Prabhat Patnaik’s Blog

There has been much discussion in public about the index of industrial production for October 2022 being 4 per cent lower than the index for October 2021; and quite rightly so, since no obvious explanations like a Covid-induced lockdown or even its residual lingering effects can be adduced to explain this fall. Covid, for the present at any rate, is a matter of the past; hence such a sharp and apparently intriguing fall in industrial production in October points to something more basic, some deep-rooted malaise in the Indian economy. But in focussing on the immediate fall in industrial production,…

The fact that income and wealth inequalities have increased quite dramatically under the neo-liberal regime is beyond dispute. The empirical work by Piketty’s team bears out the increase in income inequality. They use income tax data to infer about the share of the top 1 per cent of the population of a country in its national income. One may raise objections to this method of estimation, but the conclusions are so overwhelming that one can scarcely quarrel with them. In India’s case for instance Piketty and Chancel find that the top 1 per cent which accounted for just 6 per…

A Neo-liberal regime entails a spontaneous change in the balance of class power against the working class everywhere. This happens for a number of reasons. First, since capital becomes globally mobile while labour is not, such globally mobile capital gets an opportunity to pit the working class of one country against that of another. If the workers of one country go on strike, then capital has the option of relocating its production at the margin to another country; and its very threat to do so serves to keep down the militancy of the workers in every country. If the workers…

The post-second world war period had seen a spate of welfare state measures in the advanced capitalist countries, especially in Europe, in emulation of what the Soviet Union was effecting. Capitalism had to accept these measures, notwithstanding its hostility to them, because it was in the midst of an existential crisis, weakened by the war, shaken by the upsurge in working-class anger, and terrified by the spread of socialism in Eastern Europe. With the subsequent consolidation of its position, however, its hostility to welfare state measures manifested itself openly. It tried to roll them back, though, thanks to the resistance…

The large cryptocurrency exchange FTX went out of business on November 11. Many have likened this phenomenon to the collapse of the investment banking firm Lehman Brothers during the financial crisis of 2008, believing the FTX collapse to be as important an event in the cryptocurrency world as the collapse of Lehman Brothers in the official financial system. In fact, even before the collapse of FTX, cryptocurrency values had slumped greatly; the total value of all cryptocurrencies which had been estimated at $2 trillion by the end of 2021 had slumped to half that figure by the end of September…

There are two defining and portentous features of the current world economic situation. One, which is well discussed, is the world-wide increase in interest rates in response to the pervasive inflationary upsurge; it would indubitably generate recession and unemployment, which, notwithstanding all protestations to the contrary, is the real objective behind it. The second feature, which is less discussed, is the outflow of finance from elsewhere in the world to the US that is contributing to a strengthening of the dollar vis-à-vis virtually all other currencies, with the sole and ironical exception of the Russian rouble. While all major currencies…

Economics is a subject where the ruling classes are forever trying to promote ideologically-motivated explanations in lieu of scientific ones. These explanations of course can be, and have been, fitted into an integrated totality of an alternative non-scientific theoretical structure that Marx had called “vulgar economy” as distinct from classical political economy. But even vulgar economy tries to cope systematically with observed phenomena in its own “vulgar” manner; what is infinitely worse is when observed phenomena are sought to be explained in an ideologically-motivated manner, but even this is done not consistently but opportunistically. That is when economics descends from…

The triumph of the City of London, the one square kilometre next to Liverpool Street station that houses the citadel of British finance, is complete. Not only did it get rid of one British prime minister, whom it distrusted, in the space of just 44 days, but even got a new one of its choice installed forthwith. Rishi Sunak is being called many things: the first British Asian prime minister, the first Hindu prime minister, and so on. These facts about him however are inconsequential; notwithstanding the hullabaloo in India over his appointment, these facts are mere trivia. What is…

The most intriguing question with regard to Liz Truss’ resignation as the prime minister of Britain after a mere 44 days in office is this: what is it about her economic programme that the “market” (read “finance capital”) found unpalatable? At its core after all was tax-cuts for the rich, which the “market” should have lapped up. True, the tax-cuts were to be financed through a fiscal deficit which the “market” generally does not like; but since the fiscal deficit was meant to finance transfers to the rich, and not any direct stimulation of aggregate demand by the State, there…

The Global Hunger Index (GHI) for 2022 has just come out, which shows India occupying the 107th position among the 121 countries for which the index is prepared (countries where hunger is not a noteworthy problem are left out of the index). India’s score on the hunger index is 29.1 which is worse than the score of 28.2 it had in 2014. (The lower the figure the less is hunger). One is so bombarded these days by official talk about India being among the fastest-growing economies of the world, India within sight of becoming a $5 trillion economy, and India…