The horizon is not so far as we can see, but as far as we can imagine

Neoliberalism in India and Covid Deaths

I’ve had my eye on India ever since I found out that calories per capita had dropped in India over the last 30 years.

That’s not what happens when things are going well, unless a huge number of people have moved to sedentary jobs, which they had not.

Neoliberalism is about production and supply trains. They’re very complicated, and the parts for a finished good may be made in a dozen countries and shipped to a plant which does the final assembly. The IP holder often skims ten to 30 percent profit off of this.

Most countries currently industrialized didn not industrialize under neoliberalism. They ran protectionist trade policies and exported their way to mature economies. That was generally allowed because they were a military ally or satrapy. Japan was first Britain’s ally, then for the US. Taiwan and South Korea were American satrapies, etc.

China used a hybrid model. They got themselves into the supply chains by offering high profits to Westerners, generally through simple wage arbitrage (“our workers cost less”). They put heavy pressure on people who took those profits to give them their technological secrets (IP) in exchange. And for much of the early period, they also ran a protectionist policy, keeping their currency low against the US dollar. They turned neoliberalization into mercantalism, and because less than five countries have EVER industrialized under any system but mercantalism, they succeeded.

They were able to do this because they made it very worth the while for greedy Western elites to ship jobs to them; they made a lot of Western elites rich. They knew exactly the deal they were offering.

India was socialist for a long time. They felt it didn’t work, so they decided to try neoliberalism.

But, they ran into the fact that it made more sense to offshore to China, and they didn’t do neoliberalism smart — they didn’t control their currency properly or find another way to turn neoliberalism into mercantalism. China kept large parts of their economy state-controlled, and used those companies actively. Yes, state-controlled companies were less efficient, but they gave the State power, and they provided ways of spreading welfare to people that the private companies weren’t taking care of. Not immiserating too many people meant making sure that Chinese citizens saw the new industrial and trade policies as good for them.

India, on the other hand, got in mostly on service jobs. “We speak English, so we can do service center stuff,” and a fair bit of IT outsourcing and offshoring.

But they neoliberalized as if they were already a first world nation; they sold off public enterprise and gutted state control over the economy as if there were a huge surplus created by decades of good growth which could be cannibalized to create a rich class.

India did create a small new middle class and rich, yes, but they did so without creating widespread prosperity.

Because of the way human psychology works (we have a strategy, it has not worked, we must do it harder because we are always right until we are overthrown), when the old elites couldn’t really make this work, a toxic mix of neoliberalism and Hindu Nativism took control of the country, with the face of Modi.

Modi’s a right-wing nationalist, verging-on-fascist (some would take out the word “verging”). But he’s also a neoliberal’s neoliberal. Practically, his first act was to de-monitize: removing large bills from circulation and forcing poor people to use electronic money. This was sold as crushing corruption, but what it did was make sure that the government and financial elites could grab more money from more transactions, while crushing the informal economy most Indians live in.

Recently, he’s passed a law which allows farms to be bought more easily. And so they will be (farmers, not being idiots, have opposed this law).

So Modi’s run the same play you can see in right-wing parties around the world: He’s offered nativism and feel-good, right-wing identity politics (Hindus are the best, Muslims are scum, get rid of them, no Hindu girl should marry a Muslim, etc.), and then run policies which will, over time, hurt the poor and create more rich.

But these general policies were running long before Modi.

One of those policies that has now been brought to light by Covid is that the public health care sector was gutted under neoliberal governments, so that private healthcare could make more money. So now, when it’s needed, there isn’t enough public (or private) care around.

This is how neoliberalism works: It looks for a public good and then it gets rid of it. This can be a regulation which, if removed, allows profit (making it hard to buy farms means they can’t be bought up and turned into large cash farms; cutting pollution rules means someone makes more money, etc.) or it can be by making public services shitty, or selling them off to the private sector, or other variations.

Again, in a developed country with a large prosperity cushion like the US, France, or Canada, you can do this for a while, and it doesn’t look so bad.

If, on the other hand, you do this to a country which had never hit developed status in the first place, well, people eat less calories, and when a pandemic happens, hospitals turns away patients in droves.

Neoliberalism doesn’t work when trying develop or industrialize countries, unless you game it so it turns into protectionist trade. China did that, India didn’t, and Indians are now paying the price.

Neoliberalism is designed to create rich elites while crushing ordinary people. In India’s case, it also created a small middle class (because that’s rich, really, in India, as anyone who’s spent much time there knows. Middle class means you have servants, for example. It’s not middle class like in The US or Europe.)

Neoliberalism is not designed to help anyone but the rich, except temporarily. Some asset holders will win (say, if you owned a house in 1980 in the US and didn’t sell until retirement, then moved somewhere cheap.)

But no other groups win for any length of time, because neoliberalism is the policy of looting, of pumping asset prices and of crushing wages. That’s the policy regime. It does what it’s meant to: It creates a rich class and, for a while, it keeps enough people supporting it who won’t win the end (unless they die soon enough) by giving them large, unearned asset price increases that are much greater than inflation.

India needs a new strategy. The overwhelming of its medical infrastructure is exactly the result of the neoliberal policies it has followed for decades. Modi is only the latest and worst, not the first.

I wish the Indians well. They have a very challenging few decades ahead of them, perhaps the most challenging of any non-African large country in the world. I hope they get their act together, ASAP, or a lot more Indians than Covid is killing will die, and die ugly, as climate change, ecological collapse, and water shortages hit.

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Week-end Wrap – Political Economy – May 16, 2021


Protecting Diaspora Jews and Ending the Israeli Threat to Jews


  1. Hugh

    In 1950, the population of India per the International database at the US Census was slightly under 370 million. By 1990, thirty years ago, its population had more than doubled to 838 million. Since then, in those last 30 years, India will have added another half billion to its population, to 1.339 billion (2021 midyear estimate).

    We can only live unsustainably for so long. India is the largest but it is by no means country that we are beginning to see fail due to overpopulation and the effects of climate change and poor administration. The number and severity of these will increase over time. This is our future unless we act decisively and now, which we won’t.

  2. Plague Species

    Yep, Hugh, the Green Revolution. It allowed for the massive population explosion. It was both a blessing and a curse. We’re in the curse phase. The Brown Revolution is upon us.

    In his lecture on winning the Nobel Peace Prize in 1970, Norman Borlaug, one of the “fathers” of the Green Revolution, provided an obtuse defense of the program: “Some critics have said that the green revolution has created more problems than it has solved. This I cannot accept, for I believe it is far better for mankind to be struggling with new problems caused by abundance rather than with the old problem of famine.” Five decades since, we have come full circle, and it is evident that new problems of industrial agriculture have added to the old problems of hunger and malnutrition.

  3. Jan Wiklund

    Don’t understand, the link goes to an article about that the internet isn’t that big stuff.

  4. Astrid

    The Chinese government still controls their currency very tightly. Investing money in China is easy, but pulling out is extremely hard. This is likely a major reason for the amounts of bitcoin mining in China, as a way to launder money outside of state channels.

    Bangladesh almost certainly have the greatest challenge anywhere. At least the other”most threatened” places have relatively small populations and can probably manage a move. India and Myanmar have both made clear how they will respond to impoverished Muslim refugees. It’s going to be a bloodbath.

  5. Hugh

    I found this article from 2009:

    It dances around the reasons for declining calorie intake, such as lowered activity levels. It mentions lower weights in women, the lack of increases in height (a sign of good nutrition), and pretty prevalent malnourishment in children but doesn’t draw any conclusions.

  6. Ven

    Ian, I’m not an expert, but I’m not sure India was actually socialist. Yes it had state-owned entities, but these were by and large favoured the elites. Neoliberalism undoubtedly took off the shackles.

    India was never really serious about eradicating poverty, providing education, healthcare, etc. Under the Congress, it was more about political power of the governmental elite; and now that has shifted to the industrial / financial elite.

    The problem with India – and I suspect this will prove true in S Africa – is that they never fought for freedom. Consequently, when the British left, the elites that had managed the nation for the Brits, simply slipped into their shoes. If there had been a war of independence, then this class would have been brushed aside, so there may have then been a chance for a reset. (But, yes I know, that carries with it the danger of substituting one elite with another.)

  7. Ian Welsh


    I was there in the 80s. They certainly thought of themselves as socialist, and their elites now mostly have a visceral distaste for anything they consider socialism. You can see it at the “Wire” which rabidly opposes Modi, yet constantly agitates for more neoliberal economic policies (they just don’t like his fascism.)

    I was a kid when I was there (I also had family who lived there) but one thing I remember is there was no Coke, ’cause they had kicked Coca-Cola company out. The Coke substitutes they had, however, were all bad. 🙂

  8. Mr Pibb

    It’s all about the formulas.

  9. john halasz

    But the Prussians were ethically cleansed after WW2, just in favor of the Poles, not the Jews.

  10. Jessica

    Two things. 1) Not sure of the role of caste in all this, but it has to be huge and pervasive. In a sense, India exists less than some other nations that are farther along the path of congealing into a nation-state. So the illusoryness of talking about “India did xxx” is greater than the illusoryness of “Canada did xxx”. I bet that the explanation for why “India” is doing something so stupid can be found in caste.
    More generally, it is much less true than it was a few decades ago that those at the top need to pull everyone along if they want to make their nation richer and more powerful. Neoliberalism has made the competition more about getting away with throwing large portions of one’s population under the bus. Examples include hundreds of millions of migrant workers in China, much of the heartland and most of the (no longer) prosperous working class in the US.
    Yet more generally, at current levels of technology and population, the human race as a whole can’t possibly provide prosperity for everyone. Yes, one can show that if everyone lived a life of exceptional virtue, perhaps it would be possible, but creating such a virtuous society is an even more difficult task than solving things with material technology.
    BTW, any program to combat man-made climate change that does not tackle the issue of population (=pretty much all of them) is based on leaving the majority of the human race in poverty.
    2) India was never socialist. It was monopoly capitalist. Socialism was just an excuse that was used to protect monopolies. Whenever some capitalist wanted to take advantage of the opportunity presented by an industry monopolized by some inefficient and under-sized monopolist, they were told they couldn’t. Because socialism.

  11. Jessica

    I was there in the late 70s and I remember those god-awful Coke substitutes.
    India then felt more different, more alien than other places because of the absence of McDonald’s and KFC and all that. Bangkok by comparison felt almost western.
    Revulsion toward socialism in contemporary India would make sense given what a sham (Fabian) socialism in India was and how poorly it performed.
    Looking at the Soviet bloc, socialism there meant far fewer consumer goodies and a general grayness of society, but at least health and education were well-funded and heavy industry was built up. Indian socialism did not do that, so it was the worst of both worlds.

  12. bruce wilder

    I started to write a comment riffing on the now old saw the future is here now, just not evenly distributed yet.

    You could see that in India at the beginning of Modi’s reign: parts of the country that barely made it into the 18th or 19th century side-by-side with parts leaping into or past the late 20th with gusto. I have been on divided highways expanded in the 1950s or 1960s to put a paved road down the center track for overloaded motor trucks barely capable of 40 mph, flanked by ill-paved or packed earth service roads crowded with oxen and bicycles and camels and walkers. And, I have seen super modern concrete freeways that make the autobahn look shabby.

    I think the middle class in India, by some definition, would exceed the total population of the U.S. There is core group living very well and globally, with family spread every where, especially in the anglosphere.

    The prosperous and modern, globally, have expanded, but the number of desperately poor has, at best not changed. In India, the desperately poor may have grown in number since 1950. There is no place for them.

  13. This post by Ian is very interesting, but not a word about the apparent massive suppression of inexpensive treatments for covid, especially ivermectin. As India is (at least) the 3rd largest producer of pharmaceuticals in the world, there is lots of money to corrupt their medical establishment (and evidently, their media establishment, based on my consumption of about 20 Indian news and discussion youtubes related to their 2nd wave).

    For those who wish to go to a lower rung on the abstraction ladder (to borrow a phrase from Barrie Zwicker) , I found the blog article “WHEN INDIA STOPPED PRESCRIBING IVERMECTIN AND STARTED VACCINATING THE DEATHS SHOT UP” so good that I added it to my vanity sub-reddit, bad_science_culture.

    Well, “good” ignoring the absence of numbered references, and the evidence-free claims that this longish article begins with. Also, I am still not seeing a detailed breakdown, with timelines – if not time dependent plots – of quantitative use of ivermectin, broken down by different states. I’m afraid such data is not public.

    I haven’t read any of it, but a comment by an author regarding his book “Pandemic Blunder” looks even more evidential:

    About the Book:Pandemic Blunder contains considerable medical information and data to support a number of proven safe, cheap generic medicines and protocols that knock out the coronavirus when given early. Read about the pioneering, courageous doctors who have been using innovative approaches to prevent their COVID patients from needing hospital care and facing death. The book includes many expert opinions and Real World Evidence from doctors that show 70 to 80 percent of COVID deaths could have been prevented—and still can be.

  14. Trinity

    “Yet more generally, at current levels of technology and population, the human race as a whole can’t possibly provide prosperity for everyone.”

    This is the main goal, as I understand it. This keeps people poor and hungry, and willing to do shit work for shit pay and then conveniently die, to be replaced by their children in an endless queue of relatively low cost slaves. The profits that result ensure this situation continues well into the future.

    “In India, the desperately poor may have grown in number since 1950. There is no place for them.”

    We cannot choose where we are born, or even if we are born.

    It’s a failure of the respective government or governing entity. At all levels.

  15. Hart Liss

    The elected officials of our dominant, super-patriotic party — the GOP, of course — the preferred puppets of our ruling class, I assure you, look at India as a paradigm of the classic failed state model: relentlessly parasitic. They look at India as the inspiration for what they want for and have been working towards since Reagan. Their success in turning the US into a failed state was made clear by the response to the pandemic of Trump and his party. Imagine: with a hundred years of (alleged) progress, the response to Covid was no better than the flea hundred years earlier and arguably, impossibly (one would assume) worse.
    And a reminder: in all likelihood, the first two years of the Biden administration is an interregnum, not a sea change such as under Reagan. St. Ronnie had the ruling class and establishment media* on his side, Old Joe does not. (*I’m sure no one here has to be told that the difference between establishment media journalism and Fox’s news side is insignificant.)

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