Corrupt Notes – the Black Comedy of Tragic Error: R Srivatsan

Reflections on the many paradoxes of the demonetization process: the schizophrenia of the BJP, the desire of the well to do, the baffling sacrifice of the have nots, the faults and fault lines that propagate through our society in crisis.

Black Money

Narendra Modi and Arun Jaitley, in their brilliant strategy to kill black money through the withdrawal of currency, show no basic understanding of what the term ‘black money’ signifies.  Prabhat Patnaik has recently argued there is no such thing as black money – there is only a black economy.  However, one aspect of the black economy is the refusal to pay taxes and instead hoard wealth in the form of currency that is not recorded in bank deposits.  Another is the payment of bribes with untraceable currency to authorities and politicians who use their position of leverage as personal property on which they charge a rent for use. Both these uses of black money as corruption have a common lineage. In both cases, corruption is the failure of categories that were supposed to have been water-tight.  A) “All income is taxable” B) “Public servants are true servants of the people”
But first, here is an attempt to shake our convictions that the refusal to pay taxes is a moral evil.  To do so, let me take the example of a Hollywood film, Stranger than Fiction (2006).  The plot of this film, which has a quite complex fantasy storyline, baits the viewer’s desire through the emerging love interest between an IRS auditor Harold Crick and his investigative target Ana Pascal, who runs a bakery.  Ana is a conscientious objector against taxation. She argues that she openly defies taxation since she doesn’t support the hegemonic objectives of the USA which spends most of its revenue income on weapons of war and destruction.  Ana is thus the beautiful and charming face of morally upright conscientious objection which masks the libertarian hatred for a state that taxes more than minimally.  As Robert Nozick asserted long ago such taxation is seen as thievery, against the sacred right to private property.  Ana’s position thus also masks the refusal to redistribute wealth through welfare. As a viewer, I found it extremely difficult to think of Ana as an evil person.  She was the most charming free-spirit I had encountered on celluloid (well, on a TV screen) for a long time. The objective of this sub-plot of film criticism is to help the reader shed the ready moral judgement that not paying taxes is a universal crime and a sin against society, so that it becomes possible to examine exactly what the complex nature of the act that constitutes tax evasion is.

What does the refusal to pay tax mean in a development state?  Or in a post-planning one if one thinks of how the current moves by Modi dismantle the apparatus of planning? What indeed does bribery mean in such a situation?

Fundamentally, taxation in the Indian development state has so far been the direct appropriation of approximately 30% of the wealth of the wealthier population, and a percentage of all economic transactions as indirect tax to fund the state’s plans to strengthen its armed force, develop its facilities for capitalism and improve general welfare in society through various instruments.  In taxing the people, a representative government has to assume that it expresses the general will regarding the progress and emerging shape of society.  It also has to assume that its bureaucracy is an impeccable arm of its will in ensuring that it is translated into consequential action that has the desired effect.  The government has to assume that its implementers and objects are well constituted and completely known (to paraphrase Partha Chatterjee’s remarkable argument in a now old yet greatly relevant essay on the nation state).  This is where the coin drops, literally into the cracks of this category! Neither the targets of development nor the implementers are well behaved objects – they are what may be called, following Hegel, subjects who negate or essentially refuse ways that describe, limit or circumscribe them.

The wealthy don’t share the governmental notion of what is good for the country, still less do they agree with the government on how much of the cost of that good they should bear. They have very clear ideas, as did Ana’s persona in the film, about who should spend their money. They do not want to fund general welfare. Black money and corruption are thus one aspect of the chronic fracture of the general will. The black economy is the suture through which the economic circuit is closed across this fracture.

And yet, the wealthy have no legitimate say in government policy since the elected party derives its majority from a vote segment that is much larger than theirs.  Herein is the ambiguity of an elected democracy that depends on the poor for its vote and the rich for its money. Here is the logic of the double voice of the ruling class – on the one hand the opportunistic championing of the democratic process, on the other the intense lobbying and underhand dealing with the machinery of government so that the spectrum of specific interests that are at the root of wealth generation are met.

The tragedy of the BJP shows in its extremely thin and brittle understanding of corruption, and their extremely poor grasp of neoliberal development both of which are evident in the holier than thou pronouncements in the nationalist rants of their leaders on television and radio.  Here is a pretender to true political representativeness of neoliberal capitalism, who seems not to understand the deep  connections between caste hierarchical culture and the Indian libertarian imagination and how these connections undergird the black economy.  And yet they do, if anybody does understand these connections it is the BJP!  The BJPs explicit political agenda is that of libertarian (unregulated, mildly taxed) capitalism of an Indian variety, its supporters are tax “evaders” who have been fostered as part of the development of free enterprise over the past seventy years by the nation-state’s many holidays in taxation, regulation, health and safety, labour and wages, copyright and patent, and many other dimensions. So the question which stands unanswered is: what is this paradox?  What is the historical nature of the BJP’s political schizophrenia that tries to straddle both ends of the tax divide?  The answer will have to be sought in the concrete history of the BJP’s particular negotiation of electoral politics and its libertarian support bank.

The crisis of the BJP arises due to its lack of appreciation of the mass of wealth that has been accumulated outside the government’s account books. Its strategic error of taxation and double penalty for those returning undeclared wealth in 500 and 1000 rupee notes has systematically alienated the wealthy. Arun Jaitley’s recent impressive sounding (yet hollow) arguments[1] about the logic of reducing taxation and widening the net to increase revenues doesn’t address the fundamental problem of the wealthy: How do they keep their ‘ill-gotten’ gains which they have amassed over the years and constitute probably half their total wealth?  Legal or not, they think of it as their rightful wealth in an as yet unprobed sense that has a murky ethical history; not to mention further, black money is not only objective wealth, it is a habit that has bypassed any thought moral or otherwise.  The knee-jerk response to any income regulation is to hunker down and invent ways to defeat it. This may well be a universal problem, but it has a very specific structure in the dominant Indian imagination which needs to be explored. The research on corruption has to graduate from the hitherto thinly disguised opinionated pronouncements of the moral rectitude of “good” economic conduct towards a realist analysis of the structure of “evil”.

This leads us to examine the tell-tale impasse of implementation.  Why is it that so many banks are caught (or not) supplying bundles of the new notes to the wealthy and privileged at their doorstep while the poor and the unprivileged stand in day long queues, the old dying of the strain, the young being beaten by the police, losing their daily wage? Because the spirit of finance capital is in the thought of these bank administrators who agree with the wealthy that their ‘ill-gotten’ wealth is truly theirs. The private implementers of regulation are even less trustworthy than the government’s own, which is to be expected!

The flip side of the problem is indeed the mind of those hurt most by demonetization: the poor, the petty commodity producers whose businesses collapse, the daily wage laborers who remain unpaid because currency notes aren’t available.  For these, the currency shortage is an economic catastrophe – ten days of no currency means ten days of no wage, ten days of starvation, less than twenty days of staying alive. Why don’t they protest or rebel?  The complexity of the Hegelian notion of (what I call in short-hand) subjective negation is that it works both ways (in this situation).  On the one hand, “my infinite desire for wealth cannot be curbed by your rules and regulations”.  On the other, “I know I am impoverished, that I can die of hunger easily, I suffer objective finitude; yet I do think you may have something worth risking my life for (it is not less than this!) – go on, I will eat less or not at all for as long as I can, maybe die in the process, and this is the immeasurable infinity that I am – go ahead and see if you can change anything for the better”. Unlike the wealthy the poor are generous in their poverty. They have a lived understanding of their intractable situation. They know that once the die of demonetization is cast, going back is impossible – that it is not in their hands. They have to struggle through the economic storm that has hit them. They are willing to grant an additional sacrifice in the worst of conditions as they negotiate this storm.

If Modi doesn’t know his economics, he knows how to tap into this feeling of sacrifice.

How long will this faith in the government’s good intentions continue?  Will there be some point at which (as Ranciere asks) this acquiescent perspectival platform of the poor will fracture and lead to a different understanding of their predicament as that of the expropriated?
The tragedy of the left is that it is blind to the validity and dignity of the gesture that agrees to sacrifice and sees it in terms of ideology as false consciousness.  Its cynicism in the face of concrete faith in intractable situations is one key symptom of an overall gap between itself and the poor.
R Srivatsan is an independent political thinker.

[1] Arun Jaitley always sounds as impressive and authoritative, as his pronouncements are hollow and thoughtless as with all the BJP brass from Vajpayee onwards – unfortunately for the talented if somewhat naïve Dr. Manmohan Singh and his less than impressive voice.  The cultured measure and majesty of the BJP’s voice hides the naked emptiness of the emperor’s mind!




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