Keynes, The World Bank, and The People of Bangalore: A Case Study on Water Privitization.

 

John Maynard Keynes’s 1936  General Theory of Employment, Interest, and Money was an attack on classical economics’ circular flow model of the economy. He revealed himself to to be a political economist in the way he presented his argument. Keynes thought that unregulated capitalism was unsustainable and that “for it to last over the long run, its aggregate performance will have to be overseen by a strong government, ultimately more powerful than the most powerful corporations” (Sackeray 131).

 

Classical economics tells us that sustained overproduction is not a feature of capitalism because its “internal forces automatically end overproduction before it becomes a depression” (Sackerey 105). Therefore, classical economists believe that the “government's role in the economy should be limited” because it inherently regulates its booms and busts to produce equilibrium. This line of thinking can be traced to the hatred of mercantilism, which the classical school originally challenged. Smithians believed that open laissez-faire economics would extend benefits to the population and “produce the most productive outcome possible” (Sackerey 106). However, throughout history, there have been economic crises related to capitalism's overproduction immediately following expansions of the economy. Government intervention has always been needed to return the economy to equilibrium.

 

International capitalism required as much intervention as national capitalism, according to Keynes. The IMF and World Bank were originally Keynesian organizations which sought to address the necessity of “both domestic and international regulation” as countervailing powers to that of “private corporations” within the context of an “inherently unstable capitalism” (Sackerey 129).

However, with the shift in focus to laissez-faire policy harkened in by the Reagan-Thatcher revolution and the addition of the World Trade Organization, the anti-Keynesian policy of unlimited free-trade has become the objective of these organization. Central to uninhibited free trade between nations is the privatization of industry and services. This is the case because in a country where businesses are privatized, individual actors are more likely to consider only their enterprises when making transactions with other international corporations. Under a nationalized economy, the state would take into account (ideally) all of the people affected by such transactions and enterprises. This is not favorable to free trade because it inhibits decision making, and is less likely to be open to exploitation of third-world economies because international business is not often beneficial to third-world residents.

 

Keynes would balk at this perversion of the goals of the IMF and World Bank, especially when considering water privatization in Bangalore, which Dr Dasgupta lectured on. He would be critical of the privatization of such an important resource as water. The World Bank has offered money to local governments in Bangalore in the form of the Water Supply and Storage Project. (Dasgupta) The project is a mixed bag for residents. While the project would improve water quality and possibly water distribution in Bangalore, it would come at an expense to the wider population of the region.

As of yet, water is a public resource managed by the government in Bangalore. (Dasgupta) As such, in a rapidly privatizing India, the money that goes towards the public water supply system is proportionally small compared to that that is invested in Indian corporate industrial interests. Therefore, Indian water has flaws such as spotty distribution (far away for some consumers) and bad water quality. (Dasgupta) This is where the World Bank sees its opportunity to be attractive to the government. Their WSSP offers unprecedented amounts of money to update the system to decrease its culpability in water borne diseases and the distance the average Indian must travel to secure water. (Dasgupta) The caveat is that water will now be privatized and individuals will now have to invest money in a providing company instead of relying on tax-based money for the service.

 

While the benefits the World Bank is offering sound to our ears like unequivocal positive changes, many of Bangalore’s population are not so excited by the proposition. Many of this fraction of the population are poor. (Dasgupta) Low-class slum residents were left out of the deliberations around the installation of the WSSP because they were all held in the language of international business and trans-state power, English, which slum residents did not speak. (Dasgupta) They did not understand the concept of privatizing such a necessity. (Dasgupta) The guidelines that went along with the gift of the WSSP forced “the public [the majority of which were poor slum residents] to pay via capital to the ownership of water before even receiving services.” (Dasgupta) Obviously, the poor would have the most trouble paying upfront for something that was formerly free of charge, as they did not pay any taxes.

 

Slum dwellers decided against the WSSP. (Dasgupta) Westerners will be shocked that they declined improvements to water service, but understanding the lower caste’s realities, observers should not be surprised. People who have been oppressed value their invisibility. (Dasgupta) The lower castes “do not want to be legible to the government” because they will then be beholden to an institution who profits from controlling their lives. (Dasgupta) This is seen in eminent domain cases. Often, governments, armed with knowledge of poor people and where they live, bulldoze settlements to create business parks or highways which will get the government revenue. Slum dwellers in India have not had to report their livelihoods or places of residence, and therefore are devoid of this threat to some extent. The tradeoff between invisibility and poverty is not absent of benefit to the poor. The poor benefit by living in slums by evading taxes and constraining laws in their residences.

 

The caveats which came along with WSSP would pose new issues for the poor such as higher taxes, water bills, and residential zoning. (Dasgupta) People would be forced to become consumers of water who would, in order to get service, have to become visible to the local government so that the World Bank could assess the return on its investment in the area. Power, as Foucault asserts, uses knowledge instrumentally. And the WSSP is a powerful force which would further oppress the poor of Bangalore through making them legible to the government. Because they live in illegal slums, they would lose totally their (albeit meager) water supply and would be forced to relocate. But this is not easy for people with no economic resources. Far better for the poor to rist water borne diseases and walk miles to get water than lose their living space completely.

Keynes would be shocked that an organization meant to temper unrestrained capitalism would be so actively using their Western power and priviledge to pursue the hyper-privitization of an essential public good such as water in a third-world country. The winners in this situation would not be who Keynes advocated for. The poor would be detrimented by the neo-liberal and perverted actions of a World Bank gone astray, and he would therefore not approve (just like the people of Bangalore) of the WSSP.

 

 

Introduction to Political Economy, Thomas Sackrey

 

Lecture on Water Privitization in India, Dr Simanti Dasgupta