THE NATURE OF UNDERDEVELOPMENT & REGIONAL STRUCTURE OF NEPAL A MARXIST ANALYSIS

1. THE NATURE OF UNDERDEVELOPMENT &REGIONAL STRUCTURE OF NEPALA MARXIST ANALYSIS

2. • Underdevelopment: "The most important single issue of our time". • 2.8 billion people live on less than $2 a day. • UN's Human Development Report: The income gap between the richest 20% and poorest 20% in the world rose from 30:1 in 1960, to 60:1 in 1990, & to 74:1 in 1999, and is projected to reach 100:1 in 2015. • Development / Underdevelopment : a composite 'socio-spatial process' :Interrelation of Time and Space. • Nepal : a member of the ' poorest of the poor club‘.

3. Analytical / Conceptual Framework • Two Principal epistemological camps. (i)Anglo- Saxon school / neo- classicism/ neo- liberalism - Empiricism/ Pragmatism : Underdevelopment as original state of 'backwardness’, as a result of natural historical & geographical differentials, or like 'original sin'. - development : economic 'growth' or 'modernisation'- 'modern/‘traditional’ dualism. (ii) Marxist or Historical Materialist Approach. - Materialist dialectics : 'unity of opposites', 'unity-struggle- transformation’, ‘transformation of quantity into quality', 'a development that proceeds in spirals, not in a straight line', ‘a development by leaps, catastrophes & revolutions’, ‘interdependence between all aspects of any phenomenon’ etc.

4. - Historical Materialism: contradictions between 'material forces of production' and ‘social relations of production' constitute the ‘prime mover ' in the transition to higher mode of production; societies develop through different mode of production. - Neo- Marxist approach or Dependency Theory: drain of economic surplus from 'periphery' to 'centre'.

5. Development & Underdevelopment -‘development' within a given social formation would be full realisation of productive potentials of the society or transition to higher social formation; 'underdevelopment' would be the opposite condition of non-realisation of full potential of development and/ or blockage to transition to higher formations due to both endogenous & exogenous factors. - Capitalism, and its highest stage imperialism, by its nature of incessant drive towards expanded reproduction intervenes in the development process elsewhere. But the impact would depend on mode of articulation with pre-capitalist economy. i.e. mercantile, industrial or financial. - No determinism or nihilism as regards the relative role of endogenous & exogenous factors; in general ‘external causes become operative through internal causes’. - Degree of differentiation of social division of labour and the extent of economic articulation can be taken as general indicators of higher mode of production.

6. Spatial Structure of Underdevelopment - ‘nature' & 'society' in constant interaction with each other; 'production' as 'appropriation of nature within & through a certain form of society' ; territorial 'space' as' humanised' or 'historical' nature . - ‘development' as a combined 'socio-spatial process' - Spatial formation as the manifestation of and to a lesser degree a causal factor in the particular social formation - Articulation of territorial division of labour is manifested in the emergence of 'economic regions' to exploit advantage of geographic location & historical accumulation [ eg. Kathmandu BiratnagarBirgunj etc.] ; greater interactions among such 'region' in terms of flow of goods & services should characterise higher spatial formations - Inter-spatial disarticulation or non-development of territorial division of labour, a feature of introverted pre- capitalist formation

10. Historical Specificities • Valleys of Nepal seats of very ancient people: about 70,000 yrs? • Mongoloid stock (Kirat) from South-east, Caucasoid Stock (Khas) from north-west, and Austro- Dravids from South, in Kathmandu valley around 1st millennium B.C. -Kathmandu valley with excellent agro- climatic advantage for stabilized agriculture & primitive entrepot trade, became citadel of early civilization • Great influx from Southern plains after 11th century; assimilation with tribal communities; proto-class societies/ 'state-communal' formations • Centralised state formation in 18th century -Semi-colonial integration with British India after 1815-16 -Cumulative 'exogenous' dynamics

11. • Exogenous dynamics: political dependency to economic dependency -Politico-strategic motivation than economic depredation led to general 'fossilization‘ • Endogenous dynamics: centralized despotic state and hodge- podge social formation from tribal communalism to ‘commercial feudalism’ - No historical upheavals or sharp breaks until Maoist-[People's War in 1996-2006

12. General Differentiation of the Economy • Low level of differentiation of economy marked by more than two-third of labour force in agriculture sector. • Discernible shift of both labour force & GDP away from agriculture to service sector at the cost of industry sector, a sign of growing comprador and bureaucratic capital.

13. Stagnation of Agriculture • Very low development of productive forces reflected in overwhelming domination of traditional factors of production like land & human & animal labour; low cropping intensity; low productivity; predominance of subsistence (cereal) crops; steady decline in food surplus and now net deficit; : Only eastern Terai & Kathmandu Valley have some 'healthy' signs. • Backward & retrograde relations of production reflected in extremely low & declining average size of land-holding (0.68 hect) : pre-ponderance of 'owner-cultivator' subsistence peasantry (84.6 %) Pre-capitalist ground-rent realized through system of share-copping : More 'feudalisation' away from central authority • • Rampant disguised & under-employment; seasonal & relay migration

14. • Aggregate agrarian process: stagnation & retardation ; disarticulation with other sectors. • Marginally differentiated vast hinterland of Hill & Mountain, surrounded by areas of 'extraverted development' along Terai, Inner Terai & Kathandu Valley.

17. Industrial Retardation - 'direct appropriation of nature' vs 'indirect appropriation of nature' -'domestic industry: 'artisan' & 'handicraft' production ['proto- industry'] to 'manufacture' & 'modern factory' industry, -Historical decline after mass influx of factory made goods since the beginning of 20th century ; No combination of capital formation, free labour & domestic market -Predominance of elementary processing agro- based & forest- based industries & negligible share of production goods industries, - Undissolved ties of industrial labour with agriculture production

18. - premature monopolisation by few dominant groups • External dependence for both technological & raw material inputs • ; preemption of internal market by exogenous capital. - 'extraverted' and 'disarticulated' industrial spatial structure.

21. Proliferation of Circulation Capital - Early entrepot trade between India & Tibet (China) via Nepal ["foreign trade antedates domestic trade" ] - Decline after Sugauli Treaty

24. Unequal Exchange & Dependency - Export of primary product (cardamom, pulses, tea, ginger, skin, herbs) & import of finished products (machineries, motor, vehicles, chemicals & drugs etc) lead to unequal exchange - Trade imbalance & dependency ( with India ) [Export/Import : 5:1 to 1:8 ]

25. Financial capital & foreign Debt -Proliferation of banking & financial capital : Centralisation in Kathmandu/ urban areas : Mismatch of 'deposit' & 'credit' -Tightening 'debt trap‘ : Debt/Export earning ratio > 600%

32. Restructuration of Society & state - Problems of development/ underdevelopment of Nepal both in social & spatial dimensions are essentially problems of transition of pre-capitalist society hybridized by endogenous & exogenous factors to higher social formation. - Ten years of armed insurgency (PW) and other movements have shaken the foundation of the old society & state. • It is now time to: • Restructure the state on FEDERAL basis. • Develop the country as a VIBRANT BRIDGE BETWEEN INDIA AND CHINA • Embark on the path of INLCUSIVE DEVELOPMENT

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