state in order to
provide impetus to the neo-liberal agenda. Media, both print and
electronic, is controlled by that section of the society in India that stands
to benefit or has benefited substantially from the 'new economy'. Any
force that tries to challenge this juggernaut has to face the wrath of the
entire system including powerful politicians, the bureaucracy, the media,
business interests, etc. Even the judiciary is a part of this system and the
dominant discourse that is legitimized by the network which the
'empire' encompasses is the basis on which laws are interpreted.
What Lefebvre (1991) classifies as the triad of categories, i.e. the
physical which includes nature and the cosmos, the mental which
conceptualizes logical and formal abstractions and the social which is the
product of the means of the production that becomes the dominant
category with capitalism's hegemonic power relations, in reality gets
enmeshed in one another to create the space that is believed to be real and
ideal. Similarly, Lefebvre's (1991) spatial practices (experience),

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representations of space (perception) and representational space

(imagination) seems enmeshed in one another to produce space that is a
physical reality as well as a mental construct having its groundings in
material practices. In the case of India, the material practices of those
who gain from the neo-liberal economy is enmeshed in the physical as
well as the mentally constructed space, and this group ensures the
production of space along with ideas and symbols that suit their interests.
Historically, the most powerful counter-hegemonic force that exists
is, as Frazer would term it, the “subaltern counter publics” (Alvarez,
1997, 1998). Under the conditions prevailing in India, as in many other
places, these subaltern counter publics take the shape of unionization
and organized resistance. The history of organized protests and strikes in
India dates back to the freedom struggle when this strategy would be
employed to bring the imperial economy to a grinding halt. Post-
independence, in a socialist economy, the strategy of unionizing and
strikes were used by the laboring class to demand improvement in their
working conditions, increase in pay and other benefits. Such activism
was seen as a legitimate right of the working class to protect their
interests. However, in a neo-liberal economy, such activism is
increasingly being seen as impediments to capital gaining primacy and
anti-developmental. A cursory view of the spatial aspect of foreign direct
investments that have come into India makes it apparent that such
investments have taken place in cities like Bangalore and Hyderabad
which have a relatively mild history of labor unrest or unionization. On
the other hand, traditional industrial centers like Kolkata and Howrah,
which have had strong labor unions, have hardly benefited from the
relocation of internationally mobile finance. While the subaltern
counter-publics try to organize and change their own conditions, the
dominant discourse within the power circles now is that strikes interfere
with the exercise of freedom of other citizens. On a more realistic note,
strikes or any other radical initiatives taken by workers, provides a
disincentive to capital to locate in such place or presents a hindrance to
business in its efforts to reduce labor cost and maximize profit. Thus, the

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real motive in efforts towards de-legitimizing strikes is to attract

investments and provide entrepreneurs the opportunity to exploit cheap
labor to increase profits. A substantial section of the population believe
that strikes might completely halt locomotion and as a result involve
danger to life and property, particularly of those who attempted to go
against the strike. Thus, labor activism is increasingly being seen as a law
and order problem (The Hindu, 2000). In the last ten years, there have
been various judgments at the state level delivered by the state high
courts and upheld by the Supreme Court that have viewed strikes as
'anti-people' and have declared bandhs (a general strike which disrupts
traffic and commercial activities) as illegal. In 1997 the Kerala High
Court declared bandhs as illegal and in 2003 the Calcutta High Court
imposed a ban on meetings and processions in the city on working days
(Financial Express, 2003).
Examination of newspaper articles in leading business/economic
English language dailies on issues related to such strikes provides insights
into the discourse surrounding the same. Terms or phrases associated
with strikes are 'bane', 'damage to public property', 'irresponsible', etc.
According to an article in Business Line (2000), “it is high time a law was
enacted to regulate, or ban, strikes so that the freedom guaranteed under
Article 19 (1) of the Constitution of India is restored. Article 21
mandates that no person shall be deprived of his life or personal liberty
except according to procedure established by law”. Thus, a process of de-
legitimizing such strikes is seen to be operating in the public domain and
through public debate. It is being projected as an activity that deprives
people of their personal liberty. When the Kerala High Court declared
that “the enforcement of a strike by force, intimidation, physical or
mental coercion would amount to an unconstitutional act”, it was
merely expressing the opinion that had been promulgated and accepted
as real and ethical by those who were challenged by such strikes.
Gathering support and campaigning in order to ensure the success of a
strike had always been considered legitimate in India but by including
the phrase 'mental coercion' the court seems to have de-legitimized any

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activity that might involve campaigning and convincing others to join in

or support, since these might easily be construed and reported against as
mental coercion. Such discourses have wide ranging implication on the
use of public places as sites of protest and resistance. The current effort
seems to be geared towards eliminating contradictions within the city
space where financial centers and symbolic spaces, where people get
together to protest against any kind of oppression or to air their view in
public, exist juxtaposed. Cities, adhering to the neo-liberal norm of
competition, are competing to attract investments and under such
circumstances, any resistance against the domination of capital or moves
to empower labor and ensure better working conditions and wages, is
viewed as attributes which act as disincentives for locating
internationally mobile capital. My own experience as a student activist
points to the fact that sharp boundaries are being drawn in cities to
demarcate where people can assemble and exercise their rights to free
speech and protest. Such places are usually located away from the
commercial hubs and areas with high traffic. Thus, protestors are
expected to assemble and air their grievances at places where their
activities draw minimum attention of the media as well as the public at
large.

CONCLUSIONS

It would be a folly to believe that the neo-liberal network is so

powerful so as to subvert and relegate the subaltern counter publics into a
position where they are completely hegemonized. As the beneficiaries
and champions of the gains of the neo-liberal economy try to attain
greater submission and impose docility upon labor, by de-legitimizing
strikes and other kinds of radical activism, organized resistance is taking
new forms. Taking advantage of the technological advancements in
global communications and exchange of information, subaltern counter
publics are sharing concerns at the global level and evolving strategies to
develop counter hegemonic forums with the help of capillary power

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emanating at the grass root levels. Evidence of such resistance can be

found in the development of such bodies as the Asia Social Forum, the
World Social Forum, and many others. Such forums provide avenues to
grass root level NGOs, labor unions, indigenous peoples, environmental
groups, et al to evolve strategies for resistance. According to the World
Social Forum website:
The World Social Forum (WSF) was created to provide an open platform to
discuss strategies of resistance to the model for globalization formulated at the
annual World Economic Forum at Davos by large multinational corporations,
national governments, International Monetary Fund, the World Bank and the
World Trade Organization, which are the foot soldiers of these
corporations………
Is firmly committed to the belief that Another World Is Possible. The WSF is an
open space for discussing alternatives to the dominant neo-liberal processes, for
exchanging experiences and for strengthening alliances among mass
organizations, peoples' movements and civil society organizations…..
Only time will tell as to how successful these endeavors turn out to
be, yet, I believe that such resistance emanating from the grass roots level
and having a global outreach seems to be the common strategy that the
subaltern counter publics seems to have evolved (see Bosco, 2001;
Alvarez, 1998). In the globalization era, they believe that global alliances
are necessary to pose a realistic challenge to neo-liberalism.

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