John Maynard Keynes, though bourgeois
in his outlook, was a remarkably insightful economist, whose book Economic
Consequences of the Peace was copiously quoted by Lenin at the Second
Congress of the Communist International to argue that conditions had ripened
for the world revolution. But even Keynes' insights could not fully comprehend
the paradox that is capitalism.
In a famous essay ''Economic Possibilities for our Grandchildren'', written
in 1930, Keynes had argued: ''Assuming no important wars and no important
increase in population, the economic problem may be solved, or be at least
within sight of solution, within a hundred years. This means that the
economic problem is not, if we look into the future, the permanent problem
of the human race (emphasis in the original).
He had gone on to ask: ''Why, you may ask, is this so startling? It is
startling because, if instead of looking into the future, we look into
the past, we find that the economic problem, the struggle for subsistence,
always has been hitherto the most pressing problem of the human race…
If the economic problem is solved, mankind will be deprived of its traditional
purpose.'' He had then proceeded to examine how mankind could fruitfully
use its time in such a world.
True, after Keynes had written there has been the Second World War, but
thereafter mankind has had six and a half decades without any ''important
war'' of the sort that could interrupt what he had called the ''era of
progress and invention''. And the rate of population growth has also not
accelerated to a point that can be considered to have invalidated Keynes'
premise. And yet if we take mankind as a whole, it is as far from solving
the economic problem as it ever was. True, there has been massive accumulation
of capital, and with it an enormous increase in the mass of goods available
to mankind; and yet, for the vast majority of mankind, the ''struggle
for subsistence'' that Keynes had referred to has continued to remain
as acute as ever, perhaps in some ways even more acute than ever before.
To say that this is only because not enough time has passed, that over
a slightly longer time period Keynes' vision will indeed turn out to be
true, is facile. The fact that the bulk of mankind continues to face an
acute struggle for subsistence is not a matter of degree; it is not as
if the acuteness of this struggle for this segment of mankind has been
lessening over time, or that the relative size of this segment has been
lessening over time. We cannot therefore assert that the passage of more
time will lift everybody above this struggle.
Likewise, to say that while enormous increases have taken place in the
mass of goods and services available to mankind (the increase in this
mass being more in the last hundred years than in the previous two thousand
years, as Keynes had pointed out), its distribution has been extremely
skewed and hence accounts for the persistence of the struggle for subsistence
for the majority of the world's population, is to state a mere tautology.
The whole point is that there is something structural to the capitalist
system itself, the same system that causes this enormous increase in mankind's
capacity to produce goods and services, which also ensures that, notwithstanding
this enormous increase, the struggle for subsistence must continue to
be as acute as before, or even more acute than before, for the bulk of
mankind.
Keynes missed this structural aspect of capitalism. His entire argument
in fact was based on the mere logic of compound interest, i.e. on the
sheer fact that ''if capital increases, say, 2 percent per annum, the
capital equipment of the world will have increased by a half in twenty
years, and seven and a half times in a hundred years''. From this sheer
fact it follows that output too would have increased more or less by a
similar order of magnitude, and mankind, with so much more of goods at
its disposal, would have overcome the struggle for subsistence. The reason
Keynes assumed that an increase in the mass of goods would eventually
benefit everyone lies not just in his inability to see the antagonistic
nature of the capitalist mode of production (and its antagonistic relationship
with the surrounding universe of petty producers), but also in his belief
that capitalism is a malleable system which can be moulded, in accordance
with the dictates of reason, by the interventions of the State as the
representative of society. He was a liberal and saw the state as standing
above, and acting on behalf of, society as a whole, in accordance with
the dictates of reason. The world, he thought, was ruled by ideas; and
correct, and benevolent, ideas would clearly translate themselves into
reality, so that the increase in mankind's productive capacity would get
naturally transformed into an end of the economic problem. If the antagonism
of capitalism was pointed out to Keynes, he would have simply talked about
state intervention restraining this antagonism to ensure that the benefit
of the increase in productive capacity reached all.
The fact that this has not happened, the fact that the enormous increase
in mankind's capacity to produce has translated itself not into an end
to the struggle for subsistence for the world's population, but into a
plethora of all kinds of goods and services of little benefit to it, from
a stockpiling of armaments to an exploration of outer space, and even
into a systematic promotion of waste, and lack of utilization, or even
destruction, of productive equipment, only underscores the limitations
of the liberal world outlook of which Keynes was a votary. The state,
instead of being an embodiment of reason, which intervenes in the interests
of society as a whole, as liberalism believes, acts to defend the class
interests of the hegemonic class, and hence to perpetuate the antagonisms
of the capitalist system.
These antagonisms perpetuate in three quite distinct ways the struggle
for subsistence in which the bulk of mankind is caught. The first centres
on the fact that the level of wages in the capitalist system depends upon
the relative size of the reserve army of labour. And to the extent that
the relative size of the reserve army of labour never shrinks below a
certain threshold level, the wage rate remains tied to the subsistence
level despite significant increases in labour productivity, as necessarily
occur in the ''era of progress and innovation''. Work itself therefore
becomes a struggle for subsistence and remains so. Secondly, those who
constitute the reserve army of labour are themselves destitute and hence
condemned to an even more acute struggle for subsistence, to eke out for
themselves an even more meagre magnitude of goods and services. And thirdly,
the encroachment by the capitalist mode upon the surrounding universe
of petty production, whereby it displaces petty producers, grabs land
from the peasants, uses the tax machinery of the State to appropriate
for itself, at the expense of the petty producers, an amount of surplus
value over and above what is produced within the capitalist mode itself,
in short, the entire mechanism of ''primitive accumulation of capital'',
ensures that the size of the reserve army always remains above this threshold
level. There is a stream of destitute petty producers forever flocking
to work within the capitalist mode but unable to find work and hence joining
the ranks of the reserve army. The antagonism within the system, and vis-à-vis
the surrounding universe of petty production, thus ensures that, notwithstanding
the massive increases in mankind's productive capacity, the struggle of
subsistence for the bulk of mankind continues unabated.
The growth rates of world output have been even greater in the post-war
period than in Keynes' time. The growth rates in particular capitalist
countries like India have been of an order unimaginable in Keynes' time,
and yet there is no let up in the struggle for subsistence on the part
of the bulk of the population even within these countries. In India, precisely
during the period of neo-liberal reforms when output growth rates have
been high, there has been an increase in the proportion of the rural population
accessing less than 2400 calories per person per day (the figure for 2004
is 87 percent). This is also the period when hundreds of thousands of
peasants, unable to carry on even simple reproduction have committed suicide.
The unemployment rate has increased, notwithstanding a massive jump in
the rate of capital accumulation; and the real wage rate, even of the
workers in the organized sector, has at best stagnated, notwithstanding
massive increases in labour productivity. In short our own experience
belies the Keynesian optimism about the future of mankind under capitalism.
But Keynes wrote a long time ago. He should have seen the inner working
of the system better (after all Marx who died the year Keynes was born,
saw it), but perhaps his upper class Edwardian upbringing came in the
way. But what does one say of people who, having seen the destitution-''high
growth'' dialectics in the contemporary world, still cling to the illusion
that the logic of compound interest will overcome the ''economic problem
of mankind''? Neo-liberal ideologues of course propound this illusion,
either in its simple version, which is the ''trickle down'' theory, or
in the slightly more complex version, where the State is supposed to ensure
through its intervention that the benefits of the growing mass of goods
and services are made available to all, thereby alleviating poverty and
easing the struggle for subsistence.
But this illusion often appears in an altogether unrecognizable form.
Jeffrey Sachs, the economist who is well-known for his administration
of the so-called ''shock therapy'' in the former Soviet Union that led
to a veritable retrogression of the economy and the unleashing of massive
suffering on millions of people, has come out with a book where he argues
that poverty in large parts of the world is associated with adverse geographical
factors, such as drought-proneness, desertification, infertile soil, and
such like. He wants global efforts to help these economies which are the
victims of such niggardliness on the part of nature. The fact that enormous
poverty exists in areas, where nature is not niggardly, but on the contrary
bounteous; the fact that the very bounteousness of nature has formed the
basis of exploitation of the producers on a massive scale, so that they
are engaged in an acute struggle for existence precisely in the midst
of plenitude; and hence the fact that the bulk of the world's population
continues to struggle for subsistence not because of nature's niggardliness
but because of the incubus of an exploitative social order, are all obscured
by such analysis. Keynes' faith in the miracle of compound interest would
be justified in a socialist order, but not in a capitalist one.