Paranjoy on Facebook Paranjoy on Twitter Paranjoy on Google+ Paranjoy on LinkedIn
Paranjoy Guha Thakurta

India’s Gilded Age of Crony Capitalism

Date published: August 11, 2018Publication: HW News Link to original article

The American author Mark Twain had described the last decades of the 19th century as the Gilded Age, a period when on the surface everything appeared to be glittering like gold concealing the filth and ugliness that lay beneath. This was an era that witnessed brazen corruption in public life, a phase when economic growth was fuelled by the corrupt nexus between big business and politics. Among the “robber baron” capitalists who epitomised this phase in the United States were a clutch of household names: John D Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, Leland Stanford and JP Morgan. Many of them sought to clear their conscience by setting up charities, trusts and educational institutions.

Oligarchy is defined as a political and economic structure that is characterised by a small group of people wielding tremendous power and control over a country’s economy. In the early-1990s, after the Soviet Union disintegrated, under President Boris Yeltsin, a bunch of very rich Russians came up who were described as oligarchs or kleptocrats. They earned obscene sums of money because government-owned assets were sold to companies controlled by them at throwaway prices. Some of them siphoned off their funds outside Russia through tax havens like Cyprus – incidentally, what Mauritius has been to the rich in India, Cyprus has been to Russia’s well-off. By 1999, after Vladimir Putin had come to power, some of these kleptocrats were “purged” of their pelf and pride, among them financiers like Boris Berezovsky, Vladimir Gusinsky and Mikhail Khodorkovsky. It has been claimed between 1996 and 2000, a group of “seven bankers” controlled at least half the flow of finance capital in that country.

The People’s Republic of China too witnessed the rise of extremely wealthy individuals who worked in close proximity with important functionaries of the Communist Party of China. By the time China’s Premier Xi Jinping began his second five-year term, like Putin, he too tried to disgrace and discredit a number of corrupt industrialists and important government officials who had illegally amassed huge fortunes. Nevertheless, some businesspersons flourished and prospered thanks to the active support and encouragement they received from the ruling regime. The most prominent among them are, of course, Jack Ma and his close associate Simon Xie who are said to be among the richest men in the world and who control one of the biggest digital monopolies, the Alibaba group. Many other countries too have seen the rise of the super-rich, countries in South-East Asia, Central America, Latin America and Africa.

Which country does India resemble the most at this juncture of its contemporary history? Is it the United States of the late-19th century, Russia of the early-1990s, China, Brazil, Mexico, Malaysia or South Africa? All these countries and many others as well, have gone through – or continue to go through – phases of crony capitalism where the closeness of businesspersons to powerful politicians and influential bureaucrats have determined their success rather than their entrepreneurial talents and abilities. British journalist and academic James Crabtree, who is now based in Singapore, believes that the current period in India perhaps most closely resembles the Gilded Age of America. As a matter of fact, his recent book published by Oneworld titled The Billionaire Raj is sub-titled “A Journey Through India’s New Gilded Age.”

Crabtree, who worked for five years in India as the Mumbai bureau chief of the Financial Times of the UK, has peppered his 357-page book with dozens of anecdotes about some of India’s most wealthy individuals such as Mukesh Ambani, Gautam Adani and Vijay Mallya. His meetings with them and his detailed descriptions of their lifestyles and demeanour make for racy reading. The cover of his book depicts Antilia, the landmark 27-storeyed skyscraper in south Mumbai against a backdrop of slums where the majority of the population of India’s “commercial capital” reside, many of them under what would be considered sub-human conditions by Western standards.

The book begins with the story of the crash of an Aston Martin Rapide, one of the world’s most expensive cars, owned by a company in the Reliance group. The circumstances that led to the crash in December 2013 are still shrouded in mystery and although the story was hardly reported in the India media, it remains a subject of speculation and cocktail party chit-chat. Crabtree took photographs of the mangled remains of the car covered in a dirty plastic sheet apparently abandoned outside a police station. And then one day, what remained of the Aston Martin just disappeared!

Crabtree’s book goes beyond anecdotes about Mallya puffing his cigarillos in London and his airplane rides with Adani to the Mundra port and industrial complex in Gujarat and with Naveen Jindal to the mining township of Angul in Odisha. He has animatedly engaged in the discourse on the many complexities relating to the country’s economic trajectory and development paradigm. Interestingly, he seems to agree much of the time with two of the best-known economists of India who openly disagree with each other and espouse completely contrasting ideologies, namely, Jagdish Bhagwati and Nobel Laureate Amartya Sen. As a matter of fact, the former has endorsed the book in effusive terms.

The author argues that the “balance between growth and corruption…lies at the heart of the struggles of India’s industrial economy.” At different stages in its narrative, Crabtree’s book appears stereotypical and in keeping with the manner in which many Western observers’ hearts bleed at the country’s glaring inequalities and the way in which they perceive the plural and heterogeneous political economy of India and that defies easy generalisation. This is most evident when the author evaluates the performance of Prime Minister Narendra Modi with ambivalence. Praise for his “reformist” zeal and attempts to curb corruption is juxtaposed by a description of the “risks of rising illiberalism” and the swelling tide of Hindu nationalism and majoritarian tendencies in Indian society.

A disclaimer is in order here. Full disclosure: Crabtree has described in flattering terms his meeting with this reviewer, one’s articles and books have been referred to in a number of places and an interview conducted by me with him is available on the NewsClick.in website.

At the end of the day, a big question remains unanswered. The Gilded Age in the United States was followed by what is called the Progressive Era when that country’s government became more responsive to the aspirations of its underprivileged, when state-funded education and health-care programmes became more widespread, when monopolies were sought to be curbed and those in positions of power and authority were sought to be made more accountable then before.

Will the same analogy hold good for India as it prepares for the 17th general elections? Will a progressive era follow the current one characterised by brazen crony capitalism? Your guess could be as good as mine.

Date posted: August 11, 2018Last modified: August 14, 2018Posted byParanjoy Guha Thakurta
Featured Book: As Author
Thin Dividing Line: India, Mauritius and Global Illicit financial flows
Paranjoy Guha Thakurta, with Shinzani Jain
Penguin Random House India
304 pages
December 2017
Documentary: Random
Featured Book: As Publisher
Netaji: Living Dangerously
By Kingshuk Nag
Paranjoy
198 pages
November 2015
Video: Random
Rs. 29,000Cr Coal Scam: Who are the Real Culprits?
Date: April 28, 2016Duration: 17:38