Parliament or Democracy?

Many Roads, One Destination

The important issues in politics are as plainly obvious in India as anywhere else in the world - if not more so. The country that is often called 'the largest democracy' in the world is also one of the most unequal. Some 36% of the population are estimated 79 to be living in 'absolute poverty' (a condition defined by the UN as 'malnutrition, illiteracy, disease, high infant mortality or low life expectancy'). Alongside this, the top 10% of Indian society absorbed nearly 35% of the income of the nation in 1985 alone, skewing the wealth distribution into even more unequal figures.

These are startling statistics. But in a society in which 'the people rule' this situation - one would predict - should be quickly changed. Plain 'self-interest' should see to that. After all with so many poor people in such a majority, it would seem to be just a case of simple mathematics to right the wrong. One election is all it should take. Yet what has happened? In fact the opposite has occurred. Despite some 40 years of parliamentary democracy and 'universal suffrage', India's inequality has remained impervious to change for the better. In the last decade or so, the gap has actually been growing again.

The reasons why are not difficult to discover - nor are they particularly Indian in content. Indian politics has been dominated almost since independence by the Congress party, a political movement that is seen by many, interestingly, to be on the left and to even have 'socialist' ideas. The other significant party is the BJP. Besides the BJP there is a host of smaller parties (some on the left, others on the right). However none of these ever dent the arena of national politics so the practical choice is between only two parties - Congress and the BJP.

Asked to clarify the differences between these two political parties in 1993, an Indian business journalist 80 saw none in practice. Both parties, he concluded, were 'travelling down the one road.' The only point of difference between the BJP and Congress, he pointed out, was the 'speed' of the journey and the 'side of the road they [the parties] were travelling on'. So while the electorate in India does have a choice at election time, both parties on the roster have - in effect - the same overall policies. What are these?

Politics in India has been dominated since its foundation by the broad idea of 'reform'. More recently however, these 'reforms' have had a more focused target. According to the Indian Prime-Minister, PV Rao of the Congress Party, they 'had to do with changes in the companies act ... capital acquisition tax and the financial sector reforms…' and also 'introducing value added tax' 81 . Noting the effect of these 'reforms', the Economist recorded a familiar picture. It reported that 'Among unskilled Indians, real wages dropped in the first 18 months of economic reforms.' Not that this was the entire picture - far from it. Though grain production in India was enlarging under the new reforms ('not many people know it but India is sitting on a mountain of 30 million tonnes of grain'), the Economist went on to point out that 'the poor could no longer afford to buy'.82 Indeed even Prime-Mister Rao, the architect of the reforms, was appalled at this. And lashed out that it was 'scandalous that grain should be exported when so many Indians still go hungry'. Though in a speech to the Federation of the Indian Chambers of Commerce, two years earlier, in a more sober mood, he had said (about the reforms) 'the difficult part lies ahead. We have a long way to go. The journey is bound to be long and difficult'. 83 And returning to that all important question, that of speed, he said 'the pace of reform would be governed by the ability of the system to absorb changes 'without collapsing.' Such are the realities of 'the largest democracy' in the world.

Providing no effective choice to the electorate amid the colour, pomp and drama of 'General Election Fever' is the stuff of parliamentary democracy. In this game the media play a valuable and vital role. The 1993 parliamentary election in Australia being a case in point.

It was described by the one of the main national papers as 'The most important election since WW2.' Yet when asked to point out the differences between the two options being 'offered' to the electorate, four different financial commentators saw no 'real differences' that mattered in the long run. Why this was so is quite easy to see. The Australian Labor Party had been in power throughout the '80s in Australia and had presided over a 'historic drop in wages' 84 and a variety of 'labour market reforms' that had 'borne fruit' 85 . Challenging the ALP were the traditional parties of big business and big farmers - an alliance of the Liberal and the Country Party (whose central election policy was the introduction of VAT - a tax that invariably effects the poor more than the well off!).

The ALP eventually won the election after issuing a slew of promises (quickly forgotten - see above). Though when he addressed a large 'group of business leaders' shortly afterwards, the ALP leader, Paul Keating, was less forgetful. In his speech Keating 'foreshadowed a historic deregulation of the labour market' though he stressed (being a man who had not 'forgotten his roots') that 'economic reform should be moderated by a concern for the disadvantaged.' Not that this 'should put the Government and business at odds,' he added, 'The success of economic policy depends on the success of business' 86

We can look anywhere else in the globe and see a similar process. The Presidential elections in Honduras in 1989 were hailed 'as a milestone' though the effective choice between the two candidates left a lot to be desired: 'The elections were effectively restricted to two candidates, one from a family of wealthy industrialists, the other from a family of large landowners.' Even top advisors to both camps acknowledged that 'there is little substantive difference between the two and the policies they would follow as president.'. Not that a lacklustre campaign resulted. The candidates, noted Central America Report, 'relied on insults and accusations to entertain the crowds at campaign rallies and political functions'. As US president Bush pointed out about the victor, Rafael Callejas: He is 'an inspiring example of the democratic promise that is spreading throughout the Americas.' 87

In Eastern Europe the experience of parliamentary democracy is somewhat new, but it is not that much different. 'Painful shock therapy' was used on many of the countries in this region after the fall of State Capitalism and Soviet Power. This 'free-market madness' provoked a backlash in the population (are we surprised?) with the result that 'reformed communists have come back into power on waves of discontent…' (the Economist noted) 88 . In Poland this saw a victory for the Democratic Left Alliance (DLA) in 1993 (in the Parliamentary election) and again in 1995 (in the Presidential election). 'The once despised ex-communists gained votes by acknowledging the suffering of ordinary people…' 89

What did this sensitivity translate into? The Economist (no friend of the DLA's) pointed out that the situation was 'not as bad as it looked'. The DLA, it went on, is led by 'young urbane politicians who claim to be social democrats and preach free-market reforms and privatisation.' Assessing the impact of the election, they concluded 'It is possible that the new Government can be a little kinder to those in need without seriously jeopardising the reform programme.' 90 Which seems to be quite accurate, in hindsight. The gap between the rich and the poor is continuing to sky-rocket in Poland and throughout most of the former Eastern Europe. As one piece of astute Polish graffiti pointed out: 'We wanted democracy, but we ended up with the bond market'. 91

Providing no effective choice is the reality in the vast majority of parliamentary democracies. Parties vie for power at election time - the campaigns are often 'hard-fought' and 'tough' but the only difference lies in the faces that make up the next parliament, not in the policies. To all intents and purposes these policies continue as before, unabated.

This is the case in the majority of countries that are called parliamentary democracies. But it is not the case in all, and this most be borne in mind. Indeed parliamentary democracy is often most successful as a form of political control (as opposed to a form of democracy) because of its apparent 'openness' and because of the fact that 'popular constituencies' are often encouraged to participate in it. Many like to believe that 'if we got elected, we would be different' - despite the mounting evidence to the contrary.

The history of parliamentary democracy is littered with examples of this: parties and individuals who 'become identified with the masses' and carry for them 'their hopes and dreams'. As was noted earlier with the examples of parliamentary socialism, the anger of the poor is often channelled into parliament and away from the workplace and the street where it can be particularly powerful. Once in Parliament it gradually gets 'lost and forgotten about'.

A recent example of this dynamic is the case of Brazil's Luiz Inacio Lula da Silva (known as Lula), the former 'lathe operator turned politician'. Indeed Lula's popularity is legendary with the poor of Brazil. And well it might be. In Brazil the power of business and the wealthy is only matched by the brutality of the military and the large land-owners who have come to dominate. Though phenomenally wealthy, Brazil has been steadily getting worse in terms of the gap between the rich and the poor - a fact that has played no small part in Lula's rise to fame. Brazil is a country where, in that timeworn phrase, 'the poor appear to have no voice.' As chairman of the Workers Party of Brazil, Lula quickly became such a voice, and in fact he very nearly won the 1989 Presidential election, so large was the genuine affection that was felt for him and his 'anti-poverty' policies.

Lula narrowly lost the 1989 Presidential election. Why is still a subject for debate. What is clear however is that Lula ran a very 'radical campaign' in 1989 - in particular he refused to compromise on his economic views. As a result he maximised his vote with the very numerous poor of Brazil.

Defeat however led to reassessment with the result that the Lula who ran again in 1994 was 'importantly different'. As the Economist noted, Lula 'may still rail against capitalism. But at round tables and in the auditorium, he takes care to turn down the volume'. Indeed the politician who boasted 'I'd never wear a coat and tie' went out of his way to present a different impression in 1994. 'In Washington ... 700 bankers and the like crowded into a hall to hear him speak.' This was when he was 40% ahead in the polls.

So great was the change in Lula, in fact, that some wondered about 'who the real Lula was'. Though others were less bothered. Jose Sobrinho, chairman of Banco Pontual in San Paulo, observed, 'Lula attacks the banks for earning too much, but these days he also says the financial sector is a necessary evil'. A view underscored by another business man , Emerson Kapaz, who 'lavishes praise on his rival' noting that Lula 'understands that he cannot govern alone. These meetings with businessmen are not just for form's sake. He is looking for an alliance that will make it possible' . 92

This example of Lula's turnabout is not unusual - it is quite typical and happens again and again. It was most notable with the rise to power of the various socialist and Labour parties of the world (see earlier), but it continues to apply in any situation where a large grassroots movement seeks 'a voice in parliament'. On the electoral road to power, political parties of the left (in particular) go through a process of 'adaptation' and 'realism'. Their radicalism is gradually diluted away so as to 'send the right message'. The important constraints of electoralism - to build alliances, to retain 'a positive media image' - all take their toll. Radical politics is the inevitable casualty.

Occasionally it does happen that individuals and parties get into power with the intention of making a few changes and/or 'fulfilling their popular mandate'. This is rare, but when it does happen, other important constraints are brought to bear 'on the situation' in order to prevent an 'un-welcomed outcome'. These are the financial markets and the 'threat of a coup'.

The 'financial markets' more than any other single factor are playing an increasingly important role in constraining 'your vote'. Though the effect of the 'markets' is somewhat dependent on the size and relative economic independence of the particular country involved, it is nevertheless becoming an important factor almost everywhere with time. The effect of the 'financial markets' can be in a number of different ways:

1. When an elected Government does pursue, on occasion, a policy that 'conflicts' with the overall interests of business the prospect of 'flight of capital can be brought into play' as a means of disciplining that Government. This happened in the very notable case of France in 1981 after the victory of the French Socialist Party. 'Initial hostility on the part of business was manifested in manoeuvres to avoid nationalisation and a flight of capital abroad'. 93 This was evident in the French media where 'Businessmen made a show of studied pessimism, painting reality in excessively dark colours and discouraging hiring and investment'. France entered 'a crisis'. And in due course, after the balance of power within the French Socialist Party shifted back towards a more moderate programme, French business once again 'became prepared to play its role with a certain amount of loyalty'.94

2. A similar, though importantly different, example is the recent case of South Africa. Here the source of 'financial constraint' is non-national - unlike in the case of France above. The actual achievement of popular suffrage in S. Africa after a long and bitter struggle against the apartheid system fuelled real expectations that substantial change would occur in the aftermath of the vote in April 1994 - in particular with regard to wealth distribution. This did not occur. The Irish Times' correspondent in SA, Edward O'Loughlin, noted in December 1994 (7 months after Government formation) that the ANC's key problem 'is growing discontent among its black constituency, which believes the ANC has done little to improve their lot since taking power'. 95 However, despite this, in March 1995 the same correspondent reported that 'South Africa's second post apartheid budget ... has once again demonstrated the commitment of the country's new rulers to fiscal discipline and free-market reforms'. 96 Noting that the ANC's programme had been 'tempered by reality' O'Loughlin reported that the 'budget message' was overshadowed 'by the ongoing crisis over exchange rates and exchange controls'. Indeed the Rand's (South Africa's currency) fall from grace (its value slumped against the US dollar) was as a result of 'rumours' and 'perceptions'. Though the London based Financial Times, was less circumspect in assessing the impact of this. It noted that Trevor Manual, the ANC's minister of finance, had 'moved a long way towards embracing free market policies. The challenge now is to persuade the rest of the ANC and in particular its union and communist allies to catch-up.' Emphasising the 'disciplinary effect' of the currency problem, the Financial Times continued: 'The value of the Rand in the months ahead is likely to provide an accurate reflection of the progress of that political struggle'. 97

3. The third example is more general, but is also the most indicative of how little parliamentary democracy can mean in today's world. With the 'financial markets' skewed towards the rich and powerful countries in the First World, more 'dependent' economies are increasingly cut adrift by decisions made in say Washington, London or Tokyo. A classic example being the 1979 decision by the Chairman of the US Federal Reserves, Paul Volcker, to 'raise the rate of interest and thereby also to raise the value of the dollar'. 98 According to the economist, Andre Frank, this decision 'was the single most important cause of the debt crisis and consequently the depression and "lost decade" of the 80s'. 99 Indeed in Latin America and Africa the cost of this depression remains untold, though of huge dimension. Perhaps tens of thousands of lives were lost as a result of this 'financial decision.' Frank also notes, interestingly, that even in the specific context of parliamentary democracy neither the American electorate nor the Congress nor the President had any 'right to intervene in such a decision of the Federal Reserve'. A timely reminder of 'the limits' of parliamentary democracy - if such a reminder is still needed.100

In contrast to the remoteness and 'subtlety' of the financial markets, the 'threat of a coup' is an entirely different matter, though no less unreal if we are to judge by even relatively recent examples e.g. Haiti (1991), Algeria (1992), Nigeria (1993) to name just a few.

It is often assumed that such coups occur in situations where 'radical' polices are involved but this, surprisingly enough, is not the case. Coups in parliamentary democracies often occur against relatively 'reasonable' Governments - a fact that supports the theory that it is often the broader social movement that is the real target of the military. An important example being the coup against the Allende government in Chile in 1973. It is often not recognised that the reforms being introduced by the popularly elected government of Salvador Allende were for the most part quite benign, involving 'land reform' of large estates (with compensation) and nationalisation of copper mines (with compensation).

However Allende's period in office was also accompanied by the emergence of 'assemblies of workers in factories, People's Supply Committees in the publaciones ... Peasant Councils in rural areas'. These groups began to play a more and more important role as Allende's Government stalled on implementing its promised polices. 'Basic demands emerged from these popular organisations. The Government was supposed to represent the people, in that case it should put into operation the policies the people were demanding.' 101 Indeed this popular movement became increasingly confident and impatient as time went on, and in some areas began to supplant the State. Food distribution was taken over by community organisations; workers became more belligerent and occupied their places of work ejecting managers; in the countryside land was occupied.

The subsequent coup in Chile led to the loss of thousands of lives and the 'liquidation of the left'.

on to

Chapter 8. The Rich get Richer...

From the pamphlet Parliament or Democracy?

Parliament or Democracy

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