From Dirigisme to Neoliberalism: Aspects of the Political Economy of the Transition in India

Abstract

Over the last two decades or more, the developing world has shifted out of development strategies involving a highly interventionist and often developmentalist state to one that has been widely characterised as neoliberal. Neoliberalism is an ambiguous and loosely defined term, even when it is restricted to the economic sphere. So it would be useful to clarify the sense in which it is being used in this context. In what follows, neoliberal theory and practice are taken as referring to (1) the use of the rhetoric of market fundamentalism, in which the market – ostensibly “free economic exchange” – is presented as the most efficient mechanism to work the economic system, to pave the way for the increasingly unfettered functioning of private capital, both domestic and foreign; (2) the use of the notion of a minimalist state, to be realised by dismantling its developmentalist version, to legitimise the shift of various terms of trade and mechanisms of distribution in favour of the owners of capital and their functionaries and conceal the conversion of segments of the state apparatus into sites for primitive accumulation; and (3) the pursuit of a regime of accumulation where the home market and deficit-financed state expenditure are replaced by exports and debt-financed private expenditure as the principal stimuli to growth¹.