The war against welfare – Sandhya Jain

Sandhya JainPublic utilities like electricity and water are permanent because their demand is perennial. So what justification is there for their being privatized, and then not engaging permanent employees? Second, should any organisation get the tag of ‘industry’, with resultant tax and other benefits, if it does not provide permanent jobs and only exploits contract labour? Utilities with 40% contract labour should be designated as ‘unorganized sector’.” – Sandhya Jain

StalinThe collapse of the Soviet Union two decades ago was followed by the rise of two unnoticed but related phenomena: first, the West pushed the liberalization agenda on nations that had hitherto resisted integration with its market economy; second, the United States and Europe rapidly demolished the welfare state they had erected after World War II.

This resulted in the end of job security, sharp cuts in public employment, pensions, health and social services. As prices rose steeply across the board, a class of low-paid wage-earners emerged alongside a class of super-rich. The latter’s vertigo-inducing lifestyles contrast sharply with the declining standards of living of the former, driving millions to despair in countries that once bragged about the wonders of capitalism.

With hindsight, some events can be readily discerned. The collapse of the Soviet Union was followed by NATO’s decimation of Yugoslavia (another strike at the Orthodox Church), ruination of Iraq and Libya, and current pressures on Syria and Iran. In other words, all nations with advanced welfare programs for their peoples were destroyed or are en route to being annihilated.

After World War II, Stalin and the Soviet allies launched a massive reconstruction program based on welfare measures such as full employment, guaranteed job security, universal health care, free higher education, one month paid vacation leave, full pay pensions, free summer camps and vacation resorts for worker families, and long paid maternity leave. This model emphasized social welfare over individual consumption; the stability it provided ensured Stalin’s place in Russian hearts.

Prof. James PetrasWestern regimes were forced to follow suit, or their people would turn to political parties with similar programmes, notes Prof James Petras. So they offered welfare, suppressed domestic Communist and radical Left parties, tamed the trade unions, and topped it all by promoting high individual consumption through cheap credit and installment payments. This phase lasted till the mid-1970s; both blocs witnessed worker unrest on different counts, but essentially related to entrenching the welfare state.

Economic stagnation made Western capitalists seek leaders to challenge the Soviet bloc and dismantle the welfare state; they found Ronald Reagan (America), Margaret Thatcher (Britain), and Mikhail Gorbachev (Russia). Reagan and Thatcher let capitalists control the social agenda; curbed trade unions; and launched an arms race that bankrupted Moscow.

Simultaneously, Soviet-style ‘welfarism’ was undermined within the Eastern bloc by a new class of educated elites who ganged up with kleptocrats and neo-liberals backed by Western foundations, intelligence agencies, the Vatican (especially in Poland), and ‘anti-Stalinist’ leftist intellectuals. They preyed on public wealth and became overnight billionaires after Gorbachev triggered the collapse of the Soviet Union and Warsaw Pact nations.

Pope John Paul II & Lech WalesaThese neo-liberal pro-Western adventurers dismantled public ownership of property, basic protective labour laws, and job security. Workers soon realized the merits of the welfare state when the Western-oriented trade unions ruined them. The Gdansk shipyard workers affiliated to Solidarity in Poland were fired and left to chase odd jobs; their ‘leaders’ supported by Western intelligence metamorphosed into prosperous politicians, editors and entrepreneurs.

Once Stalin’s welfare model was demolished, Western capitalism promptly dismantled its own social welfare measures. For the past two decades, all Western capitals have been busy ending job security and workplace protections, chopping severance pay, making firing of workers easy, curbing pensions, and extending retirement age under a doctrine of ‘work till you drop’. Capital mobility has risen to new heights with exploitation of highly qualified low-paid labour across the world.

Readers would have noted the parallels with India’s own liberalization journey and the growing miseries of the common citizen, best exemplified by the Planning Commission’s cynical claim that Rs. 28/day keeps poverty away. The bitter truth is that this policy has been covertly endorsed by the polity across the spectrum, which explains the brutality at Nandigram and Singur; the POSCO face-off; farmers protests in various parts of the country, and State insistence on the right to grab private land for ‘development’. Emerging trade union militancy is a natural response to this trend.

Sheila DikshitSome Left intellectuals have exonerated themselves by making polite noises about jobless growth, but have studiously avoided investigating or articulating any serious issue. Thus, despite the trauma experienced by citizens due to privatization of electricity in the capital – with a chief minister hell-bent upon privatizing water as well – no political party or all-India trade union has done basic homework to reveal how many permanent employees of the public utility retired naturally, how many were phased out with compensation packages, how many permanent employees remain on the rolls, and how many employees are simply contract labour without benefits, who live in terror of losing their small wages.

Worse, when some public-spirited citizens began a movement against the steep hikes in bills some years ago, no political party or leader supported them, causing the movement to fizzle out. Even after the abject failure of the privatization of an essential service, no serious move has been initiated to challenge it.

Some fundamental issues arise. Public utilities like electricity and water are permanent because their demand is perennial. So what justification is there for their being privatized, and then not engaging permanent employees? Second, should any organisation get the tag of ‘industry’, with resultant tax and other benefits, if it does not provide permanent jobs and only exploits contract labour? Utilities with 40% contract labour should be designated as ‘unorganized sector’.

Hugo Chavez, Fidel Castro & Evo MoralesSome argue that industries need contract labour to leverage lean seasons and maintain profit margins. Today, over one-third of India’s industrial workforce is contract labour. Yet, not one trade union or political party has demanded that contract labour be paid equal wages for equal work done by permanent employees, with a fair package on exit. The declining public esteem of the Supreme Court is linked to its indifference to these burning issues.

Currently, only Latin America has realised the dangers of anti-welfare neo-liberalism; hence labour’s share of national income is rising here even as it shrinks in Western Europe and North America. Venezuela is supporting massive health, educational and labour reforms through its nationalized petroleum sector. Ominously, Myanmar is planning to privatize its petroleum sector following its new openness to the West, but Russia under President Vladimir Putin is determined to curb gangster capitalism. Will India awaken or will it let Western diktat ruin its citizenry? The resistance of some regional parties to FDI expansion gives ground for hope. – Vijayvaani, 31 July 2012

» The views expressed in this article are the author’s own.

» Sandhya Jain is a senior journalist and editor of Vijayvaani. Follow her on Twitter at!/vijayvaani

4 Responses



  2. President Vladimir Putin’s cruel tyranny is driven by paranoia – Edward Lucas – The Telegraph – 31 July 2012

    Apologists for the Kremlin are struggling. The Russian regime’s dogged defence of the blood-drenched Syrian dictatorship, and its persecution of the Pussy Riot musicians for their stunt in Moscow’s main cathedral, display its nastiest hallmark: support for repression at home and abroad.

    Mr Putin’s return to power has eclipsed the liberal-sounding talk of his predecessor as president, Dmitry Medvedev. Russia’s leader has in recent weeks signed laws that criminalise defamation, introduce £6,000 fines for participants in unauthorised demonstrations, require non-profit outfits financed by grants from abroad to label themselves as “foreign agents”, and create a new blacklist of “harmful” internet sites.

    Now comes the prosecution of Pussy Riot, a bunch of feminist performance artists made famous by their imprisonment and show trial. Their “crime” was to record a brief mime show at the altar of the cathedral of Christ the Saviour. They then added anti-Putin “music” (featuring scatological and blasphemous slogans) to suggest that they had actually held a concert there.

    Many might find that in bad taste and would accept that police can arrest those using a holy place for political protest. But the three women on trial (who all deny involvement) have been in custody since March. They face up to seven years in prison on a charge of “hooliganism motivated by religious hatred or hostility”. It all smacks of a grotesque official over-reaction and the growing and sinister influence of the Orthodox hierarchy.

    Also a distant memory is Russia’s “reset” with America, which was supposed to herald a new era of cooperation. Since Mr Putin’s return, Russia’s foreign-policy rhetoric has been venomously anti-Western. It recently warned Finland, with startling bluntness, to stop working with Nato. The hostility is still largely a one-way street. Western companies grovel before Mr Putin (he recently kept oil-industry chiefs waiting for hours in an airless room with no chairs; they uttered not a squeak of complaint).

    Western governments largely ignore what their intelligence services tell them: that the regime in Moscow is a criminal syndicate, fuelled by a noxious ideology of paranoia and supremacy. But in public, politicians such as David Cameron bow and scrape to Mr Putin, hoping for a few crumbs of trade and investment. The West is far too cash-strapped to stand up to Russia, and the Kremlin knows it.

    Yet Russia’s support for Syria can seem almost incomprehensible. Why risk such opprobrium in a doomed cause? The answer is the same as in the case of Pussy Riot. For all its contempt for the West, Russia’s regime also feels cornered by it. It sees the opposition at home, and pro-democracy movements abroad, as part of the same threat. Mr Putin does not want to share the fate of Saddam Hussein in Iraq, Serbia’s Slobodan Milosevic, Colonel Muammar Gaddafi of Libya – or, closer to home, the Ukrainian leadership toppled by the “Orange revolution” of 2005.

    Its policy is not so much support for the regime in Damascus, as opposing Western attempts to overthrow it. Though it may seem ludicrous, many in Moscow believe that if Syria falls, Russia is the next target.

    The policies that follow from this paranoia make Mr Putin’s plight worse, not better. Repression undermines the regime’s legitimacy. In the early years of Mr Putin’s first reign, many Russians were tolerant of its authoritarianism (and corruption). They welcomed the stability brought by his ex-KGB colleagues and their business cronies and the new-found sense of national pride.

    But that has given way first to apathy and then alienation. Arbitrary behaviour increasingly infuriates the urban middle classes. The death in prison of a whistle-blowing lawyer, Sergei Magnitsky, in 2009 has become a cause célèbre for the smart, English-speaking professional classes who used to affect disdain for politics.

    The persecution of Pussy Riot may do the same for a younger and grungier generation. Scorn and mockery of Mr Putin and his cronies is rife. Political humour – a mainstay of resistance in the Soviet era – is back.

    But the more the regime denounces its foes as foreign puppets, the less persuasive its propaganda appears. Its business model is in trouble too: the gas price has plummeted thanks to the rise of America’s shale-gas industry. The oil market may be heading in the same direction. For a regime that survives by collecting and distributing the windfall gains of its mining industries, that is ominous news.

    It is hard to see a way out for Mr Putin. Many of those around him know that change is needed: more openness, more legality, more choice. But they fear what it would mean. Opposition politicians, media and prosecutors, if unleashed, would feast on the regime’s past misdeeds. Tens of billions of dollars have disappeared into offshore bank accounts. Dozens of people have died mysterious deaths. The cupboards are packed with skeletons. Opening up Russia’s political system risks them falling into public view.

    The regime is dropping even the pretence of liberalisation. Instead – as the Pussy Riot trial exemplifies – it appeals to ignorance, prejudice and superstition. The Russian Orthodox Church, far from offering an alternative to the greed and bullying, complements it.

    Russia’s neighbours are right to worry about the country’s direction. But as so often in the past, it is Russians themselves who will suffer most at their rulers’ hands.

    Edward Lucas is the author of ‘Deception: Spies, Lies and how Russia dupes the West’ (Bloomsbury)


  3. putin is stalin. gangster kgb. who is better putin or kleptocrat? kleptocrat take money but putin take life.


  4. This is just conspiracy theory presented in a sophisticated journalistic way.

    Why do Indians always pick the bad guys for their examples of good things? RSSers think Hitler was a great nationalist and now we have Stalin, arch criminal of the 20th century, presented as a great humanist with superior welfare programs for his people.

    Many European countries have better welfare programs than Stalin ever did. Look at Denmark, Sweden, Finland, even the UK, France and Germany.


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