december 25, 2010

Fiddling While Rome Burns

The global powers that be ddle even as Cancun takes the mitigation of climate change backwards.

olivias ambassador to the United Nations, Pablo Soln Romero, who has been a social activist, must have, in his youth, absorbed Hans Christian Andersens short tale of The Emperors New Clothes. Like the child in the crowd who cries out that the emperor isnt wearing anything at all, Soln displayed the courage of his governments convictions when, at the concluding plenary of the 16th Conference of the Parties (COP 16) of the United Nations Framework Convention on Climate Change (UNFCCC) in Cancn, Mexico, he declared: I cannot in all consciousness sign such a document as millions of people will die as a result. In the Andersen tale, the childs cry is taken up by others in the crowd and the king cringes, but continues on his onward march nevertheless. Will some other countries among the 191 parties to the UNFCCC now join Bolivia to declare that the Empire is naked in preventing catastrophic climate change? The Cancun Agreements, as they are called, have virtually killed the Kyoto Protocol (KP) which, despite its negatives, had binding targets for the developed countries for their greenhouse gas (GHG) emissions, arrived at on the basis of climate science. The KP also made a distinction between the developed and developing countries, which is crucial, for the developed countries have already used up the carbon absorptive capacity of the biosphere with a disproportionate amount of GHG emissions, and are thus largely responsible for climate change. But now, the way, which was created at the COP 15 at Copenhagen last year, seems to be set for voluntary pledges to reduce GHG emissions, with more than a little bit of help from offsets, payments for reduced deforestation in places like the Brazilian Amazon through the Reducing Emissions from Deforestation and Forest Degradation (REDD) scheme, the older Clean Development Mechanism projects, cap-and-trade market mechanisms for the buying out of the emissions reductions, and so on. It was at the COP 15 in Copenhagen that the United States (US) pushed for the replacement of the Kyoto framework by a structure in which the developed and large developing countries take on voluntary GHG emissions reduction targets, in effect rejecting the concept of ecological debt debt owed by the developed countries to the developing countries for, among other things, the former using up the carbon absorptive capacity of the biosphere and therefore their responsibility for mitigation of the problem. Now, as part of the so-called Long-term Cooperative Action, the mitigation actions of countries like China and India have
Economic & Political Weekly EPW december 25, 2010 vol xlv no 52

assumed importance along with, of course, the required related steps by the developed countries, rather than what should have been the binding commitments of the developed countries for the second commitment period of the KP beginning 2013. The understanding reached at COP 13 at Bali in 2007 was that the Annexure I Parties of the KP (developed countries and economies in transition) would take on binding targets for GHG emissions reduction, as required by climate science, for the second commitment period; the US, which did not sign the KP, would make a comparable commitment, and the large developing countries would undertake mitigation actions with the nancial and technological support of the developed countries, both of which would be subject to measurable, reportable, and veriable mechanisms. Needless to say, the voluntary pledges of the Copenhagen Accord in no way come anywhere near what is required to remain within the safe limit of a two degree Celsius rise in average global temperature, as was made clear on the eve of the Cancun meeting by an emissions gap report prepared by the UN Environment Programme. A word or two needs to be said regarding the promise of developed country funding and the technology transfer for the purposes of mitigation of and adaptation to climate change in the developing countries. Of course, the notion of an ecological debt owed to the developing countries has never been accepted by the developed countries. Indeed, as recent WikiLeaks disclosures have revealed, funding seems to have been an effective bait to get the Alliance of Small Island States to toe the line, with the aid package arranged for the Maldives amounting to what seems like a clear case of climate bribery. Regarding new technology for the mitigation of and adaptation to climate change, the question of intellectual property rights is at the heart of the matter, for this will determine the private returns to the investments made in developing new eco-technologies, albeit with the aid of government subsidies. The US government and corporations are seeking to take the lead in developing such technologies, which is all about prots and national power and not about dispensing genuine aid. What does one then make of it all, the proceedings from Bali to Cancun? The kind of procrastination of the global powers in the face of the impending disintegration of the ice sheets in west Antarctica and Greenland and the disappearance of the Arctic sea ice, among other impacts of catastrophic climate change if capitalism continues on its present course of business-as-usual, is

EDITORIALS

truly amazing. Clearly the nations of the world have to work out an agreement to converge towards low and equal per capita GHG emissions, keeping the per capita emissions at the world level within the standards acceptable to climate science. But such an agreement is not even on the agenda. One would think that with the large deve loping countries willing to make commitments, albeit not binding, to reduce their GHG emissions, such an agreement would be within

the realm of the possible. But all that is on offer is the promise of the development of new technologies to reduce GHG emissions, available at a price and subject to strong patent law. Nevertheless, what is necessary now is the putting in place of a sustainable relation between human beings and nature, one which takes account of the needs of future generations. But the powers that be ddle even as civilisation moves to the edge of the abyss.

Capitalism, Cronyism, Corruption

Corruption and cronyism are integral to capitalism; they are not a curable deviation.

he exposure of the Radia tapes has resurrected the term crony capitalism in India. It has been among the more favoured appellations to describe the political economy of the massive corruption and decadence exposed by the Radia tapes. This term came to prominence in the 1990s when it was used to explain the Asian nancial crisis. It referred to the nepotism and corruption which marked the Asian tiger economies. It was argued that the closed networks of business groups and their connections lial, nancial and structural to political power in these countries had made self-correction by the market difcult and created a capitalism which was disgured. These economies had been the star-ghters for post-second world war capitalism as they pursued an economic path much favoured by the Bretton Woods institutions. They had pushed the market and integrated their economies with global capitalism. Their rapid economic growth and ability to provide a basic level of well-being to their citizens, while brutally crushing any left wing political movement, was held up as the model for all to emulate as a success of capitalism. Thus, their economic crisis had to be explained in terms which would not implicate capitalism as such. Hence, the use of the word crony to argue that while the market economy based on private property and prot-seeking had led to the economic miracle of south-east Asia, the existence of cronies (friends and relatives) between business and government led to a breakdown of checks and balances. The invisible hand of the free market was shackled by cronyism which led to a lack of checks and balances that are inherent in the market economy, and which encouraged the growth of inefciencies through political patronage and thence to an economic crisis. Or so argued the defenders of capitalism. In this context it is telling that the recent global nancial and economic crisis which emanated from the headquarters of capital New Yorks Wall Street was not seen as linked to the pre valence of crony capitalism. This despite the easy ow of personnel between business and government and the old boy, golf club ties between business and political leaders which is so endemic to the United States and other developed countries. Clearly, crony is an adjective to be used for the developing world. Or perhaps it carries a racial code where non-white societies, even if with a successful capitalism as Japan has, were tarred with this disgurement to show up their non-rational side. While the use of the word crony can be explained by the need to defend capitalism as an idea and its selective deployment can

perhaps illuminate a vein of racism, it is important to acknowledge that secretive ties and closed social networks have undermined not only economic life but democracy and political accountability too. One should remember that one of the promises of liberalisation of economic controls was that it will reduce corruption and increase efciencies in the economy. In India, in particular, it has intertwined with the demand for merit to build a political agenda which pushes for less public control of the economy while reducing government initiatives for redistribution of resources and opportunities. However, a plotting of the opening up and growth of the economy with the number and size of corruption cases would indicate a direct and positive correlation between the two. As we have privatised, liberalised, globalised and grown in size to become a trillion dollar economy, so have the number of corruption cases while the amounts involved have grown exponentially. Compare the Rs 64 crore allegation for the Bofors gun deal with the (admittedly notional) Rs 1.76 lakh crore estimate for the 2G telecom scam to get a sense of how corruption has grown. The example of India indicates that the loot of public money for private benet and the use of public ofce for private gain are not inimical to economic growth and the deepening of capitalism. In fact, it can be argued, as has been done by various radical critics of capitalism, that there is an intrinsic link between the two. The free markets efciency is based in part on its ability to draw on the labour and resources for which it does not pay, whether it is the unfree labour of women or bonded labour or the free gifts of nature. Capital has to continuously encroach on natural resources, push down the rates for labour power as well as break laws to keep its head above the swirling waters of the falling rate of prot. If friend and family do not help it in this struggle for survival, who will? Historical experience suggests that as India continues to liberalise controls on capital and privatise its resources, there will be a corresponding increase in corruption and a further growth in the nexus between business and politics. To call it crony is to misread the very nature of capitalism and provide an alibi for its depredations, as if capitalism itself is not guilty of these transgressions. Prime Minister Manmohan Singh warning about the dangers of crony capitalism is understandable, since he would need to defend the capitalism he is trying to build. However, when leftists and radicals start using this term, it may reect an inability to understand the very nature of capitalism.
december 25, 2010 vol xlv no 52 EPW Economic & Political Weekly