The OPEC’s Decision to Cut Oil Output Prabhat Patnaik
What is called OPEC+, that is the 13 members of the Organisation of Petroleum Exporting Countries (OPEC) together with 11 other petroleum exporting countries led by Russia, decided on October 5 to cut their oil production by 2 million barrels per day, starting from November. The US had been pressing OPEC not to take this decision. There had been hectic lobbying by the US to prevent this outcome, and several visits by top US officials to Saudi Arabia, including even by President Joe Biden, to press home the point. And yet OPEC decided otherwise; not surprisingly, this decision has been…
The New Threat on the Foreign Exchange Front Prabhat Patnaik
On September 23, the value of the rupee vis-à-vis the dollar fell to a new low: it crossed 81 to a dollar after some weeks of relative stability when it hovered between 79 and 80. And it fell despite the Reserve Bank’s running down of foreign exchange reserves in a bid to hold up its value. In fact foreign exchange reserves had reached their highest level in October last year, but since then there has been a decline by over $90 billion until September 23 to just below $550 billion. A part of this decline is because of revaluation: reserves…
Europe’s Economic Hara-Kiri Prabhat Patnaik
The cessation of natural gas supplies from Russia to Europe in retaliation against Western sanctions imposed on Russia because of the Ukraine war, is threatening Europe not only with a winter with inadequate heating that will take a big toll in terms of lives among poor people, but also with large-scale closures of enterprises; such closures would push up the unemployment rate, and significantly increase poverty and destitution among the workers. It is not just the immediate effect on Europe that threatens to be severely adverse; capital has already started relocating away from Europe to the United States, a trend…
The Huge Danger Associated with Privatising Banks Prabhat Patnaik
There are fundamental objections to the plan of the government to privatise at least some of the public sector banks. They centre around the fact that such a move will change the pattern of deployment of credit, away from productive activities towards speculation, away from peasant agriculture towards big business (with dangerous implications for peasant viability, food security and employment), and away from domestic to global destinations. These objections are well-known and have been much discussed, and their pertinence has been underscored by the fact that Indian public sector banks were completely untouched during the “sub-prime-lending crisis” of 2008; but…
First Quarter GDP Estimates for 2022-23 Prabhat Patnaik
The estimates of Gross Domestic Product for the April-June quarter released by the government on August 31 paint a dismal picture of the Indian economy. Since the GDP in real terms (at 2011-12 prices) shows an increase of 13.5 per cent over the first quarter GDP a year ago, and since 13.5 per cent appears an impressive figure, official spokespersons have been putting a cheerful gloss over it. But a closer look reveals an economy getting further bogged down in a state of stagnation. The economy, it may be recalled, had contracted sharply in 2020-21 because of the pandemic and…
Controlling Inflation at the Expense of Working Class Prabhat Patnaik
Economists distinguish between two kinds of inflation: “demand-pull” and “cost-push”. Demand-pull inflation is said to occur when there is excess demand in a situation where supply cannot be augmented, because full capacity output has been reached in one or more crucial sectors. War-time inflation is a classic example. In India during the pre-neoliberal, dirigiste period, inflation was often the result of insufficient foodgrain output relative to demand, arising from a poor harvest. Cost-push inflation on the other hand occurs when supplies can be augmented, as the economy is nowhere near full capacity in key sectors, but one of the classes…
The Modi Government and the So-Called “Freebies” Prabhat Patnaik
A Bizarre drama is unfolding in front of our eyes. The Modi government which has been giving away hundreds of thousands of crores of rupees as tax concessions to the monopolists has expressed its opposition ironically to what it calls “freebies”, that is to handing over subsidies to other segments of the population. First, it was Narendra Modi who warned the youth against being influenced by a “revariculture”; then a BJP functionary who happens to be a lawyer moved a petition in the supreme court to prevent “freebies” from being given. Why the supreme court was dragged into the issue…
Sanctions and the Decline of the Dollar Prabhat Patnaik
The hegemony of the US dollar was based on the fact that the world’s wealth-holders considered it to be “as good as gold”, even when it was no longer officially convertible to gold at a fixed rate, as it had been under the Bretton Woods system, after the collapse of that system. These wealth-holders were of two kinds: private individuals and institutions, and central banks that held the foreign exchange reserves of their respective countries. The main reason it was considered as good as gold was because the prices of goods and services, with which the price of gold generally…
Scandinavia and Imperialism Prabhat Patnaik
There are many misconceptions about Scandinavian capitalism. A very common one is the belief that since the Scandinavian countries developed vigorous capitalist economies, without ever having acquired any colonies of their own, they constitute a clear refutation of the claim that capitalist development necessarily requires imperialism. This is an argument that I have heard for decades, but it is based on a misconception, not just about Scandinavia but above all about imperialism itself. Indeed, one may say many positive things about the concessions wrung out of capitalism by Scandinavian social democracy (although many of these are under threat in the…
“Heads I Win, Tails You Lose” Prabhat Patnaik
The craftiness of imperialism is boundless. In several countries of the world at present there are neo-fascist governments, propped up by their respective big bourgeoisies (all aligned to globalized capital), and implementing neo-liberal policies with their characteristic ruthlessness; in many other countries there are neo-fascist outfits attempting to get into power by promising to their big bourgeois patrons that they would do the same if in power. A neo-liberal-neo-fascist alliance in short has become quite pervasive. Such a neo-liberal-neo-fascist alliance has become necessary because the crisis of neo-liberalism has made the usual breezy assurance no longer credible, that “everybody would…
