Prabhat Patnaik’s Blog

The budget figures these days mean very little. The difference between what the budget provides and what actually happens does not come to light even after a time- lag of two years, while earlier two years were the limit. And knowing this, the government provides figures in the budget which are extravagant and hence meaningless, but look pretty. What is remarkable about the 2020-21 budget however is that notwithstanding massive liberties taken with figures, this budget still has been so non-descript that hardly anyone outside of government has had a kind word to say about it. Despite its extravagance it…

Marxism teaches us that every totality is composed of elements which are different and hence among whom there are contradictions. Even when the totality is conceptualized as a totality, there must be an implicit awareness of these contradictions. This injunction should not be forgotten when we study the political economy of authoritarian or fascistic regimes. Marxists have for long seen such regimes as being based on the solid support of monopoly capital; indeed this is crucial for their coming to power. The renowned Marxist economist Michal Kalecki for instance saw the European fascist regimes of the 1930s as resting upon…

Wealth data are quite unreliable; and wealth distribution data even more so. Not much faith can be reposed on the absolute figures; but cross-country comparisons, and also movements in the shares of the top decile or percentile of the population over time in any country, are less likely to be affected by the infirmity of the absolute figures. The fact that India has been witnessing growing wealth inequality, in the sense, say, of the share of the top 1 per cent in total wealth, is quite indubitable, as is the fact of its having a higher level of wealth inequality…

If a head-load worker were to ask a bourgeois economist “Why does Ambani have so much wealth but I do not?”, that economist’s answer would be that Ambani has certain “special qualities” which the headload worker lacks. Bourgeois economists however are not all agreed on what exactly these “special qualities” are that are supposed to explain wealth inequalities. These “special qualities” that supposedly explain a person’s being wealthy must be independent of the fact of that person’s being wealthy, if this explanation is to have logical soundness. In a capitalist economy for instance capital accumulation occurs, and hence wealth increases…

The idea is an old one, but the Hungarian economist Janos Kornai clearly conceptualized it, by drawing a distinction between a “demand-constrained system” and a “resource-constrained system”. A demand-constrained system is one where employment and output in the system are what they are because of the level of aggregate demand is what it is; if the level of demand increases then output and employment in the economy will increase, with very little increase in the price-level. By contrast, a “resource-constrained system”, which can also be called a “supply-constrained system”, is one where an increase in the level of aggregate demand,…

Even as the growth rate of the Indian economy is slowing down, and the index of industrial production actually showing negative growth for three consecutive months, August to October (over the corresponding months a year ago), the inflation rate in the economy has started accelerating. Significantly, the acceleration in inflation has been the sharpest precisely during these very months when the contraction in industrial output has been the most pronounced. India’s retail price inflation for the month of November 2019 (over November 2018) was 5.54 per cent. The inflation rate so calculated has been rising every month since January 2019,…

When income growth slows down in an economy, so does the growth of tax revenue within the given tax regime. Since the government has certain expenditure obligations, to meet these obligations it has to either impose additional taxes or expand its fiscal deficit. Enlarging the fiscal deficit in such a situation, which was the typical response everywhere under post-war capitalist dirigisme, has the additional effect of ensuring that one component of demand, namely that arising from government spending, remains unchanged, even as the economy is otherwise slowing down, thereby checking this slowdown itself. This was referred to in economics text-books…

A unique feature of Jawaharlal Nehru University is its student composition. A substantial proportion of students come from socially and economically underprivileged families; and yet there is considerable social inter-mixing among students, made possible perhaps by campus politics which breaks down insularities. JNU’s having a large proportion of impecunious students is the result of major student struggles in the past. One of the first events I had encountered when I joined JNU in 1973 was a student strike over admissions policy. The students had then ensured not only that applicants got extra points for social, economic and regional deprivation, but…

“Mainstream” economics does not appear to understand the functioning of the bourgeois economic order; and nowhere is this more evident than in matters relating to fiscal policy. It holds to this day that a fiscal deficit “crowds” out private investment by reducing private borrowing. This presupposes that there is a fixed pool of savings in the economy in any period, of which if the government takes more (for meeting a fiscal deficit) then a correspondingly lesser amount is left for the private sector leading to a reduction in private investment. The fallacy in this argument is that there is no…

The National Statistical Office (NSO) has decided not to release the quinquennial survey data on consumer expenditure for 2017-18. This is because these data, leaked by The Business Standard (Nov.15) show a drop of 3.7 percent in real per capita consumer expenditure between 2011-12 and 2017-18, from Rs.1501 per month to Rs.1446 per month (at 2009-10 prices). An actual drop in per capita consumer expenditure is an extremely serious matter. Such a drop has occurred for the first time in over four decades; the previous occasion when a drop had occurred was in 1972-73, when a poor harvest had combined…