Neoliberal Poison


Analytical Monthly Review, published in Kharagpur, West Bengal, India, is a sister edition of Monthly Review.  Its November 2007 issue features the following editorial. — Ed.

Now that the global counter-revolutionary assault of the last decades has visibly begun to ebb, the time may be near when an account can be rendered of the damage done to humanity and the environment.  High on the list shall be the destruction of the first initiatives and experiments in scientific economic planning, that is, the rejection of the use of intelligence, reason and foresight on a social scale and in the social interest, at precisely the moment when its use became more critical than ever before.  In India, even before the end of the cold war, the limited planning regime was at best a fragile adornment on an economy fundamentally subservient to post-colonial imperialism.  But in its place has come a species of “economic” reasoning, termed neoliberal, that in better days to come shall be looked upon as insane.

At the very moment that India, under intense pressure from the World Bank, turned to the neoliberal economic policies absurdly described as “reform,” the chief economist of the World Bank, Larry Summers, distributed the following internal memorandum:

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]?  I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality.  From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages.  I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost.  I’ve always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City.  Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity.  The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is 200 per thousand.  Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates.  These discharges may have very little direct health impact.  Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing.  While production is mobile the consumption of pretty air is a non-tradable.

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

Summers went on to be U.S. Secretary of the Treasury in the second Clinton administration, and then President of Harvard University, before resigning in disgrace under circumstances recounted in the article “Gender and Mathematical Ability” in this issue.  In retrospect, we now can see his 1991 memo as not the “ironic” comment he later excused it as, but in fact the neoliberal programme; the manifesto of neoliberal “reform.”  The result is a disaster for whole future generations — much evident from the activities of giant multinational companies in collaboration with the big industrial houses of India in the chemical industry sector.

The export of hazardous industrial plants to developing nations is seen in a number of industries.  As hazardous and polluting industries (mostly those producing highly toxic products such as asbestos and certain pesticides and those processing copper, zinc, and lead) come under increasing regulation in industrial nations, some of the affected processes are exported, without improvements to make them less hazardous, to non-regulating countries where cheap and uninformed labor is abundant.  The products are then marketed in industrial nations, and a new “export platform” comes into being.

In addition to the export of the most poisonous industrial processes, the dumping of toxic substances takes place directly.  Under the neoliberal regime, a flood of mercury, an extremely hazardous brain-damaging poisonous substance, has poured over India.  Asha Krishnakumar in Frontline of December 6, 2003 set out the grim facts:

According to data published recently by the Kolkata-based Directorate-General of Commercial Intelligence and Statistics (DGCIS), imports of mercury to India rose sixfold between 1996 and 2002 — from 285 tonnes to 1,858 tonnes.  The quantity of organo-mercury compounds (for example, pesticides and slimicides) that made its way into the country zoomed 1,500 times – from 0.7 tonne to 1,312 tonnes.  Between 1997 and 2003, over 70 per cent of all the mercury exported from developed countries came to India.  Of this, Spain exported 417 tonnes, the U.K. 368 tonnes, Russia 267 tonnes, Italy 172 tonnes, the U.S. 165 tonnes, France 403 tonnes, Germany 806 tonnes, Japan 362 tonnes and China 627 tonnes.  India is also the biggest processor of mercury, nearly 70 per cent of the world’s production.  It consumes 1,350-1,843 tonnes per annum or 50 per cent of the global production.

Here we can see the true meaning of the triumph of neoliberal “enterprise” over the frustrating restrictions of the “license raj.”  The Ministry of Environment and Forest attempted to ban the commissioning of mercury-based chlor-alkali plants, a primary importer of mercury and a major force behind the explosive growth of these poisonous imports, in 1991!  In 2000, a draft notification was circulated by the Ministry to eliminate mercury from consumer products, but no action has yet been taken.

A recent complaint filed by the CBI on August 21, 2007 against a subsidiary of U.S.-based multinational Dow Chemical is also worthy of note.  According to the complaint, beginning in 1996, the Dow subsidiary made approximately $39,700 in improper payments to an official in India’s Central Insecticides Board to expedite the registration of three products (Pride (NI-2s), Nurelle-D and Dursban 10G).  The complaint also alleges that from 1996 and to 2001: improper payments to state officials were made in the amount of $87,400; improper payments to Indian government officials consisted of an estimated $37,600 for gifts, travel, entertainment, and other items; and also $19,000 to government business officials; $11,800 to sales tax officials; $3,700 to excise tax officials; and $1,500 to customs officials.  In sum, over a six-year period, the Dow subsidiary distributed an estimated total of $200,000 in improper payments through federal and state channels.1  But, sadly if not unexpectedly, the case does not demonstrate a newfound willingness of Chidambaram & Co. to enforce the law against a U.S. multinational.  The CBI raid and complaint took place only after Dow Chemical was fined with a civil penalty of $ 325,000 by the U.S. Securities & Exchange Commission [SEC] due to reports of improper payments to regulatory officials in India that had emerged from the company’s own accounting.

Dow Chemical was the purchaser of Union Carbide.  Last year the Ministry of Industry suggested that, pending the resolution of district court litigation, Dow provide Rs 100 crore for needed remediation measures at the Bhopal site.  Immediately the Chargé d’Affairs of the US Embassy in Delhi demanded the government withdraw the Rs 100-crore claim on Dow.  In April 2007, the cabinet secretary dutifully put up a note saying ”it stands to reason that instead of continuing to agitate these issues (Dow’s legal liability) in court for a protracted period, due consideration should be given to the prospect of settling these issues appropriately.  An important aim is to remove uncertainties and pave the way for promoting investments in the sector.”  Dow now has large-scale plans to invest in Madhya Pradesh, and West Bengal Chief Minister has also indicated to Ministry of External Affairs representatives that he is looking towards Dow setting up a chemical industry in his state.2

Displaying the “impeccable logic” of Larry Summers, Dow continues to sell in India Class I pesticides like Monocrotophos, banned many years ago by most of the developed world.  Their leading home and garden pesticide product in India, Dursban (chlorpyrifos), is prohibited for such use in the United States, Dow’s home country.

It is profoundly misleading to pose the question as whether one is for or against “industrialization.”  We know the railroads were built to facilitate the export of natural resources and not to develop Indian industry nor to distribute our foodstuffs, but it would be absurd to condemn the building of railroads.  So with industrialization, there is nothing in common between the chemical plant that poisons the community for the profit of U.S. corporate giants and the chemical plant safely constructed in accord with the planned development of society.  Our enemy is visible in such as Larry Summers and his mentally diseased neoliberal “logic,” a logic that continues to motivate the Manmohan Singh regime and has even infected significant segments of the left parliamentary parties.  The time has come to learn what can be learned, to reject with every means at our disposal imperialist capitalist FDI, and to create a political environment that strives for reason, decency, and planning on a social scale.

1  U.S. Securities and Exchange Commission, “Litigation Release No. 20000: The Dow Chemical Company,” 13 February 2007.

2 Shishir Gupta, “To Get Dow to Invest, Tata Offers to Lead Initiative on Bhopal,” Indian Express, 1 January 2007.

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