The ''Peoples' Plan campaign'' in the Indian state of Kerala, which led to the devolution of nearly a third of the Plan outlay of the State to Local Self Government Institutions (LSGIs) to spend on projects of their choice, has of late generated much controversy. Many have even argued that ''decentralization'' is a part of the imperialist agenda and that the Left's adoption of it represents a capitulation (which can be explained only through the ''erroneous'' activities and understanding of some leading Comrades). This entire line of criticism however misses a basic point, namely that the ''decentralization'' proposed by the Left, propagated through the Peoples' Plan campaign, and implemented during the years of LDF rule is fundamentally different from the ''decentralization'' promoted by the World Bank and other imperialist agencies. While the ''decentralization'' agenda of the Left is a means of carrying class-struggle forward, of buttressing the class-strength of the rural poor by developing institutions where they can, in principle, assert themselves directly and hence more effectively, the ''decentralization'' promoted by the imperialist agencies has precisely the opposite objective, of blunting class-struggle, of encouraging a scenario of ''obedient-and-supplicant-villagers-being-patronized-by-NGOs'', and of substituting the concept of the ''Rights'' of the people by the concept of ''Self-Help''. In pushing their agenda, it is in the interests of the imperialist agencies to pretend as if there is no difference between their programme and the Left programme. But for that very reason it is essential for the Left to emphasize in every possible manner the difference between the two agendas, to highlight the specificity of the imperialist agenda, if it is to defeat the latter.
I
It is a deliberate ploy of imperialism to borrow concepts from the Left
and incorporate them into its own lexicon after giving them a different
meaning. This habit of borrowing concepts serves many purposes: first,
the analytical depth that is usually associated with any Left concept
is mistakenly attributed to the imperialist concept as well and imparts
a prestige to imperialist theory; secondly, since the same concept is
used by the enemies of the Left as by the Left itself, it creates confusion
in Left ranks, and blunts a basic weapon of the latter, namely theoretical
clarity; thirdly, by creating fuzziness around basic concepts imperialism
seeks to destroy clarity of thinking in society as a whole, which helps
to establish and perpetuate its hegemony.
Consider an example. Terms like "structure", "structural
change", "structuralism", and "structural reforms"
were originally developed in the ranks of the Left as a critique of imperialist
theory. As against the standard imperialist view that the free market
was the panacea for the ills of the third world, the Left advanced the
theory that the third world needed a rupture with the structures inherited
from its colonial and semi-colonial past, via land reforms, via de-linking
from the imperialist-dominated world market, via building up the public
sector as a bulwark against metropolitan capital, and via a rapid process
of planned industrialization. This was so clear an intellectual divide
that the term "structure" was as much a short-hand for Left
thinking as "market" was for the Right. And yet today the term
"structural adjustment" has become a central part of Fund-Bank
theory; it is given a meaning that is precisely the opposite of what it
originally meant within the Left lexicon, namely "opening" the
economy to the free play of the so-called market forces. Imperialist agencies
simply took over a Left concept and used it for their own purposes after
giving it a different meaning.
The same is happening today to the concept of "decentralization",
which has been, for a very long time, and particularly in India for the
last quarter of a century, i.e. since 1977 when the Left Front government
came to power in West Bengal, an integral part of the Left lexicon. This
was long before the so-called "economic reforms" began and the
Fund and the Bank started strutting around on the Indian scene. But soon
they, and other imperialist agencies like the ADB and DFID, started talking
about "decentralization" as if they had invented the term, and
giving it a fundamentally different meaning from what it had as part of
the Left lexicon. So successful has been their ploy that today, as mentioned
earlier, many who claim to owe allegiance to the Left have actually started
demanding that the Left should have nothing to do with decentralization
which is an imperialist concept and hence a part of an imperialist conspiracy.
This is "liquidationism" at the level of theory. Instead of
exposing the imperialist game of taking over Left concepts and exploiting
their legitimacy for its own nefarious ends, this perception actually
accepts imperialist claims of having authored the concepts themselves,
and abandons legitimate democratic issues on the absurd ground that if
imperialism is talking "about the same thing" then they cannot
be legitimate democratic issues. The whole point however is that imperialism
is not talking about the same thing.
My purpose in this paper is to distinguish between imperialism's concept
of decentralization and the Left concept which, as already noted, is far
older and rooted in its own philosophical tradition. I shall not however,
for reasons of space, be going into the whole gamut of Left thinking on
this question. I shall confine myself only to the concept of decentralized
planning as conceived of and practised by the LDF government in Kerala,
examine its specificities, and show the difference between this practice
and the one advocated by the imperialist agencies.
II
Two basic questions can be asked about Kerala's "decentralization"
experiment. First, what is its relationship with planning? And secondly,
what is its link with class-struggle in the countryside? In this section
I shall address the first of these questions, keeping the second to the
next section. Section IV discusses the contrast between this "decentralization"
and the imperialist concept. The last section contains some concluding
observations.
Even traditionally, i.e. prior to the intrusion of the imperialist concept,
the term "decentralization" had been used in different contexts
to mean several different things. To examine the specificity of the Kerala
experiment therefore let me begin by distinguishing between some of these
traditional meanings.
There are at least four different senses in which the term has been used
in the economic literature. The first is decentralization as in a capitalist
market economy, where there are a number of separate decision-makers,
such as firms and consumers, and the overall functioning of the economy,
its performance in any period and its dynamics over time, is a resultant
of these dispersed individual decisions. By contrast a planned economy
in its classical meaning is supposed to function on the basis of centralized
decision-making. A comparison between the two systems of decision-making
used to be a common theme in economics at one time, and the case for the
superiority of the centralized system was argued on the grounds that it
overcame the "anarchy of the market" to which Marx, and Keynes,
in their different ways had drawn attention[1].
(Maurice Dobb and Michael Kalecki were perhaps the most persuasive presenters
of this argument).
The other three senses in which the term has been used refer essentially
to the context of a planned economy itself, but one which despite being
planned is not centralized in the sense of being a "command economy".
The second meaning of the term has to do with decentralization as an arrangement
for information flow in a planned economy, such as was proposed famously
by Oskar Lange and later by Kornai and Liptak. Of course the Lange vision
of decentralization, and that of Kornai-Liptak, referred not to actual
decentralization but merely to a procedure of central planning, to the
operation, as Joan Robinson was to put it, of a "pseudo-market"
in a planned economy, so that the plan gets finalized on the basis of
a two-way flow of information between the central planner and the individual
enterprises.
The idea is the following. The Central Planner announces a set of prices
(these prices are only announced, they do not actually rule in any market),
and on the basis of these prices the enterprises inform the Planner how
much they would like to produce in order to maximize the enterprise profits.
Since the sum of these output decisions would differ from what the Planner
might wish to have as the Plan target, it would then announce a set of
revised prices; and so the ''iteration'', i.e. the to-and-fro movement
of information, would continue until a final Plan is prepared. The sole
advantage of this ''iteration'' proposal is that the Planner does not
need to have detailed knowledge of all the resources and raw materials
available with each and every enterprise[2].
Even though this ''iteration'' is supposed to occur only through a "pseudo-market",
i.e. only through an exchange of information to which there is no actual
market counterpart, one could in principle even make this ''iteration''
occur in actual practice. The Central Planner could announces a set of
prices, leave it to enterprises to produce amounts they like at these
prices, and hold unsold amounts as stocks. In all cases where the stocks
were large, the prices could be lowered and where they were small, prices
could be increased, and so on. There would not then be one overall final
plan, but a series of adjustments on an initial blue-print, approximating
towards but never actually reaching a final consistent document. Room
would have to be made in such a case through appropriate institutional
provisions (e.g. larger inventories etc.) for the realization of such
an approximate plan, but a planned economy of this sort could still function
in a manner that curbs on the whole the anarchy of capitalism.
The third sense in which the term decentralization has been used is in
the context of the view that the unit over which planning is done is not
the country's economy as a whole but the economies of particular parts
of it. Here we have not a change in the model of central planning, but
a splitting up of the units over which the central plans are formulated.
(And if we are talking not of a fully-planned economy but of a mixed or
partially-planned economy, such as India was in its dirigiste phase, then
"decentralization" would refer to a reduction in the size of
the unit over which such partial planning is done.) An idea was current
among several progressive thinkers in the country at one time that, barring
a few areas such as defence, communications, and foreign policy etc.,
the rest of the functions of the government, including in particular development,
should be undertaken by the State governments. Whether the Centre makes
actual resources available to the States for this purpose, or resource-raising
powers are themselves transferred to the States, this perception of "decentralization"
amounts to a change not in the relation between the plan and enterprises
but in the unit over which planning, of whatever variety, occurs.
The fourth concept of "decentralization" refers to a situation
where, if an individual or collective unit is to be the beneficiary of
a set of projects in a particular sphere, then they should be allowed
to finalize the precise mix of such projects. This is nothing else but
an extension of the principle that when it comes to certain kinds of goods,
it is better that individuals (or families) are given the cash to purchase
these goods[3], rather than these goods being
made directly available to them, a principle that often goes under the
grandiose (and, in capitalist conditions, misleading) title of "consumers'
sovereignty". In certain spheres in other words, "users' sovereignty"
should be respected.
The last two meanings of the term "decentralization" might appear
to be too close for drawing any worthwhile distinction between them, but
there is a significant difference in "quantity" between the
two cases which almost amounts to a difference in "quality".
I perceive these four cases in the following terms respectively: "decentralization
as anarchy", "decentralization as iteration", "decentralization
as multiplication" and "decentralization as users' sovereignty".
Of course in practice these different cases come not in pure form but
often jumbled up, and neat pigeon-holing of any actual case of "decentralization"
into any one of these cases may be difficult; nonetheless this distinction
is useful for assessing the implications of particular cases of decentralization.
For instance it would be grossly erroneous to see the Kerala case of "decentralization"
through "peoples' planning" as engendering either "anarchy"
or "multiplication" or mere "iteration". It is quite
clearly of the fourth kind. It does not in principle negate planning (even
of the sort we have in India); rather it is based on invoking, implicitly,
the concept of "users' sovereignty" as justification for the
devolution of plan funds to LSGIs for undertaking certain kinds of projects
within an overall plan.
Two caveats have to be entered here. First, if a plan is to have consistency,
i.e. various commodity balances have to be satisfied, then the fact that
the mix of projects is left to the individual LSGIs would have problematical
implications. Flow excess demands and flow excess supplies of particular
commodities would arise on account of the fact that the decisions of the
individual LSGIs are not co-ordinated ex ante. But this problem (as in
the second case discussed above of real-life ''iterative'' planning) can
be resolved through the holding of appropriate inventories. Secondly,
if the LSGIs are to be not merely plan-fund-using institutions but are
to take some initiative in mobilizing resources of their own and using
these for their own purposes, or even taking on productive roles and using
the proceeds obtained from doing so for their own purposes, then these
activities and the expenditures generated on account of them would constitute
"add-ons" to the basic plan of the economy. These "add-ons",
since they are not based on any ex ante co-ordination, could upset the
basic balance of the plan by creating ex ante flow excess demands and
supplies. Once again however the problem can be handled by making prior
provision for such contingencies through the appropriate provision of
inventories or by maintaining a higher level of planned excess capacity
in the productive sectors within the framework of the plan itself.
It follows then that the "peoples' planning" experiment of Kerala,
while it entails "decentralization", in the sense that the budgeted
amount earmarked as expenditure on certain items in the plan, such as
rural infrastructure, is handed over to the LSGIs in order to reflect
better the preferences of the users, does not mean a negation of planning.
On the contrary, it can be defended on the grounds of "users' sovereignty".
True, the amount handed over to the LSGIs has been fixed as a percentage
of the total plan outlay rather than being independently determined on
the basis of the estimated expenditure under the relevant heads, but the
figure for this percentage itself has been arrived at by considering the
approximate proportion of expenditure actually incurred in the past on
these items. Hence the "users' sovereignty" argument is not
undermined by the fact of the devolution being fixed as a percentage of
plan funds.
The additional merit of the Kerala experiment consists of the fact that
"users' sovereignty" is sought to be exercised through collective
bodies directly or through their democratically elected representatives.
This brings me however to the second question that can be asked about
Kerala's decentralization experiment.
III
To see LSGIs as being uncontaminated by class-struggle would be an idealistic
error, reminiscent of the old "village community" hypothesis
of Baden Powell. They contain class contradictions, and the mode of use
of resources devolved to them under the decentralization agenda occurs
via class struggle (whose intensity however varies depending on the degree
of antagonism that is immanent in the class configuration). But even if
there was no decentralization and the mode of use of plan resources for
these particular items was bureaucratically determined, then the outcome
would still have been determined by class struggle, but class struggle
over shaping bureaucratic preference. In short, decentralization neither
does away with, nor engenders, class-struggle in the countryside which
exists anyway and is a fact of life.
The impact of decentralization on this pre-existing fact of life can be
three-fold. First, it provides an opportunity to the rural poor to assert
themselves in a way that bureaucratic decision-making would not have made
possible. True, the bureaucratic outcome may turn out in many instances
to be more "humane", but it leaves no scope for the rural poor
to realize their subjectivity in this domain. For this very reason however
the need for organizing the rural poor to assert themselves becomes paramount,
and this need can be fulfilled only through the intervention of a political
Party. The idea of Party-less LSGIs in other words represents a throwback
to the idealism of the "village community" concept. This greater
ability on the part of the rural poor to assert themselves would necessarily
come into conflict with the prevailing property relations in the countryside
(except in situations where radical land redistribution has already been
carried out), but that only underscores the fact that "decentralization"
is a part of the dialectics of class struggle. It is not some "ideal"
arrangement at which society can remain frozen, but part of the process
of carrying forward the dialectics of class struggle, which does not necessarily
mean of course a state of continuous violent conflict. (In fact the organization
of the rural poor by a political Party committed to their emancipation
is a means of controlling violent conflict).
Secondly, it provides a legacy for the construction of a better society.
Any socialist society must build on the institutions bequeathed to it
by the pre-existing society. Indeed a part of the reason for the excessive
centralization, and the accompanying authoritarianism, that prevailed
in the earlier socialist societies lay in the absence of any representative
democratic institutions in these societies prior to the emergence of socialism
on which the latter could build its foundations. In that sense the decentralization
experiment, by empowering elected bodies, puts life into a whole range
of institutions on the basis of which a future society can be built.
This argument must be sharply distinguished from the so-called ''social
capital'' argument. First, we are talking here of representative political
institutions, not clubs or addas, or religious gatherings, or the innumerable
instances of social interaction among individuals that the so-called ''social
capital'' theory picks up for celebration. The flourishing of such instances
of social interaction is not only perfectly compatible with the putting
in place of thoroughly non-representative political institutions, but
has actually accompanied, throughout the history of modern India, the
most bizarre attempts at the denial of political rights to large masses
of the people. And secondly, we are talking about representative political
institutions through which the conflict between classes plays itself out,
not about institutions sans such conflict, and hence about institutions
defending the status quo, which typically constitute the desideratum of
''Social Capital'' theory.
Thirdly, it trains the people in the art of book-keeping, in the art of
responsible financial management etc. which constitutes another legacy
for the future, apart from strengthening even the existing system of parliamentary
democracy. One of the weaknesses of revolutionary Russia that Lenin had
highlighted was the absence of knowledge of "bourgeois management
principles". The overcoming of this absence, even partially, would
go a long way towards providing the basis for the construction of a socialist
society in the future.
While there is no conflict between the perspective of class struggle leading
to the creation of a socialist society and the empowerment of the LSGIs
within our prevailing social order through greater devolution of resources
(just as there is no conflict between such devolution and the erection
of a planned economy), the opposite error can also be committed, namely
the the mistake of treating the LSGIs as if they already constitute the
organs of popular rule. There is an ocean of difference between LSGIs
within a bourgeois-landlord order and "communes" in a socialist
order. While the latter can be built, looking at the matter in very general
terms, on the foundations provided by the former, the vast gulf between
the two must not be overlooked.
IV
Let me now come to the difference between Kerala-style "decentralized
planning" and the imperialist concept of decentralization. This latter
has no theoretical basis, and hence is different from any of the four
senses in which the term has been used in economic literature, to which
reference was made earlier. Indeed it is never explicitly set out as one
coherent vision; on the contrary, there is a certain (deliberate) fuzziness
about it which allows it to mean all things to all people[4].
One therefore has to cull out the main features of this concept of decentralization
not so much from theoretical writings on the subject as from the practices
enforced on particular State governments, such as Andhra Pradesh, which
have accepted the tutelage of imperialist agencies. There is also an additional
problem, namely there are different imperialist agencies lording over
different States and over different sectors, which may make generalizations
difficult. We can discern nonetheless a degree of consensus among them
over conceptual issues, on the basis of which we can reconstruct the imperialist
concept of decentralization.
This consensus arises above all from the fact that all of them see ''decentralization'',
even in the sense of devolution of powers and resources to lower tiers
of administration, as an aid to a ''free-market'' economy. For instance
the World Bank puts forward its fuzzy views on decentralization in a section
of the World Development Report 2002 which is titled Building Institutions
for Markets. In other words ''decentralization'' for imperialist agencies
is not a matter of relocating powers, resources and functions within an
activist State (in matters of investment), but of building an apparatus
that fits into the ''neo-liberal'' paradigm.
It is not surprising in this context that the following four propositions
regarding decentralization are more or less common to all the imperialist
agencies. First, while they talk about Gram Sabhas they invariably see
the Gram Sabhas as being presided over, and led by, not the elected representatives
of the people, but by outside officials. Their perspective in short is
not one of strengthening representative institutions in the countryside,
but of providing a democratic veneer to a process of essentially bureaucratic
decision-making (which can always be manipulated to fall in line with
their wishes). Secondly, they see the major tasks of the LSGIs being carried
out through a number of Committees, consisting not of elected representatives
of the people but of ''experts'' and corporate-NGOs, and these are to
be allowed to enter into direct negotiations with funding agencies for
loans for particular projects. Thirdly, their emphasis is on ''Self-Help''
groups rather than the ''Right'' of the LSGIs to a share of the Plan funds
of the State government. To be sure, Self-Help groups can be of assistance
to the rural poor under certain circumstances, but what is noteworthy
about the perspective of these agencies is the overwhelming emphasis on
these groups to the exclusion of the LSGIs' ''Right'' to Plan Funds. And
finally, whenever any infrastructure projects are undertaken at the local
level, these agencies insist on the imposition of ''user charges'', i.e.
their exclusive emphasis is on the adoption of the commercial principle
even in the matter of peoples' access to basic amenities.
What these four propositions amount to is a negation of representative
institutions, a negation of all political activity, reflective of class
struggle in the countryside, in local government, a negation of ''Rights''
of the people to Plan Funds as users of infrastructure, and the erection
of a mai-baap ethos, reminiscent of the old colonial administration trying
to wear a paternalist cloak, with imperialist-aided NGOs being presented
as the benevolent patrons of the countryside.
In short, this concept of ''decentralization'' visualizes a substitution
of the State by a set of NGOs in the implementation of local projects,
including especially social sector projects, the funds for which, whether
drawn from the State budget or from foreign donors, are expended through
these NGOs. Putting it differently, imperialist "decentralization"
is concerned neither with a particular model of planning, nor even a mere
substitution of the free market for planning, but with establishing a
direct access of imperialist agencies to the Indian countryside through
a bunch of NGOs who are in no way accountable to the people.
What is often missed by those who do not see the difference between Kerala-style
decentralization and the World Bank concept is that the LSGIs are also
a part of the State apparatus. Transferring certain responsibilities to
the LSGIs therefore is tantamount to a redistribution of responsibility
within the State structure, but a redistribution that has the aim of enforcing
greater accountability of the State. The concept of "users' sovereignty"
invoked above was linked essentially to this greater accountability. Such
"sovereignty" could be exercised only because of the introduction
of greater accountability on the State for which decentralization was
a means. To be sure, the sheer fact of decentralization would not bring
about all these changes; on the contrary, in regions where the poor are
unorganized decentralization could have the opposite effect of strengthening
the local oppressors, who, prior to decentralization, might have been
kept in check through the actions of "benevolent" elements of
the bureaucracy. But, in principle, democratic decentralization is to
be preferred, no matter how unsatisfactory its immediate results (this
point of course is not relevant for Kerala) , because it enforces greater
accountability on the State and restores greater subjectivity to the people.
Imperialist decentralization however has nothing to do with the subjectivity
of the people, even when the people are consulted on their preferences,
since it operates not through statutory institutions but through voluntary
organizations. Indeed its very objective is to reduce the scope for the
operations of statutory institutions, and their replacement by voluntary
agencies which are either directly funded by imperialist donors, or are
funded from the State budget which in turn has come to depend heavily
on imperialist sources for funding social sector expenditures. In short,
World Bank decentralization refers essentially to a withdrawal of the
State from the social sector, while the aim of decentralized planning
was not a withdrawal but greater accountability of an activist State.
Enfeebling the third world State, even the third world bourgeois State,
breaking down whatever relative autonomy it may have vis-à-vis
imperialism, and reducing it to the status of either a collaborationist
or a client or even a puppet State, is a persistent objective of imperialism.
This is because a relatively autonomous third world State can act as a
bulwark against imperialist domination. This enfeeblement is brought about
through a number of different instruments. For instance the imposition
of neo-liberal economic policies necessarily results in an accentuation
of the fiscal crisis of the third world State, which is then used to induct
direct funding of social sector expenditures by imperialist agencies (the
DPEP is a classic example of this and there are designated "World
Bank districts" in India where this important social sector expenditure
has become the responsibility of the Bank). The Bank's notion of "decentralization"
is a part of this project of enfeebling the third world State, and is
therefore well-integrated into the plethora of neo-liberal policies. One
aspect of these policies which has been well recognized is the withdrawal
of the State from an autonomous active role in the social sector in favour
of the market; the other aspect which has received less attention however
is the withdrawal of the State from an activist role in this sector in
favour of imperialist agencies which then penetrate the countryside both
directly and through imperialist-funded NGOs.
V
It follows from what has just been said that,
Kerala-style decentralization, far from being indistinguishable from imperialist
decentralization, actually faces a threat from the latter, or at any rate
from the package of policies of which the latter is an integral part.
The real problem with Kerala-style decentralization in the present context
lies in other words in the fact that it tends to get undermined not because
of its own failings but from outside: from the pursuit of the neo-liberal
agenda by the country's government, and from its efforts to push neo-liberal
"reforms" on the State governments.
The neo-liberal dispensation necessarily implies an accentuation of the
fiscal travails of the Central government, which the latter in turn passes
down to the State governments. It is noteworthy that during the nineties
the ratio of the Central government's tax revenue to the GDP went down
while that of the State governments went up, and yet the latter were afflicted
with acute fiscal crises by the beginning of the new century. It is not
just one or two States that are facing fiscal difficulties but virtually
every State, though to differing degrees. Reduced transfers from the Centre,
and the pay-hikes in the wake of the Central government's acceptance of
the Fifth Pay Commission report, have of course played their part in precipitating
this fiscal crisis of the State governments. But a very important contributing
factor has been the sharp increase in interest rates on State government
debt.
The Central government's own borrowing rates have gone up with the end
of the ad hoc Treasury Bills route, which came with neo-liberalism. What
is more, the Centre has deliberately, gratuitously, and quite unwarrantedly,
jacked up the rates of interest it charges on loans to the State governments,
and used the debt-trap to which it has pushed the State governments to
impose neo-liberal policies on them. It has even used the offices of the
Eleventh Finance Commission to impose "reforms" on States as
a pre-condition for their obtaining funds that are due to them anyway
under the Constitution[5]!
With the State governments starved of funds, the LSGIs too find themselves
short of resources. No worthwhile "local level planning" is
possible under these circumstances. Besides, when the State governments
are short of funds, they turn to international agencies like the ADB or
the World Bank for financing investment projects in rural areas which
they themselves would have otherwise done[6].
These agencies in turn have their own ways of allocating their funds between
projects, and monitoring the use of their funds in rural infrastructure,
which either preclude the involvement of the LSGIs or give them at best
a token role[7]. A vibrant programme of decentralization,
which can lead to the greater assertiveness of the rural poor, thus runs
counter in a fundamental sense to the trajectory of development of a neo-liberal
economic regime.
References
Dobb, M.H. (1969) Wefare Economics and the Economics
of Socialism, Cambridge University Press, Cambridge.
The World Bank (1997) ''The State in a Changing World'', World Development
Report 1997, Oxford University Press, Oxford.
The World Bank (2000) ''Entering the Twenty-first Century'', World Development
Report 1999-2000, Oxford University Press, Oxford.
The World Bank (2002) ''Building Institutions for Markets'', World Development
Report 2002, Oxford University Press, Oxford.