The Debate over Inequality Prabhat Patnaik
The debate over inequality has become hotter world-wide. While Trump had introduced substantial tax cuts for the rich in 2017, and Britain’s Boris Johnson, the front-runner to succeed Teresa May, has promised to do the same if he becomes Prime Minister, there are strong proposals for taxing the rich which have also been mooted. Bernie Sanders had such a proposal for the U.S. during the time that he was seeking the Presidential nomination of the Democratic Party. And now a group of 18 individuals in the U.S. including George Soros, each of whom is a billionaire, is asking for a…
India’s GDP Growth in the Recent Period Prabhat Patnaik
The “Gross Domestic Product” is a concept rooted in an epistemic position which is intrinsically incapable of recognizing the existence of a “surplus” in society. A simple example will make this clear. Suppose we have an agrarian economy in which 100 peasants produce 100 units of food; and suppose 50 of these are taken by an overlord through taxes, for consumption by his family and hangers-on. These 50 units will be readily recognized as constituting a “surplus” out of the total output of 100. But the concept of GDP would not recognize this. Instead it would claim that the GDP…
The Dramatic Increase in the Unemployment Rate Prabhat Patnaik
The report of the Periodic Labour Force Survey (PLFS) conducted in 2017-18 is finally out, and it confirms what had been leaked earlier, namely a dramatic increase in the unemployment rate in the Indian economy. The unemployment rate is given under two heads: usual status unemployment and current weekly status unemployment. These can be understood as follows. If a person is employed or seeking work for more than half the time (“majority time”) during the preceding 365 days before the date of the survey then his or her “usual status” is that he belongs to the labour force; but if…
Finance and Growth under neo-liberalism Prabhat Patnaik
The post-second world war years had seen systematic intervention by the State to stabilize capitalist economies. In fact State intervention had played the same role in that period that incursions into colonial and semi-colonial markets had played earlier, over much of the nineteenth century, right until the first world war. This role consisted in ensuring that one component of aggregate demand, whether exports to such markets or State expenditure, kept growing even when there was a downswing in the level of activity in the capitalist economy. One component of aggregate demand in other words, which determined the level of activity,…
An Economic Paradox Prabhat Patnaik
Statistics show that the period of neo-liberal economic policy in India has witnessed a much higher rate of GDP growth compared to the earlier dirigiste period, indeed almost double the previous rate. They also show that the rate of agricultural growth, especially of foodgrains, in the neo-liberal period has been distinctly lower than in the previous period. In per capita terms the contrast is even sharper. The per capita GDP growth under neo-liberalism is more than double what it was earlier, while the per capita foodgrain output growth in the neo-liberal era has been almost zero, while in the earlier…
The Significance of the Transfer Schemes Prabhat Patnaik
First the Modi government in its last budget announced a scheme of transferring Rs.6000 per annum per household to a targeted group of small peasants (about 12 crores), obviously with an eye on the coming elections. But the amount promised was so trivial, and the exercise so fraught with non-seriousness of intent (except perhaps to make some money available to local cronies in the election season), that Modi himself has refrained from tom-tomming it in his election speeches. The BJP has gone back instead to its usual game of inflaming communal passions for garnering votes, by fielding candidates like Pragya…
Unemployment, Poverty and The Modi Years Prabhat Patnaik
Numerous agencies from the Labour Bureau of Shimla to the Centre for Monitoring the Indian Economy to Oxfam have been drawing attention to the grim unemployment situation in India at present. The government however not only continues to be in a denial mode, but has actually suppressed all official statistics that go against its claims. But like the proverbial thief hiding behind curtains whose shoes nonetheless are visible from outside, the government’s hiding behind suppressed statistics is of no avail; its own figures given in other places, like the thief’s shoes, reveal the truth. And these other places are not…
The Modi Years Prabhat Patnaik
In its attack on civil liberties, its restructuring of the State to effect an acute centralization of power, and its pervasive purveyance of fear, the Modi years resemble Indira Gandhi’s Emergency. But the resemblance stops there. In fact the two differ fundamentally in several ways. First, there were no lynch mobs, and street thugs, terrorizing people and giving them lessons in “nationalism” during the Emergency. It was only the State that repressed people then; but now we also have gangs of Hindutva hoodlums, who force critics of the government to apologize for their “misdemeanor”, with the additional threat of arrests…
The Abysmal State of Economic Decision Making Prabhat Patnaik
The minutes of the Board meeting of the Reserve Bank of India just prior to the announcement that currency notes of Rs.500 and Rs.1000 denomination were being demonetized are now available in the public domain, thanks to an RTI query. And what they reveal is the abysmal state of decision-making on economic policy that prevails under the Modi government. To be sure, economic decision-making has always been informed by class bias; but that is not what I am referring to here. Even when a decision is taken on the basis of the interests of the ruling classes, the argument for…
The Subversion of MGNREGS Prabhat Patnaik
The National Rural Employment Guarantee Act that brought the MGNREGS into being was a unique piece of legislation in the history of independent India. It stipulated that employment was to be made available on demand, within a fortnight of being asked for, failing which an unemployment allowance had to be paid. True, its scope was confined only to rural areas, and it promised employment only up to 100 days per household per year; but it made employment a right. The fact that it was passed unanimously by parliament, after much deliberation, meant that parliament was in effect creating an economic…