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Politics of Economy or Economics of Polity

Political parties and ideologies are supposed to implement their economic programmes and policies or impose their ‘world view‘ on the economy of the country when in power and when out of power gain power to implement the same. This seems to be true in all countries with a democratic setup where people have a direct say on who will rule them. Political parties and leaders put their ideas and programmes to run the economy before the electorate through their programmes, manifestoes and public pronouncements. Then the electorate elects the leader or party whose programme it finds the most acceptable. The slogan, “It‘s economy, stupid” was central to the successful election campaign of former US president Bill Clinton in 1992. The current US election is being fought on whether to allow global integration to go further or erect ‘walls‘ around the country to not only arrest the march of globalisation but also reverse it. It seems it is not a good time to be a ‘liberal‘ or a ‘libertarian‘ who propagates the free flow of goods, services and people around the world.

In world politics, the pendulum is swinging to the right. The Brexit vote with active lobbying and support of the right-wing UK Independent Party (UKIP) in the UK increased vote share of Le Pen‘s party in France, a near win of the far-right candidate in the Austrian Presidential election, and even increasing the popularity of Donald Trump in the US, is a clear manifestation of the move to the right in western Europe and the US. In other parts of the world too, from the rise of Abe in Japan, the flexing of muscle by China in the South China Sea, Russia‘s stringent position on the right of the Russian speaking population in former Soviet republics including the annexation of Crimea, the increasing sectarian conflict and the rise of Salafists in the Islamic world or the Narendra Modi wave in India are clear indication of the swing to the right. In political terms, this generally translates into nationalism, sectarianism, or maybe even tribalism or Nativism. The politics of ‘us‘ versus ‘them,‘ leading to xenophobia and jingoism, is the ultimate abode of the right. But the reason as well as the impact of the rightward movement lies in the condition of the economy, both real and perceived. The notion that US jobs are paramount, the tirade against ‘goods coming from China,‘ ‘service jobs going to India,‘ ‘Muslims not being able to accept American values‘, seems to bring the supporters of Donald Trump, the republican US presidential candidate, together. The political right in Europe and America has never been the enthusiastic supporter of global integration and takes it as an ‘invasion‘ by foreign goods (rise of imports), foreign people (immigration), foreign capital (foreign companies) and foreign ideas (as against their own culture and way of life). The call for protecting ‘our own jobs‘, ‘our own values‘ or ‘our own way of life‘ is no more than an effort to reverse the process of global integration and mixing up. There is no doubt that globalisation has led to creation of new wealth. It has moved millions and millions of men and women out of the shackles of extreme poverty and deprivation, making them belong to the group with ‘ambition‘. The ‘nativist‘ ideology of the right, would not accept it as the positive outcome. In the tirade against globalisation and immigration, the political right gets ample support from the elements of the left, especially the extreme left. Both extremes have a common enemy: the free flow of goods, people, capital and ideas, which are the main planks of liberal politics.

Economics-of-Polity-or-Politics-of-Economy

This swing to the right does not augur well for global integration and provides reasons to fear the return of the days of protectionism, which led to disastrous outcomes in the past. Such development poses additional challenges to an economy like ours. People may say that we are not closely integrated to the global economy; we do not export much to Europe and the US; remittance does not flow-in from that part of the world; we are likely to suffer less from the rightward swing there.

But the fact of the matter is we are immensely dependent on remittance. There is clear volatility in Western Asia, where the vast majority of our brethren are working. As our people are at the bottom of the pyramid in these countries, they will be the first to be sacrificed if the situation deteriorates further.

Coming to our own homeland, we are witnessing a changing of guards in the government. One coalition giving way to another. The coalition of the UML and the Maoist parties, claiming to carry the same ideology of Marx and Lenin and which looked to be rock solid less than a year ago (There were even rumours of the communist factions coming together to form a single unified party representing the ideology of communism), has crashed down like a house of cards giving way to a new coalition of the Maoists with the Nepali Congress, which claims to be the standard bearer of democracy in the country.

This was a clear spectacle of yet another round of musical chair in the seat of government, entertaining to the public but stunningly harmful to the country and her economy. The spectacle was quite unique, with a ‘no confidence‘ motion being moved as soon as the budget in the form of Appropriation Bill was approved by the national legislature. We are in a situation where the bill allowing the government to spend money under different budget headings (Appropriation Bill) has the approval of the parliament, whereas the bills allowing taxation at certain rates (Finance Bill) and the borrowing of money by the government (National Debt Bill) has failed the test of legislative approval. Many Nepalis may call it ‘Nautanki‘ (a form of drama, popular in the sub-continent), but this author is of the firm view that calling it so, is a serious devaluation of the art-form of ‘Nautanki‘.

People, especially those from outside the four walls of Nepal and who are not keeping regular track of Nepali politics, are raising questions about the economic policy of the new coalition. They ask, “Will it continue with the policy of the previous coalition or will reveal a new set of policies?” “Will it be a swing to the left and bar the private sector from certain businesses?”

In contemporary Nepali politics there is hardly anything of ideologies, convictions or principles to differentiate various parties and their leaders. We may have a plethora of communist parties, each claiming to pursue the true ideals of Marx, Engels, Lenin, Mao, Stalin or even that of the North Korean dictator, Kim. There are other parties, which claim to be socialist, democratic, nationalist or even Monarchist. They may claim that their ideology is different from those of the others, but their behaviors and actions while in power or in opposition, seem to be strikingly similar. The parties of all hues can happily cohabitate in the government and share power. Otherwise, we could not have a government where a monarchist Hinduite becomes a foreign minister and an ultra-revolutionary republican a home minister. In our context, the ‘dictatorship of the proletariat‘ seems to be happily cohabitating with the notion of absolute hereditary rule by the “incarnation of ‘Vishnu‘”. Our leaders, whenever they are in power together do not look like strange bedfellows but like natural civil partners. But whenever they are in the opposite side of the power equation, they seem to behave like the worst of enemies. This was quite evident in the recent parliament session, when the audience (ordinary folks like you and me) were subjected to the theatrics of parliament members whole heartedly supporting a bill while it was being tabled and debated in the parliament, and opposing the same as it was being voted because one coalition was breaking-up while other was forming-up. So support or opposition to a bill does not depend on whether it is in line with your ideology, but on whether you are in power or out of it. There will be no surprise, if the new government will present the same finance bill as its own, then the opponent of the bill yesterday will be wholeheartedly supporting it and the staunch supporter of the bill yesterday will be opposing it tooth and nail tomorrow.

So on the economic policy, do not expect major changes. We have seen over many years, our government or governments are long on declarations and short on delivery. The same is expected to continue with the new government. It will declare that it will work to remove poverty and reduce power-cuts (load shedding as we have been calling it), welcome private capital both national and foreign and accelerate economic growth, provide relief to the victims of earthquake and floods, construct highways and roads, revamp our education system, and countless other similar promises. The past government or governments have been saying the same. Even if we look at the election manifestoes of the parties, they seem to declare the same thing in different words and using different jargons

So will there be no impact? No, there will certainly be impacts and these will be huge. The nature of the impact, whether it will be positive or negative, will depend on the persons who will assume the ministerships in different ministries. Priority will be accorded to the new set of constituencies. A new set of individuals will occupy the positions of importance. In today‘s Nepal, the leaders and parties try to gain power and cling to it. Not to impose their ideology, but clinging to power has become the new ideology. We have been seeing many of the same faces assuming the stewardship of the ministries even when the prime minister and government changes. The dynamism of these people indicates that they can be at ease with any of the prime ministers.
Vladimir Lenin, the founder of the Soviet Republics, the first communist state on earth had said that ‘Politics is the concentrated expression of economics‘. In Nepal, our political parties have taken that view to the logical conclusion. It is the economic interest of the parties and leaders that determine their politics and not their political ideology that decides their economic policy. So it is not the politics of economy but economy of the polity that is central in our action.


Dr.-Hemant-DawadiDr Hemant Dabadi is a Senior Fellow at Samriddhi, The Prosperity Foundation, well-known expert writing and researching on economic aspects of federalism in Nepal.

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