Barun Roy: A question for the Marxists

ASIA FILE

Before India's Marxist communists call or support another nationwide general strike to delay the pace of economic reform, in the name of protecting workers and the poor from the clutches of the private sector, they must remember one important piece of statistic contained in an International Finance Corporation study: Since 1979, when the process of reforms began in China, more than 250 million people in that country have been lifted from poverty. And then ask themselves the simple question: If reforms can be good for the poor in China, why can't they be equally good for the poor in India?

The major elements of China's reforms are known, such as the weeding out of inefficient state enterprises and an open invitation to foreign direct investment, but few take note of two that are the real key to its stunning economic success: emphasis on the private sector that Indian communists so deeply despise and labour discipline that they find so hard to accept.

The non-state sector is, in fact, China's foremost economic target and has been growing at 20 per cent a year for the past 20 years, a rate more than twice the average for the entire economy. Since 1992, the private sector has created more than 6 million jobs a year, and a large share of China's GDP is now in private hands. Official statistics show that in 2003, a third of the country's GDP, or some $423 billion, came from private business activities, against less than 1 per cent in 1979. In March last year, China amended its Constitution to put private assets on an equal footing with public property. Membership to the Communist Party is now open to private entrepreneurs and business persons.

And Zhou Xiaochuan, head of China's central bank, left no one in any doubt about the government's thinking when he told a financial seminar in Beijing earlier this month that China didn't need a "very large" state sector. On the contrary, he added, the economy needed to open up more to the private sector in order to boost economic flexibility and avoid economic distortions.

The reason for this is increasingly clear to the Chinese and increasingly blurred to the Indian Left. The economy must grow quickly to enrich and empower the poor and it can't grow quickly without the dynamism that comes from private wealth creation. Besides, only the private sector, domestic as well as foreign, can mobilise investments in the volumes that are needed to improve the economy in the shortest possible time. Any political stance that opposes greater freedom to private involvement in the economy must be seen as anti-people.

But it's perhaps the discipline of its labour force that has been one of the biggest factors sustaining China's economic success. This discipline accepts the new realities of the marketplace and emanates as much from the party as from the government and flows through the entire body of the country's trade unions, creating a unity of purpose that a country must have when it wants to grow.

Here are some facts that India's Left politicians, especially the Marxist firebrands of West Bengal, would do well to know. China's flexible labour policies now allow companies to hire and fire workers easily. There were massive layoffs as state enterprises were restructured and privatised, but no labour strikes shutting down the nation. There are labour contracts, but employers can revoke them if a worker is found wanting during probation, if he or she is guilty of serious labour indiscipline or violates company rules and regulations, or if there's a serious dereliction of duty. An employer can also lay off workers when his company is trying to recover from bankruptcy or when it runs into deep business difficulties. Labour disputes are settled through mediation, consultation, arbitration, or courts, not through strikes.

Unions are never used to provoke workers. When there is a work stoppage or a slowdown in an enterprise, trade unions are expected to work with the management to settle reasonable demands and restore normalcy at the earliest.

It's true that the monolithic structure of China's politics makes it easier for it to enforce discipline. But the current political structure in West Bengal, where Marxist communists have been in power for almost 28 years, is no less so. It sounded extremely hypocritical when Chief Minister Buddhadeb Bhattacharjee said his government didn't support the September 29 general strike denouncing the Indian government's reforms and privatisation policies, but his party was free to go its own way.

Such divisions of political approaches never work in practical economics. Bhattacharjee will never get the investments he wants for his state, domestic or foreign, at the rate he wants, as long as the government, the party, and the unions continue to go their different ways. One Salim or two will never transform West Bengal.