April 30, 2008

life in financial markets: two-facedness of capitalists

The farce that is seen in any ism (capitalism, communism, socialism, religionism etc) is a
lways visible more easily during times of crises. The current inflation in food prices, oil prices and prices of industrial commodities like metals is bringing out the two-facedness of capitalists more clearly. Some measures were announced yesterday by the finance minister of India, P Chidambaram -- here, here and here. (the image to your right was taken from http://www.jewishworldreview.com/images/two_faced_cover.jpg)

There are contradictions. While export duty for steel has been raised from 0% to 15% the tax concessions on exports by software services companies continue shamelessly. Software companies' export earnings has not been taxed by the Indian government since the last about 10 years.

It has been a regressive thing if you consider one of the core tenets of capitalism that would kind of say 'let all the different businesses run themselves without bestowing special favours to any one." This tax holiday was supposed to end in March 2009. In yesterday's announcement, it has been extended to March 2010. A similar tax holiday for companies operating in areas designated as software technology parks that was to end in March 2009 has now been extended to 2010. The new 2010 deadline is of no use as the software companies will move to SEZs and continue to pay zero tax.

The concessions and favours in the form concessions in corporate income tax, excise duty, import (customs) duty, etc make the claims of capitalism of being based on free and fair competition so very hollow. In fact, 6-8 out of 10 times, the concessions are used a ruse by politicians (policy makers) and industrialists to grab the land of government and rural/non-affluent people. The land grab seen in the implementation of the Special Economic Zones Act in India is a prime example where we are seeing the commerce minister of India, Kamal Nath, acting almost like a goon in favouring companies to grab land from the rural people of India. The land grab is also seen in phoney development projects like the Sardar Sarovar Dam project in the Narmada river valley.

Exporters are a pampered lot in India. Even when things like rupee appreciation against dollar or domestic raw material price spurts (that are nothing but a natural corollary of free global trade) hit them the so-called capitalists start cribbing.

Chidambaram said yesterday "short-term pain is the price you have to pay for long-term gain." He asked companies to consider sacrificing profits to help contain inflation. Now now! Look who's talking! And look what's he talking! Where were all these bright tips and suggestions when human rights activists and ecologists advise governments and companies not to bull doze their way in their obsession with business growth at the cost of basic democratic rights of non-affluent people and at the cost of severe damage done to ecology by the industries' excesses? These fake capitalists like Chidambaram ridicule environmentalists and human rights activists when they say the same thing of sacrificing profits now and bearing short-term pain for long-term gain. Now look who is speaking in the same language!

Of course, all this is made possible, because urban consumers in India and all over the world are blinded to the perils and back-to-back consequences of their greed and excessive consumption. There is hardly any endeavour by them to become sober and moderate in their fulfilment of their desires to make their lives more and more comfortable/luxurious. A reasonably comfortable life can be lived at one-fourth the consumption volume of the urban affluent. It is the very least they can do but barring a very few they aren't doing it.

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