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Protests against malfeasance and criminal misconduct grow fainter and fainter every day

Nothing, we know, can be more authoritative than the World Development Report authored every year by the wise men inside the World Bank. The latest such report is a rapturous resume of economic liberalisation is process in different parts of the world, particularly in Eastern Europe, following the collapse of the Soviet Union. Victorious capitalism is on the march.

Nations who had once pursued collectivist economic policies, and others which had chased the shadow of rapid and equitable growth courtesy state-led self-reliant economic models are being put through the drill of unlearning. The World Bank's general attitude is easy to sum up.

Never mind if, consequent to the measures undertaken in recent years, the economic depression that has set in the erstwhile Soviet Union is even more intense than what was experienced in the United States in the 1930s. Never mind too if during these last few years, with liberalisation in full swing, average life expectancy in Russia has dropped from 64 to 58 years, or if the real purchasing power of the average citizen has declined by more than 80 per cent. The cost of living in Russia has almost caught up with the level in Western countries, but minimum wages happen to be as low as $10 a month.

Any phase of transition, argues the World Development Report, is bound to throw up some winners and some losers; liberalisation is a stern taskmaster. Economies which had banked upon state initiative for ensuring rapid growth have predictably emerged as prime examples of incompetence and efficiency. They richly deserve to be despatched to the dump heap of history. As a first step toward that direction, public sector undertakings in these countries, need to be liquidated wholesale and new private entities set up instead.

A fabulous exercise along these lines is on the Eastern Europe, entire branches of industry, including manufacturing, mines, electricity and oil refineries, till the other day owned and operated by the state, have been earmarked for forced-bankruptcy. The standard modus operandi is to put up for auction the most profitable ones among these undertakings. The book value of the enterprises is purposely understated, and the actual act of disinvest boils down to sale of valuable government-owned assets to private parties, including foreign parties, at throwaway prices.

The state loses, the workers hitherto engaged in these enterprises are also the main victims. In such a situation, who are the gainers though? One obvious gainer is the fairly well-known Harvard Institute for International Development. Over the past five years, academics belonging to the institute have been advising the Russian government on the ways and means for making privatisation a piping success.

The institute is supposed to have a considerable stock of knowledge and experience in disinvestment activities; its staff, strategically located in Moscow and elsewhere, also accord technical advice to Russian officials on the management of stock exchanges and share markets. How to dispose off shares of profit-making public enterprises is one of their prime responsibilities. While on the job, they evidently did not mind passing on to the Russians expertise on some of the shader aspects of the trade, such as 'insider trading'.

Provided scruples are not an issue, an advantageously placed person, possessing confidential information on official capital placements and withdrawals, is in a position to use the knowledge for chalking up huge private gains. The bright lot from Harvard did not flinch from communicating to the Russians the ins and outs of such secret arts.

More salacious things however eventuated. Two experts from the Harvard Institute, on contract with US Agency for International Development to advise the Russians on privatisation and share market transactions, felt the urge to further advance the cause of liberalisation during their tour of duty in Moscow. They chose to set personal examples. Be as efficient, liberalisation theory says, as you can be, efficiency being defined in terms of one's ability to mint money.

The Russian bureaucracy were to be taught how to sell, at the most nominal prices, state undertakings to shady private parties. They were also to be made adept in the pastimes of bulls and bears in the stock exchanges. The basic underlying goal is to optimise the loot and plunder of Russian economy. But certain byproducts are for the asking. Any one engaged in these transactions, as long as he or she does not mind cutting a few corners, can build overnight a nice egg-nest for himself or herself.

The scholars on deputation from the Harvard Institute for International Development did precisely that. They used the confidential information available with them to make some quick money entirely on their personal account while maintaining the front of instructing the Russians on the rudiments of the sociology of knowledge. A portion of the million of dollars the US Agency for International Development had advanced to train Russians on the techniques of privatisation and capital market operations were set aside by the two experts for their private edification. They availed of the money and also availed of the inside information they possessed to speculate successfully in the Russian securities markets and pile up good clean profits. The wife of one of the two academics was of an even more adventurous bent of mind; she set up a mutual fund of her own to which the husband nonchalantly channelled US Aid funds kept in his care.

The other don did not even bother about an intermediary of a spouse; conflict of interest be hanged, he directly engaged in manipulating in Russian government bonds while working as official adviser on disinvestment operations. A subsequent report is even more exciting; it mentions a liaison between these two American gentlemen scholars and Boris Yeltsin's crony, Anatoly Chubais, currently a deputy prime minister in Russia, who was in direct charge, from the government side, of the privatisation programme. The Harvard dons apparently went out of their way to satisfy Chubais in order to make it pucca that Chubais satisfied them.

The above narration can be interpreted as a depressing story, depressing in the sense that it could engender a temptation to formulate sweeping generalisations on the weakness of the flesh even high-salaried Harvard academics are prone to. And yet, please consider the circumstances. Money is flowing like water all around, spies and crooks and commission agents are crowding the arena, they are offering fantastic sums to induce you to sell to them for a song the shares of this about-to-be-privatised enormously profit-making state enterprise.

Money is also similarly on tap to influence the administration's role so that share prices behaved in a particular manner in the stock exchanges. You are right in the middle of it, dispensing favours to x, y, z as a consequence of which they come to own, overnight, enormous fortunes. Thanks to the courtesy accorded by you, the spivs and the crooks are wading in money; you might as well join them. Does this not fully satisfy the criterion of efficiency, of making high profits and all that, never mind the modality of garnering the high profits. The temptation is great and the Harvard dons succumb to it.

It is, besides, not a story of a specific failing, it weaves a total picture. Early capitalism had a thick overlay of moral principles: make money, but at the same times practise restraint as well as frugality, and do not make a fetish of flaunting your wealth and property. This ethical framework is foreign to the liberalisation ushered in the period since the cessation of the Cold War. By common agreement, morals are in tatters. Or perhaps a slightly different formualtion is called for: morals are not a part of the agenda, they have nothing to do with the accumulation of money.

It should not, therefore, cause any surprise if, on our admittedly more sedate domestic front too, it is a grand spectacle of frauds, scams and scandals. Concepts of malfeasance and criminal misconduct have been thrown out of the window, as if by general acclamation. Protests against outrageous behaviour grow fainter and fainter with the passing of every day. An incongruity nevertheless continues to loom large. Mature capitalism can develop a rationale for sliding into sin and indulgence. A system short of accumulation and yet to blossom into full capitalism has no such alibi; its slippage into misconduct guarantees both chaos and growthlessness.

The standard query poses at this point will be on policies and measures for eschewing corruption. Why not state it, those waiting to be told how the could stay out of turpitude are a bunch of burnt-out cases; integrity cannot be taught, one either has it or is hopelessly bereft of it.