Economy Plunging Headlong into Recession Prabhat Patnaik

Volume II of the Economic Survey which was brought out by the Ministry of Finance a few days ago paints an extremely grim picture of the Indian economy. The growth rate of real Gross Value Added (GVA which is the appropriate thing to look at, since the GDP measure includes net indirect taxes and hence does not truly reflect output trends), was 6.6 percent for 2016-17 as a whole, compared to 7.9 percent for 2015-16. More importantly, the quarterly growth rate (i.e. the growth rate of GVA in a particular quarter over the corresponding quarter of the preceding year) kept…

What is really happening in Indian Manufacturing? C.P. Chandrasekhar & Jayati Ghosh

Data on organised manufacturing production do not really capture the impact of demonetisation and its effects on demand, but looking at some sub-sectors of consumer non-durable goods provides more insight. Indian_Manufacturing (Download the full text in PDF format) (This article was originally published in the Business Line on August 14, 2017.)

Economic Development for Transformative Structural Change

Economic Development for Transformative Structural Change: Lack of Alternatives Is Not the Problem (pt 1/4) Historically all major thinkers about the economy were development economists as they saw the economy going through transformative structural changes and that is what they studied, says co-editor of The Handbook of Alternative Theories of Economic Development. Economic Development for Transformative Structural Change (pt.2/4) 1947 was a year of political ambition, says a panelist for the book launch of The Handbook of Alternative Theories of Economic Development in posing the question, "Do we have that same level of ambition in the current crop of international…

Leadership Failure Perpetuates Stagnation Jomo Kwame Sundaram

What kind of leadership does the world need now? US President Franklin Delano Roosevelt's leadership was undoubtedly extraordinary. His New Deal flew in the face of the contemporary economic orthodoxy, begun even before Keynes' General Theory was published in 1936. Roosevelt's legacy also includes creating the United Nations in 1945, after acknowledging the failure of the League of Nations to prevent the Second World War. He also insisted on ‘inclusive multilateralism' – which Churchill opposed, preferring a bilateral US-UK deal instead – by convening the 1944 United Nations Conference on Monetary and Financial Affairs at Bretton Woods with many developing…

Beyond Fantasies of Industry 4.0, Where Global Capital Has No Answers Erinç Yeldan

Together with the collapse of the Soviet system, China’s and India’s opening up to the global markets have added 1.5 billion new workers to the world’s economically active supply of wage-labor.  This meant almost a doubling of the global labor force and a reduction of the global capital-labor ratio by half.  With intensified pressures of unemployment looming everywhere, wage earners had witnessed a race to the bottom not only of their wage remunerations, but also of their social rights and work conditions. Complemented with the neoliberal policies invoking flexibility and privatization, global wage-labor had suffered serious informalization and vulnerability, consequent…

After neoliberalism, what next? Jayati Ghosh

We may be living through one of those moments in history that future historians will look back on as a watershed, a period of flux that marked a transition to quite different economic and social arrangements. Unfortunately, in human history a ‘moment’ can be a very long time, so long that it could be decades before the final shape of the new arrangements are even evident; and in the interim, there could be many ‘dead cat bounces’ of the current system. What is clear is that the established order – broadly defined as neoliberal globalised finance capitalism – is no…

Financing Education Prabhat Patnaik

The Draft National Education Policy unveiled by the central government puts forward a bizarre line of reasoning. Education, it is argued on the basis of a long-held and honourable belief going back to the Kothari Commission, should have an annual expenditure of around 6 percent of the Gross Domestic Product; we have come nowhere near this figure even after so many years and cannot do so on the basis of government effort owing to our stretched budgetary resources; hence, to realize this target, which most right-thinking persons in the country would accept, we must draw the private sector into the…

‘Riskless Capitalism’ in India: Bank credit and economic activity Rohit Azad, Prasenjit Bose and Zico Dasgupta

The Indian growth story of the 2000s’ cannot be over-simplistically explained as a result of “market-oriented” reforms. Public sector bank credit-financed investments, particularly in the infrastructure sector, played a significant role in sustaining growth, most crucially after the global economic crisis. Such a growth trajectory, however, proved to be unsustainable with the expansionary phase coming to an end in 2011–12 and bad loans piling up in the banking system. Riskless_Capitalism  (Download the full text in PDF format) This article was originally posted in Economic & Political Weekly on August 5, 2017.

Twenty Years after The Asian Financial Crisis Prabhat Patnaik

Exactly twenty years ago, a major financial crisis had hit the countries of East and South East Asia in July 1997. This crisis was a watershed in the history of third world development, in the sense that these “tiger economies” which had seen extraordinarily high growth rates until that time, remained permanently crippled thereafter. Just around the time that they were shaking off the effects of the 1997 crisis on their respective economies, the collapse of the “housing bubble” in the United States plunged the entire world capitalist system into a crisis which also affected them, so that they could…

EURODAD Conference 2017: Development Finance Landscape: Why Alternatives are needed

Second Plenary Session of Eurodad Conference 2017 Speakers: Professor Jayati Ghosh (Jawaharlal Nehru University) Kavaljit Singh (Madhyam) and Mikaela Gavas (Overseas Development Institute) Moderator: Penny Davies (Diakonia) Jayati Ghosh, Kavaljit Singh and Mikaela Gavas discuss the current capitalist stagnation after the global crisis, in which finance has re-emerged as a dominant player and global concentration is adding to inequality. Instead of prioritising the uses of scanty international aid, what is required is political leadership that ends fiscal austerity and ensures more democratic control over finance, as well as trade policies that enable industrialisation and structural transformation. Click here for more…