Sitaram Yechury on Crony Capitalism

The term crony refers to a long standing friend – in that sense, crony capitalism means a capitalist system, by and for, such long-standing friends. Going by this definition, it is no surprise that people from various spheres have started to describe capitalism practised in India as Crony Capitalism. In the past few months, we have seen several scams hitting the front page - 2G spectrum, Common Wealth Games, Illegal mining scam, Petrol bunk licenses, Adarsh housing, to name a few. It is in this context that Sitaram Yechury, Politburo member of the CPI(M), delivered a lecture on "Crony Capitalism, Management of Democracy" at IIM Calcutta on December 17, 2010 as a part of the Institute Lecture series.

Yechury touched upon several recent scams like the 2G and Common Wealth Games. He points out that signs of corruption were visible right in the beginning. For instance, companies that had nothing to do with telecommunication were allotted 2G licenses, only for them to turn around and offload their shares to multinational corporations often at 9-12 times the money they paid for the spectrum. In the case of Common Wealth Games, the renovation cost for Jawahar Lal Nehru stadium in Delhi alone turned out to be 12 times the cost of building a brand new stadium in Nagpur.

In his remarks, he noted that even within a system like Capitalism that seeks to maximize profits, the Capitalist state has to come in to set up rules and regulations and work out methodologies to set up a level playing field. Given the very nature of capitalism, these rules and regulations are always bent and taken to the limits of rupture, so that profits can be maximized. In crony capitalism, there exists a nexus between government, capitalists, sections of bureaucracy and media – this sort of nexus determines the nature of economic activity or who gets to do what in the system. Continuing on his analysis of the widespread corruption in the system, he went on to say that not only does Crony Capitalism loot the resources of the country, it also imposes a collateral damage on the various spheres like environment, agriculture and livelihood. He cited several startling statistics – for instance, in the Karnataka-Orissa-Andhra belt alone, 1.6 lakh hectares of forest land has been diverted for illegal mining. Illegal iron ore mining in took up 77 million tonnes of water in 2005 – which would have been more than enough to meet the daily needs of 30 lakh families. Not only does it loot the resources of the country, it also distorts the very concept of democracy with election victories being “purchased” through unaccounted and illegitimate campaign financing.

Referring to the importance of management as a discipline he pointed out that the future of our country is a very big management exercise. On the one side, we have 1.1 billion people out of whom, 77% are unable to have three square meals a day. On the other side, we have a specific amount of food grains and potential for agricultural produce. How we distribute this to the people so that all of us can lead a comfortable life - this is a management problem. Management is no longer a multi disciplinary approach, it has transcended to become a trans-disciplinary approach. He concluded his lecture by urging the students to come forward and address this significant management problem to create a better India.

After the lecture, Mr. Yechury answered questions from the audience on several issues like how the CPI(M) handles cases of crony capitalism involving its own cadres and trends in corruption post liberalization. His observation in response to a question on the capitalism followed in China was particularly interesting. In a candid yet clear response, he commented that it is difficult to say whether China is following a market oriented socialism – with market as the dominant player in economic decision making - or a socialist market economy, with planning as the dominant player using market indicators. In response to another question, he remarked that committing a mistake is not a mistake, but not realizing that you have committed a mistake and thus repeating it, is a mistake.

Yechury's talk not only highlighted the critical challenges posed by crony capitalism to democracy in India, he also outlined the imperative for future managers and young professionals to utilize their skills and education for the greater common good.