Look at the situation in India. In the early years after independence, the nascent Indian corporate sector needed the crutch of the state. It needed protection. To ensure that that protection was extended, it had to strike a deal with other sections of the population. As the years passed, the broad contours of this dealbecame clear. Unions, domestic business, small business, government babus, rich farmers, and the vocal middle classes were all co-opted into the system. The license raj, aptly described as "ten per cent socialism" suited all these elements, including the business class. Unfortunately, however, the surplus generated by this system was not enough for everyone. There were too many demands made on too small a pie. Put succinctly, the state model had become a fetter on the interests of capital. The looming bankruptcy of the state in 1990 was the right time to strike a blow for business freedom. The solution for the ruling elites was to jettison the old alliance for new ones. An ally was needed who had resources, and what better friend than international capital. The losers in this change of tack were parts of the middle class, the unions, and the working class. Privatisation, and the removal of cross-subsidisation will help business. The pruning of subsidies and downsizing will also help. The change clearly showswho was top dog in the old coalition.

Of course, the new paradigm has tensions of its own. There is now no alternative but to integrate into the global economy. All that remains to be haggled over are the terms on which that integration will occur. There will be something in that arrangement for local business, something for skilled workers, but marginalisation for the bulk of the workforce.

So the emphasis on market solutions is basically an attempt to get undesirable classes out of economic decision making. Power is accordingly being handed over to supposedly non-political institutions such as the WTO, an autonomous central bank, independent regulatory bodies. The autonomy is necessary to keep these bodies out of the reach of politics. Yet every decision in public affairs is a political one, i.e., it has consequences on the distribution of resources. Pretending that solutions are technical in nature is one way of insulating the economic process from the pressures of democracy. The nature of the state ischanging, and while earlier the state owned resources, now it will merely regulate them. This obscures the fact that it is autonomous regulatory bodies who will regulate, not Parliament. The state is being restructured in an attempt to keep the masses out. The same thread runs through the invocation of growth as a panacea. Growth is good in itself, and no effort is made to calculate who gains what.

Of course, India is in tune with trends the world over. Consider America, that defender of the faith in free markets, where the cult of the minimalist state is in full sway. This extract from Noam Chomsky is self-explanatory: "One fundamental component of free trade theory is that public subsidies are not allowed. But after World War II, US business leaders expected that the economy would collapse without the massive state intervention during the war that had finally overcome the great depression. They also insisted that advanced industry "cannot satisfactorily exist in a pure, competitive, unsubsidised, `freeenterprise' economy" and that "the government is their only possible saviour" (Fortune, Business Week, expressing a general consensus). They recognised that the Pentagon system would be the best way to transfer costs to the public. Social spending could play the same stimulative role, but it has defects: it is not a direct subsidy to the corporate sector, it has democratising effects, and it is redistributive. Military spending has none of these unwelcome features....One consequence is that civilian aircraft is now the country's leading export, and the huge travel and tourism industry, aircraft-based, is the source of major profits. ....A fine example of really existing markets, civilian aircraft production is now mostly in the hands of two firms, Boeing-McDonald and Airbus, each of which owes its existence and success to large-scale public subsidy. The same pattern prevails in computers and electronics generally, automation, biotechnology, communications, in fact just about every dynamic sector of theeconomy."

It seems that while free markets are useful when needed, the state too must help out when necessary. Both the state and the market are tools -- instruments -- which must be used to suit the occasion. Improving a bit on Deng, "What does it matter if the cat is black or white, so long as it catches mice for the master?"