Jeff Bezos visit
to India was overshadowed by few related political incidences. One was
ostensible refusal by both Prime Minister Modi and Commerce Minister Piyush
Goyal to meet him. Secondly, there was a statement on Amazon attributed to
Goyal. Apparently, Goyal had hinted Amazon was not doing any favour by
investing in India and instead the investment was in their own self-interest.
It might be a different matter that the statement was twisted as usual by the
media over-eager to hit back at the government. Yet, for all the outwardly
deceptiveness of protection of small grocers, at the heart of the kerfuffle, was the
seemingly biased reporting by Bezos owned Washington Post in recent times on
India. An analysis of the same can be found in the piece ‘
WaPo
and White Man’s Burden’.
Government
industry relations have always been one of jigsaw puzzles. To the industry,
government would be the forum where they would love to shop for protecting
their domestic markets from foreign entrants and secondly seeking protection to
their legacy business models from the disruptive business models. The industry often fancies itself as arbiter
of regulation given the professed expertize in their domain. Implied is they
anticipate government to consult them when framing policies for new business
entities. Incidentally, emergence of a disruptive phenomenon makes the
bureaucrats seek advice of the known experts who happen to be the existent
firms, more often than likely victims of the disruption. Indubitably, the
process is underpinned on an apparent conflict of interest given their characteristic
concern of legacy protection and continuation.
Corporates use
government apparatus in furtherance of their interests overseas. Conflicting
interests between national government and overseas firms backed by their
governments recurrently degenerated into coups, counter-coups, agitations,
civil wars, colonialism etc. President Arbenz of Guatemala nationalised the
banana plantations owned by United Fruit Company that were creating social and
economic havoc. At UFC’s insistence, CIA backed a coup in1954 deposing Arbenz
and installed a puppet to serve the bidding of UFC. Nationalising oil companies
in Iran made Britain and CIA jointly oust PM Mossadegh in a coup and reinstate Shah.
Recently, Evo Morales of Bolivia argued his ouster was a reaction to his attempts
to nationalize lithium reserves that did not serve the US interests. European
powers constantly intervened in African colonies to serve their economic
interests so did the US in countries like Philippines, Haiti, Chile among other
countries.
Washington
Consensus is derided by critics of being camouflage for advancing US economic
interests. The introduction of TRIPS in Uruguay Round of trade negotiations and
consequent adoption were perceived to be an outcome of entrenched
pharmaceutical lobby in the US seeking market access to emergent countries. Widespread
perception abounds on global trade rules being recrafted to suit the economic
agenda of US corporate backed by its government than genuine aspiration to
reform the global trade in easing the barriers of mobility in trade, capital,
technology and labour.
Huawei in
seeking to monopolize 5G networks globally is, for good reason, viewed as an instrument
of Chinese imperialist ambitions. The hostile reaction therefore is a societal
response to the Chinese drives. China has sought to advance its objectives to
set infra projects like ports in Sri Lanka, Myanmar, Djibouti, railroads in
Kenya among other ways. Chinese firms more often than not, are essentially
party run irrespective of what they claim to be. The party control is concealed
beneath the series of veils. Huawei’s veil is slowly being pierced. To China,
perhaps a learning curve of 19th century imperialism is leading it
on a policy what few have described as incremental imperialism. However the
Chinese debt games have a precedent albeit in a different form in Latin
American countries. India seems to be very late comer in the games and its
moves if any are highly tentative.
Similarly,
within the country, the contestations for supremacy between corporate and
government has been for many years. In the US, led by dominant industrialists
and financers like Rockefeller, Morgan among others, monopolies were erected in
virtually every sector including steel, oil etc. Presidential administrations
often overlooked these encroachments despite presence of legislative framework
like Sherman Act. However, President Theodore Roosevelt believed the state was
supreme and the firms had to submit to state supremacy. In series of
trust-busting actions, monopolies were unravelled.
In India, the
nationalization of banks of 1969 was essentially believed to hit at the
corporates whom PM Indira Gandhi believed to be working against her interests.
Nationalization in the garb of eliminating concentration of wealth in the hands
of few served good politics despite the long run consequences in terms of
economic despair. Land reforms like Tenancy elimination etc. were essentially
again targeting certain zamindari coalitions that perhaps might have been a
threat to those in power. The cat and
mouse game goes on in many countries in different manifestations at different
points of time. Yet it would be of interest to understand how the games play
out.
Henry Farrell, presented a matrix, illustrated
below that captures the state-private actor dynamics. The objective is to
illustrate the formulation than debate the pros and cons of the formulation.
Source:Henry Farrell, Governing Information Flows, State and Private Actors, - this diagram is representative illustration of the matrix
To Farrell, the crescendos
revolve around two parameters, the preferences of the state and the points of
control available to the state. As the globalization increases in intensity
accompanied by equally strong backlash, numerous challenges emerge. The states
with decreasing control over cross border flow of information and resources
need to redefine their strategic priorities. Many an occasion, different states
might manifest differing preferences, the outcome of which would be an
inability to arrive at global consensus. Online gambling might be illegal in some
countries, yet many small countries would be open to the idea given the revenue
potential. Traditional arrangements work best when states
as a whole exhibit congruence and no points of control exist. The international
agreements arise when such consensus is possible. To many states, in the absence
of points of control, the capacity to exert its power is limited and thus
willing to compromise. If the points of control are present, and the state
bargaining power is strong, hybrid regulations emerge. Most of these might even
in more ways than one benefit the private actors while getting state support.
The US administration towards the end of the 19th century
demonstrated the hybrid arrangements best. Currently the role of ICANN best demonstrates
the same.
Contradicting
preferences between states and private actors often result in stalemate in the
absence of points of control. This stalemate however is contingent of the state
capacity. In the absence of state capacity to act, the stalemate might give way
to private domination. Very few global arrangements are possible and each state
might reveal power relative to its state capacity. In the presence of points of control, there is
without doubt competitive attempts to wrest their control. Moreover, the willingness
and credibility of the state to exercise its power in leveraging points of
control determine the trajectory of these contestations. The firms desire
regulatory capture at state’s expense resulting in contradictory impulses.
These battles often get played out in overseas political geographies in a
different manner and an altogether different game is played in the native
geography. US often went after the corporate power to rein in monopoly power
and promote competition. There was competitive battle for the same, yet the
corporate and state cooperated in exerting power in terms of capture of
sovereignty overseas directly or indirectly. Chinese attempts in overseas regulatory
capture as well as its application of power domestically on MNCs illustrate the
gradation of exercise of power owing to the increasing state capacity.
Amazon-India
cold war is a manifestation of century old battles and India is well within its
right to exercise its sovereignty. There are points of control and state
capacity is perchance stronger than ever before and thus high times establishes
its interests and sensitivities and acts upon the same. Domestic interests are paramount and there cannot
be compromise on the same. India’s stand on RCEP is a reflection of the same.
India has to prove its state capacity as also the alacrity and credibility in
leveraging the points of control to its benefit when it comes to protection of
national interests.
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