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Wednesday, April 24, 2013

Dilemma of Nepali free market fundamentalists: a case study of Sajha Yatayat and Sudeep Shrestha


Fundamentalism of every variety tends to disable the faculty of judgment of its followers. To compensate for the loss, fundamentalists tend to skew the facts and realities to construct a belief system that then serves as the pillar of their arguments. A prototypical example of this is the religious fundamentalism in which the followers construct a skewed argument to justify their brazenly criminal deeds in the name of the god.

There are, however, more subtle forms of fundamentalism that affect our lives yet elude our attention. Looking back, as late as in 1983, the literature emanating from the then USSR kept predicting the doom of the capitalist system and the eventual triumph of communism. That was a belief system created some time in the past and totally detached from the reality of that day, yet the followers were very loyal when it came to the belief on the system.

In this article, I will deal with the fundamentalist belief system in the opposite end of the political spectrum, namely the rightist extreme, and the predicaments of the people at the spectrum. Because of its very nature and the coziness of its followers with the mainstream media, the phrase ‘free market fundamentalism’ is yet to be familiarized with the bulk of readership. That per se has nothing to do with my arguments, nonetheless.

Free market fundamentalist (FMF) belief system


For never having been formally educated in economics, my use of terminology may seem awkward but I will do my best to connote exactly what I intend to. In this section, I will briefly introduce the people who are free market fundamentalists(FMFs).

First, they share a set of beliefs that is not limited to but includes these: 1) Market is the eternal entity that can and should shape the lives of people  2) Free market is the only thing in the world that will sustainably improve the lives of people  3) Anything that interferes with or tends to control the market is evil  4) while egalitarian utopia is an impossibility, second best possibility is where free market will lead  us.

Second, they are solidly unified in ignoring this reality: while capitalism does promote competition, it definitely does not do so in uniform pattern across time and space. Outright monopoly, oligopoly, and monopolistic competition are as much the part of baggage of capitalism as is competition in its ordinary sense. While contrasting capitalism with socialism, they never fail to brag about the endless potential for innovation in a competitive environment, they categorically maintain silence on these details: 1) effective monopoly of some market forces discouraging innovation in today's world (an example of how monopolistic tendency manifests at micro-level; this is elaborated extremely well in the works of economist Joseph Stiglitz) 2) the phenomenon of increasing prominence of monopolistic tendency at macro level sweeping across the  globe, often described as Monopoly-finance capital.

Third is the factor of denial. The whole philosophy of free market utopia resides on the belief that market can do no bad. Just to take an example, while the concerns that the the fossil fuels may be depleted too soon are being gradually superseded among sensible people by the graver concerns that the planet may not be able to withstand the burning of all the discovered fossil fuels, FMFs are as enticed by their market-does-no-bad formula as ever. Obviously the market always loves the things like production of ‘dirty’ oil from the tar sands and solidly incentivizes the projects that intend to accelerate the global rise of temperature so that the Arctic ice melts potentially enabling the market forces to unleash the oil wealth beneath it.

 Massive deforestation, desertification of land, unparalleled levels of pollution and egregiously rapid loss of biodiversity have all been the increasingly prominent concerns of people in different parts of the world while the overarching problem of global warming and climate change is becoming increasingly obvious by the day. But how do the FMFs respond to this: by denying. Neo-cons in US and elsewhere have reached so far as to construct their own fictive science to counter the credible findings of climate change science.

Fourth, they allege the strong state to be behind everything that goes wrong in the world, be it a direct result of the weakness of the state or a case of state being overwhelmed by the malevolent private players. If state leaves things alone, they argue, everything will fall in its place. 


A case study from Nepal 

a. KFC and Pizza Hut enter Nepal with a bang 


I have no pretense that I really know all the prominent FMFs from Nepal. But some of them are hard to ignore and hence have prompted me to write this article. One name was related to two separate columns with related themes and the coincidence, rather discrepancy of the conclusion, was hard to ignore. The name was ‘Sudeep Shrestha’ and the two instances leading to the columns were the opening of fast food outlets by KFC and Pizza Hut in Kathmandu more than a year ago and the resumption of services by Sajha Yatayat, the government-owned* travel enterprise in Nepal recently.

On the first instance, the column** was the laughable glorification of the consumerist culture thriving in Nepal. KFC and Pizza Hut were the new vehicles that had started to deliver fast foods in Nepali market. Factually he was not incorrect in saying that more choices for fast foods in Nepali market, that too from international brands, were a positive development when viewed from the perspective of a consumer. What was really pathetic was, however, the component of glorification with which he characterized the entry of two American food brands in Nepal as if something revolutionary had taken place. Was it really worth it? Moreover, in a maniac expression, he goes on to praise so many other brands of commodities that we can consume, thanks to the free market (and becomes mean enough to name some domestic brands in a derogatory sense).

He may be content at praising the shining consumption culture in Nepal and there are people concerned only about the trend of consumption and health of the market (and of course that of the corporations that dominate the market). But there are others too in Nepal who gauge the society with parameters other than consumption and profitability of the corporations in mind. For example, some analysts including C K Lal were prompt in posing this question: why should Nepalis prefer a dish made from chicken imported from Brazil (with a carbon foot print unacceptable for any sensible person) instead of one made from home-grown  chicken? At a higher level, these questions can also be posed in relation to the development: why should countries like Nepal always export labor and import finished items? 

At a more personal level, why cannot one Nepali pose this question: in a situation in which international brands have become the parts of daily lives of so many of us anywhere in the world, what would it feel like if we could produce one international brand and export it in significant amount as we import the other 999? Why should innovation be the privilege of select societies? Is our satisfaction and gratification with the finished items precluding the possibility of innovation at home? Instead of using the beleaguered domestic brands like 'Brighter' tooth paste pejoratively, why can't we envision a 'Brighter' that can be exported in bulk? 

My point now is, while there can be no factual inaccuracy in a praise-column like this one, this reveals the crippling disability of the FMFs of Nepal: no textbook of economics published in US or Europe and no essay published in The Economist or Times ordinarily dwells in details as to why industrialization and sustainable economic growth has been eluding the countries like Nepal in global periphery. For Nepali FMFs, if the economists and analysts in west have not been preaching something to us, that is probably unworthy of any serious contemplation.

Significantly, such columns get priority in our corporate-friendly mainstream media. (Shrestha's column was published in leading Nepali language newspaper published from Kathmandu which has made searching its online archive so cumbersome that I cannot retrieve it).


 b. A new Sajha Yatayat emerges from the ruins buried 12 years back



Now comes one more development and one more column to complete the circle. This time, writing in an online outlet Setopati, Shrestha capitalizes the popularity of re-launched government bus enterprise to attract the attention of a bulk audience. But unlike with the previous column, this time he exposes the dilemma of Nepali FMFs by admitting that market may  well not be doing all good in Nepal.
One of the spacious new Sajha buses. Contrast this with the old,
cramped and overcrowded public vehicles of private enterpreneurs below
(Photo courtesy: Official site of Sajha Yatayat, published under fair use policy)

(Photo by Stephen Buros, used for non-advertizing, non-promotional purpose)
First the pretext: in Nepal, the transport sector today epitomizes the worst form of monopolistic capitalism that has degenerated into outright criminality. While travelling between most destinations within Nepal in public vehicles is an ordeal, the freight transporters have an even more notorious image for choking both the industrial sector as well the consumers by enforcing an intractable monopoly. With due patronage of political forces, the illegal cartels of private entrepreneurs have literally divided the roads of the country among themselves and government authorities practically require their permission to let new vehicles or entrepreneurs to enter in the roads. The results need not be elaborated here.

During the Panchayat era (1950 to 1990) and in the early years of democracy and free market capitalism in nineties, Sajha Yatayat had a solid reputation of a cheap, safe and reliable means of travelling. As the free market invited more private players in the sector, competition was soon the name of the game. If it was not for the reckless and criminal interference  by the shoddy politicians, the government enterprise would have well survived and even thrived in the competitive environment. As politicians gradually strangled the enterprise leading to its closure some 12 years back, private entrepreneurs had only themselves to compete among. Soon the factor of competition disappeared in most road sections in the country including the capital and cartels across the country united to form an umbrella cartel of private entrepreneurs that calls all the shots today. By now, the criminal cartels (which are illegal in theory) feel it to be their right to cramp as many passengers as they wish in short, narrow-bodied vehicles; and charging as much as the cartel wishes. Such cage-like vehicles have displaced most of the large and spacious buses in most of the transport routes, thanks to their cost-efficiency from the view point of the owners. As a result, while the number of public vehicles has multiplied with increasing population of the cities, more people are forced into opting for a private vehicle thereby unacceptably congesting the roads. 

In this backdrop, the Sajha Yatayat has restarted its services in the capital with 16 new and spacious buses and has come to limelight because of its instantaneous popularity among the public. Shrestha's column in Setopati, which has been shared more than 1200 times in different social media sites so far, relates with this development.

So what do you expect: a set of twisted arguments to justify the monopoly of private cartels in roads? Surprisingly, Shrestha does reasonable soul-searching and goes on to extend the Sajha experience to other sectors where the monopolies thrive making everyday lives of people pathetic. In a somber tone, he writes to this effect: as things evolve, a new exercise appears prudent in relation to the implementation of economic liberalization in Nepal. The lesson to be learnt from the episode is that, whatever the extent of liberalization, the  regulatory role of government should not be minimized. He even admits the fact that the public nostalgia in relation to Sajha buses and its soaring popularity go as far as to make us question whether public or state-owned corporations are needed today. 

Conclusion: the paradox and the dilemma of FMFs

The two columns by Shrestha show the predicament in which the people in extreme right are in Nepal. In the latter column, while writing objectively about the state of affairs of the private players in Nepali market, Shrestha subtly expresses his displeasure at the disappointing performance of the market players in terms of winning the confidence of the consumers in Nepal. Significantly, the issue of disappearance of competition from the market and the mushrooming of cartels of borderline criminality is not limited to transport sector in Nepal. 

Once again, I think I am not fit enough to judge whether Shrestha has harmed his FMF credentials from earlier on with the introspective column about Sajha Yatayat, but he is not alone in carrying the burden of the paradox. The way the Soviet communists in eighties were loyally sticking to the conclusions from earlier era that were drawn from a robustly thriving communist regime, the FMFs today are stuck to the conclusions drawn from some earlier phase of capitalism when competition among private players thrived. Capitalism is undergoing momentous transformation meanwhile with increasing prominence of monopolies of every scale at every level. While competition does exist in today's capitalism, the extent to which the monopolies are affecting the lives of ordinary people has been troubling, particularly in societies like Nepal where the state is too feeble to behave firmly with the criminal cartels. 

At a higher level, it is high time everyone believing on free markets and economic liberalism gave a thought about the unchangeable limits to the present trend of growth worldwide dominated by the private forces and led by corporations that are concerned about their own profits and nothing else. An orthodox market-does-no-bad belief no longer holds ground, at least practically. On the other hand, a reasonable belief on liberalism  and free markets may not be entirely incompatible with a measure of concern about the ecology.

To conclude, irrespective of what the Soviet literature said over the eighties, the USSR did collapse by 1991; not because the enemies of USSR detonated a powerful bomb but because the system simply imploded from within. The coming end of the system was not anticipated until very late by believers the in the system because they were so blinded by a belief from the past that they could not objectively gauge the sorry state in the present. While the extent of blinding may be different, I see an eerie parallel between the Soviet communists of late eighties and the FMFs of today: the latter are also pretty firm in the market-does-no-bad belief. If they start introspecting and seeing things more objectively as Shrestha has done with the latter column, however, their fate may change. The struggle to save the precious environment, resources and biodiversity from the greed of the corporations should continue meanwhile in the world. In Nepal's case, the attempt of the criminal cartels to obliterate the services of Sajha Yatayat should be foiled at any cost. 

* In it earlier version, Sajha Yatayat was wholly owned by government. Now also government holds a share of nearly 90% in the enterprise even though the new service is run through a cooperative. 
** Since it was impossible to track the original article by Shrestha in Nagarik daily in reasonable time, I re-cite him here from this article:
Kshetri, I. D. 2012. Corporate Friendly Nepali Dailies: A Case Study of KFC Coverage. In Studies in Nepali History and Society (SINHAS).

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