Plutocracy

Since the 1990s, the general messaging has been that private enterprises and free markets are the only worthwhile goals to pursue. Most people now believe that making profits is good for individuals and also society. Markets are the great mechanisms that reward talent and efficiency and punish sloth.

This is nothing more than a neoliberal fantasy world. The assumption is that the citizens compete as equals, in a level playing field, attempting to outprice one another in offering products, goods, and services. The best become employers, while the rest employees of theirs. Everyone will benefit magically, both employees and employers.

That's not how it works. Free markets are skewed in the favor of those who own capital, as those with money will out-compete the rest by offering higher salaries, purchasing the latest technologies, and selling cheaper. Deep pockets can sustain losses for a longer time, compared to first-generation entrepreneurs who cannot even sustain that. Thus the only way forward is via acquisitions and amalgamations that lead to the creation of monopolies and consequent economic inequality.

Neoliberalists argue that since such large monopolies are listed in stock markets, wealth is not concentrated. But can small shareholders compete with larger ones in deciding company strategy? No, not at all. Now once monopolies are created, the Big Capital controlling it wants that to continue forever. That needs the right policy environment that is favorable government laws which in a democracy may be quite difficult, hence the capture of state institutions is the target. The best way to do so is via reforms, which means governments leaving some section of the economy to be exploited by monopolists. Governments excel at selling the idea as beneficial to the society, as "needed for economic growth", and that is exactly what is being done in India since 1991. Governments talk about growth, but rarely of equity or inclusive development.

Now the common citizen has started deeply believing in all this, and governments find it tough to go against it. Industrial captains are now the new heroes, and any government trying to cut their profits is fearful. What is done instead is curtailing workers' rights, which is then lauded by the media, while cutting corporate taxes is celebrated.?

The Indian corporate sector's tax contribution went from 36% in 2010 to 23% in 2020-2021, whereas indirect taxes went from 45% to 53%. No more proof is required for how dangerously inequitable this taxation is. Direct taxes are always progressive while indirect ones are regressive. And India is doing wrongly in both!

The government policy is to keep deposit rates in banks low and force people to invest in stock markets and participate in corporate profits. Why do this? The logic given is that funds become productive instantly without intermediation from banks. But large shareholders determine what goes on, not small ones.

India suffered deeply in 2020 and 2021, while corporate India enjoyed record profits. The richest 1% are becoming richer by the hour, while the majority of Indians are sinking. That's neoliberalism for you.

- Aindri Abhishek Singh.