Defeating capitalism through regulation and taxation

16.07.2019 - London, United Kingdom - Pressenza London

Defeating capitalism through regulation and taxation
Jayati Ghosh, Professor of Economics, Jawaharlal Nehru University, speaking at the Labour Party's International Social Forum, July 13, 2019 (Image by Tony Robinson)

At the International Social Forum organised by the UK Labour Party on the 13th and 14th of July 2019 a host of international speakers attended to give talks on subjects from global economics, climate crisis, global finance and accountability, movement of people and trade protectionism.  We publish here the transcript of the talk given at the opening plenary by Jayati Ghosh, Professor at the School of Social Sciences at Jawaharlal Nehru University.

Thank you very much.  It’s really a great honour and a privilege to be part of this panel and I’m delighted that there is this coming together of progressive people who are trying to develop alternatives, because at no point in the recent past can I remember that these things have been so absolutely essential.

I think we’ve already got a fascinating and excellent summary of the problems and, as I was listening just now to Dilma Rouseff, there are so many parallels with what is happening in India and in many other countries. But also I think it reminds us that imperialism is alive and well and rearing its ugly head all over the place. I think what is more important for us to remember is that, for a change, it’s the developing countries which are showing the developed countries an image of their own future.

I hate to say this but welcome to the third world!  What does that mean? Well it means that despite all that talk of the elephant graph and all these workers in the south doing so much better because of globalisation, and China and India having this fantastic time, and so on, actually things are pretty bad in most of the developing world, including the so-called success stories.  Many of the problems that you face here, we have been facing for a longer time and in a worse way because at lower levels of per capita income it’s not just material insecurity, jobless growth, the desecration and destruction of the environment, climate change – it’s not just coming for us, it’s upon us.  In this year’s monsoon, there have been parts of India where it’s been raining sand, not water!  We are talking about very, very severe impacts on the environment.  We’re talking about extreme inequality which is growing even more and worsening as we speak, which in turn is unleashing the worst possible social forces.

We already heard Dilma Rouseff tell us about neo-fascism in Brazil. I can tell you that there are equally unpleasant, possibly more unpleasant, forms occurring in India today with the explicit patronage of the state and global capital and local, national large capital. So this coming together of large capital, of the worst possible political tendencies, many of which bring the appearance of so-called change.

They talk about delivering change from the kinds of neoliberal tendencies we’ve seen in the past and they do this on the basis of developing arguments of “the other”, that what’s been going on is really because you’ve got migrants, or because you’ve got Muslims, or you’ve got dark people or whatever, some “other”. So what we have is the system which is at fault but it’s a particular phase and form of the system.  It is a particular plutocratic, patrimonial, patriarchal phase of the system which is expressed in financialization, but it’s also expressed in a range of other ways we haven’t seen before and which are having implications that we haven’t fully understood.

So the growth of digital company’s, their ability to penetrate every element of our lives and know everything about us, their extreme complicity with large capital of other kinds, and with the state, in forms of monitoring and surveillance that, I can tell you in India, we are already feeling the implications of, and my friends in China are certainly feeling the implications of. All of these are things which are irrevocably changing the nature of our societies and if we don’t do something about it now, it may well be too late.

neoliberal capitalism is fundamentally incompatible with democracy

What’s happening today is that neoliberal capitalism is fundamentally incompatible with democracy.  If we want to preserve democracy in any form, we really have to demolish this beast before it’s too late.  Now it may seem that it’s just too big, too large and too impossible, because they control every part of our lives, they’ve also got us all into finance and tied our hands in every possible way, our pension funds, and so on and so forth.  So all of this seems that it’s just impossible to change.

I think, in fact, it’s these periods when it seems the most constraining, the most impossible, when actually the chinks begin to appear and that’s largely because, in a way, capitalism has got too powerful for its own good.  It has destroyed all its opponents. The predator has eaten all the prey and you know what happens to predators who eat all the prey?  They starve.  The stagnation we are seeing is the starvation of capitalism, which has really ran out – I mean the complete absence – of sources of demand in the system. The countries that relied on export-led growth are not finding that growth.  The inability of the state to generate, on its own, any sources of independent demand, and everybody looking at others saying, “well, you can somehow find that demand there”, that’s one of the indications that this is a system that has just grown too powerful for its own good, for its own viability or, I hope, for its own longevity.

Now that means that there are in fact these chinks, these open spaces that we have to seize but these are not spaces that are going to just, on their own, dissolve.  In fact, if anything, they fight back as we have seen in Brazil.  The Empire Fights Back – big time.  We have seen it in India. We are seeing it in many, many other countries. This weird combination of what is called populist, but I mean I think it’s just basically the politics of hate, which is spread throughout different groups in society.  We are seeing it in India, we are seeing it in the Philippines.  We are seeing it in Egypt.  We’re seeing it all over.  And it’s come to Europe.  As I said, welcome to this not-very-pleasant third world, but it is possible to change and I think there are already ideas in different parts of the world to change it.

But you can’t do this alone. You have to do this globally. It cannot be done individually.

Sometimes, in England, I know, there’s been talk of a Green New Deal which has many of the ideas and arguments which, I believe, are valid in different parts of the world as well. In the United States, they talk about a Green New Deal, which is much more, shall we say, inward-looking. But you can’t do this alone. You have to do this globally. It cannot be done individually.

If we can just remind ourselves, what are those elements of that New Deal which are so important still for all of us, for us in India, for people in Pakistan, for people in South Africa, for people everywhere in the world?  They are essentially a state-led recovery, re-distribution and regulation of markets. We really have to bring back all of those elements. We need a massive public investment push, certainly in green investments, in the care economy, in all these things which are deeply employment-generating, as it happens, and which will have very strong multiplier effects, which would actually cause much more generation of employment, and therefore better labour-market conditions, and therefore more effective demand, and so on, and so forth.

We need much more regulation of markets, certainly financial markets are number one on the list, but we also need regulation of the big digital companies. We need regulation of a whole range of multinational enterprises that have gone beyond the pale, in terms of both control and ability to exploit the system. We need them to be taxed and there are low hanging fruit out there in terms of the possibilities of the unitary taxation of multinationals.

Believe it or not the IMF and the OECD are talking about this possibility for digital companies. In other words everybody is waking up to the fact that multinational corporations today are able to get away with paying about 3% of the tax that they should be paying, on average. We’re not even talking about the big guys who I think don’t even pay 3%. So these are possibilities that even the most, shall we say, staunch supporters of the old order are beginning to recognize have to be done. So that kind of regulation is essential.

Taxation is also significant for the redistributive requirement. We must have this big public investment push, which means that we must have public resources, that means we must take those resources from those who have been creaming it off the system for the last 25 years in unprecedented ways. And that is possible. We can begin with the taxation of the multinationals, and some simple regulations in different countries, very, very small changes in regulation, would actually leave much more in terms of public resources to invest in the things that matter for people, to invest in the regeneration of our cities, to invest in the recovery of an ecological agriculture in most of the developing world, to invest in the things that make life worth living, not just the care economy, but creative activities and a whole range of other things.

There is so much that needs to be done, there is so much work that needs to be done, that it is unbelievable that workers cannot find jobs.

There is so much that needs to be done, there is so much work that needs to be done, that it is unbelievable that workers cannot find jobs. So we really need to bring all of that back, so that anyone who drops in from Mars 10 years from now doesn’t say, “my god, are all the people in this world crazy?”

I mean really, there is so much that is obvious that needs to be done, that can be done.  The big constraint, today it’s not just our domestic politics, sure our domestic politics are a constraint, but the big constraint is the international architecture, and I’m so delighted that John McDonnell has brought in this international element to your economic discussions, because just as you can’t do it alone – none of us can do it alone – but even all of us together can’t do it in the current international regime. We really have to change this International architecture. So while Mr. Trump is out there taking a hatchet to the WTO – and let’s not defend the current WTO!  It was a disaster for us, it has denied India, for example, the ability to ensure food security to its citizens and livelihood security to its farmers. It has perpetuated a system of intellectual property rights which is obscene in the concentration of knowledge and in the unwillingness of large multinationals, based largely in the north, to part with any knowledge that would actually improve the conditions of most of the world, and has enabled them to skim off huge amounts of rents, and then to spend all their energies in parleying for more rents through lobbying and so on.  So the intellectual property regime is one of the first things that needs to go.

The second big thing that has to be brought back on the table is financial regulation, both cross-border regulation and national regulation. It’s not rocket science, it’s been done before several times in the last century. It can be done quite easily again, only a few rules here and there. We don’t have to keep saying, “oh, well, you know, if we do it capital will fly,” because capital cannot fly if everyone is doing it together.

no matter how many concessions you give capital, they always want more

We have to recognize that while we have given more and more concessions to capital – and this is not just you, it’s also us – they have not responded with more investment, more productivity, raising technological change, and so on.  In India, the rate of investment has fallen for the last six years. I know we’re this great success story, right?  And we’re doing really well.  No!  We have some of the worst economic conditions in the world, some of the worst inequality, but also some of the worst stagnation and jobless growth, and a large part of that is because, no matter how many concessions you give capital, they always want more.  It’s never good enough.  Especially when the demand conditions are so poor, and so we are unable to actually force capital, to discipline capital to do what it’s supposed to be doing, which is productive investment.

I think someone wrote a book about saving capitalism from itself.  This is not really about saving capitalism anymore because unfortunately when capitalism goes, it’s going to take all of us with it. It’s going to take the globe with it.  It has destroyed the environment to a point where it’s going to take the planet with it as well. So whether we like it or not, we have to discipline capital and we have to do it at a global level, and we have to therefore create international alliances that will insist on this. As I said, the chinks in that armour are already appearing. We have to build on those chinks and we have to build on the global solidarity that, I think, does exist, despite all the attempts of multinational capital to divide us, to create societies filled with hate, prejudice, anger and resentment.  Despite all the attempts of multinational capital to control every aspect of our lives, so that we’re constantly monitored and locked up if we disagree, and so on.  I think there are enough people out there who really don’t want this, who really do want a society with a minimum of justice, with a minimum of equity, of equality, of being able to appreciate the joys that come from relational activities.  And I think therefore, what we need to do is to present a positive agenda that certainly thinks globally, but as you mentioned has to be local, has to be national in its orientation, but we also have to have a holistic idea of what is going on and a holistic agenda, but then be really specific and have specific goals on which we can build alliances.

If I had to name just one, the UK, as you know, is about to embark on its own free trade agreements for various reasons.  When it was part of the European Union it was negotiating a free trade agreement with India and it was the main mover in trying to enforce a system of intellectual property rights which are TRIPS Plus which are really much, much worse, and of course that would have destroyed the domestic drug industry in India which is already under deep threat, but it would have made all of you pay maybe five times the drug prices that you are paying already today, which are already too high. That’s the kind of thing we can actually take up specifically but, within the holistic framework, build alliances and demand that that kind of thing never happens.

There are many, many more such things, we could go on at length in all of this but I think these are things that are possible if we have the energy and if we have the hope and the optimism and I’m so happy that there are all these young people in the room who can take this forward.

Thank you very much.

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