Of partnership between governments and businesses

President Eisenhower was the first to caution against the strengthening corporatocracy, the military-industrial complex setting national and international financial, economic, political and military policies. In the US, a capitalist, free-market economy, corporatocracy is to be expected.

‘Corporatocracy’ is defined as “a form of government where corporations, conglomerates or government entities with private components, control the direction and governance of a country”. Induction into government of corporate professionals typifies corporatocracy, for example, McNamara’s, appointment from Ford Motors to defence secretary in the Kennedy administration.

A justification for private sector professionals in government is its presumed efficiency. That McNamara led the US in the disastrous Vietnam war is forgotten. Both Bush administrations had Cheney in government. Cheney privatised the Iraq war.

The World Bank and the IMF were prime movers in the corporatisation of governments. A major impetus for private sector role in governance came about during the Reagan-Thatcher years. The neo-liberal movement furthered this tendency. Globalisation led to its fashionableness in the East’s attempt to imitate the West. Eastern politicians and bureaucrats found corporatisation useful in camouflaging corruption.

The beginnings of corporatocracy in governance, and of governments, in India, have gone beyond ‘green shoots’, indicative of its birth. That Indian governments are now corrupted by this western practice is a fact. Take budget preparations, for example. Business chieftains troop to the PMO and finance minister’s office. This yearly ritual is accepted as quite normal.

The public know very little of these conclaves. What prevents transparent, public consultations with business groups? Why cannot the prime minister and finance minster conduct these meetings openly? Why do these ‘public servants’ meet only business representatives? Could it be that, this is how corporatocracy works?
It often happens that first, corporations provide financial support to competing political parties and major political candidates. This allows corporations — to have a winner who is indebted to them. As politicians are increasingly dependent on campaign contributions, their objectivity on issues is compromised. Second, former corporate executives are appointed as decision makers within government institutions.

Government employees who collude with corporations often accept high-ranking positions within corporations once they have demonstrated their commitment to serve the corporate interest. These lucrative offers provide incentives for government employees to serve special interests as well as provide their employers with access to governmental decision makers. This is known as the ‘revolving door’ between corporations and the institutions established to regulate their behaviour and can lead to ‘regulatory capture’.

Here are examples of India’s ‘revolving door.’ A private banker, while running his businesses, simultaneously chairs JNNURM’s technical advisory group. An ex-BDA commissioner moves to head a private builder’s project. An ex-IT company boss heads UIDAI. Bureaucrats he dealt with for his company’s purposes are his subordinates now.
What motivates?

Presence of private sector professionals in government is corporatisation of government. When the appointing process is non-transparent, its motivations become suspect. When the expenditure is met from public funds, the appointments need legislative sanction, not ministerial whim.

Another corporatocracy manifestation is the composition of the Genetic Engineering Approvals Committee (GEAC). Among the committee members are foreign private companies. It is incredible that the government would induct MNCs, whose products are under evaluation, into the approving committee that decides what people eat. This movement from individual appointments in government to vesting private companies with approval functions could be termed ‘creeping corporatocracy’.

In Bangalore, during the Congress regime, there was BATF, a body of private sector persona, ostensibly tasked to improve the City’s infrastructure. The latest avatar of this perversion of government is ABIDe, of the BJP dispensation. Companies of these professionals contributed to the City’s haphazard growth. Hence, their presence, in bodies meant for improving quality of life in the City, is incongruous.

Imitation corporatocracy, of the western kind does not sit well on a nation whose Constitution touts its ‘socialist’ credentials. Induction of private sector players into government, without implementing Art 243 of the Constitution, is condemnable.
The global financial meltdown put brakes on the privatisation gravy train. With the recovery, the crisis is now a faint memory.

The World Bank and the IMF promoted privatisation by propagating the PPP model (public-private partnership) in public sector areas, notably in civic service functions. They did so through strings attached to their loans. ‘Partnership’ denotes a healthy relationship, but it is used as a euphemism for the transference of control of public funds into private hands. The government is responsible for regulating private sector conduct. This responsibility is tossed out altogether, when the regulator joins the regulated in a partnership. Enron’s Dabhol power project and BIAL are examples of failed PPP adventures.

An election campaign couplet of the past runs thus, “Sarkar jutah, vyapar jutah, donoe milkar sabkho lootah”. Translated, it means “government and businesses are false. Together they have looted all”. This is the bane of corporatocracy. Separation of government, as regulator, and private sector, as the regulated, is a dire need. A beginning could be made by banning company contributions to political parties and state funding of elections.