An Unimaginable Contrast Prabhat Patnaik
Much has been written about the immense increase in economic inequality that has occurred of late and various startling figures have been provided by bodies like Oxfam, which has just come out with a report titled Inequality Kills. This shows that the wealth of the 10 richest men has doubled since the pandemic began while the incomes of 99 per cent of the population of the world are lower today than before the pandemic. A mere 0.027 per cent of the world’s population is estimated to have owned a combined wealth of $45 trillion in 2020 which is more than…
Why Capitalist Governments worry more about Inflation than Unemployment? Prabhat Patnaik
Capitalist governments invariably seek to control inflation by enlarging unemployment. This has nothing to do with any belief in a stable “trade-off” between the two, namely in a stable curve that links the two. Even those who attribute inflation to other causes, such as excessive money supply (“too much money chasing too few goods”) and find the solution to it in monetary stringency, are in effect seeking to control it through larger unemployment since monetary stringency causes larger unemployment. This raises many questions. The first question is: why is this so? Why do governments not maintain high levels of employment…
A Budget whose Silences are Ominous Prabhat Patnaik
No budget in recent memory has been presented at a time when the economy is in such dire straits: unemployment is so bad that there are job riots in Bihar and UP; wealth and income inequalities are among the worst in the world; millions more have been pushed into poverty because of the pandemic and the lockdown; and inflation is accelerating even in the midst of massive unemployment. There is an urgent need for a strategy that promotes economic revival, while providing relief to the poor, and contributing to an abatement of inflation. The 2022-23 union budget should have spelt…
The Economy on the Eve of the Budget Prabhat Patnaik
The Indian economy is currently caught in a vicious spiral of inflation, stagnation, and a widening of the fiscal deficit. And this spiral is set to become even more vicious because inter alia of developments in the world economy. Even before the current omicron wave, the rate of GDP growth projected by official estimates for 2021-22 over the previous year was 9.2 per cent; but the previous year itself had witnessed a 7.3 per cent contraction because of the pandemic. Hence even if the official projection turns out to be true, the GDP in 2021-22 would be higher than in…
Social Sciences and the Colonised Mind Prabhat Patnaik
A crucial component of the imperialist system is the colonisation of third world minds that helps to sustain it. This colonisation is pervasive, but here we shall discuss only academic colonisation and that too relating to the social sciences. Social sciences are of critical importance because the problems of the third world are above all social problems, and since the colonisation of third world minds has the effect of inculcating in them the belief that imperialism in the colonial era had nothing to with these problems (on the contrary, if anything, it had a beneficial impact), and that imperialism in…
Financial Markets Under Capitalism Prabhat Patnaik
One of the most important arguments advanced by John Maynard Keynes, the renowned economist, was that the operation of financial markets under capitalism is deeply flawed. Such markets are intrinsically incapable of distinguishing between “enterprise” where an asset is held because of the stream of returns that its ownership yields over time, and “speculation” where an asset is held not for this yield but only because it can be sold at a higher price tomorrow to someone else who in turn would buy it because he believes that he can sell it at an even higher price the day after…
Co-lending: Towards recolonising the peasantry Prabhat Patnaik
In colonial times, the peasantry had to borrow from private moneylenders. According to Provincial Banking Enquiry Committee reports, these moneylenders in turn borrowed from commercial banks. But while disbursing credit to the peasants and charging exorbitant interest rates, the money lenders at least bore the whole of the lender’s risk. The banks from whom they borrowed did not bear any risk in case the peasants could not pay back the loans they had obtained from the moneylenders. The banks in short had nothing to do with the ultimate borrowers. But with the new arrangement being put into effect, of which…
Yet Another Contradiction of Capitalism Prabhat Patnaik
In the United States there are still four million persons who remain unemployed compared to before the pandemic; and yet the Biden administration’s attempt to stimulate the economy has already run into a crisis with the re-emergence of inflation not just in that country but elsewhere in the capitalist world as well. The Federal Reserve Board (the equivalent of the US central bank) is planning soon to raise interest rates (that are currently close to zero), and even the fiscal expansion will be difficult to sustain in the face of inflation. All this will truncate the recovery that has been…
Privatisation and The Constitution Prabhat Patnaik
In a recent report the People’s Commission on the Public Sector and Public Services has rightly drawn attention to the sheer un-constitutionality of the Modi government’s plan to privatise en masse the assets of the public sector. The constitution of the country is not just a set of procedures and rules for the governance of the polity. It expresses above all a certain social philosophy which is supposed to inform the behaviour of the various organs of the State and which constitutes the foundational beliefs around which the nation has come into being. This is particularly true of ex-colonial countries…
US Inflation and India’s Economic Recovery Prabhat Patnaik
The very day, December 11, when the Indian finance ministry spuriously claimed a robust recovery in the post-pandemic Indian economy, newspapers carried news of an acceleration in the US inflation rate. The inflation rate in November 2021 over November of the preceding year had been 6.8 per cent in the US, which was higher than the corresponding rate in any month over the previous 40 years; in particular, petrol prices had increased in November 2021 by 58 per cent, which was the highest for any month since 1980. The Indian finance ministry however blithely ignored this inflation in the US…