Prabhat Patnaik’s Blog

The French economist J B Say had believed that there could never be a problem of aggregate demand in any economy, that whatever was produced was ipso facto demanded. There could of course be too many safety-pins and too few blades, but other than such micro mismatches, there could never be too little demand for the aggregate output as a whole. This assertion which is called “Say’s Law” in economics is obviously an absurdity, because if it were true then there could never be an over-production crisis. Marx had pilloried Say’s Law, and in the 1930s J M Keynes and…

There is massive unemployment in the country that especially afflicts the youth; there is a huge and persistent inflation in food prices; there is acute and unprecedented rural distress; there is a crisis in the petty production sector; and income and wealth inequality has reached levels where the whole world is talking about it. One would have thought that a budget presented in the midst of all this would have shown some urgency, some boldness for tackling these issues. But no, not the 2024-25 budget presented by the NDA government to parliament on July 23. Neither in overall State spending…

In his opus The Wealth of Nations published in 1776 Adam Smith drew a distinction between the progressive state, the stationary state and the declining state. The progressive state was one where capital accumulation would be occurring at a rate faster than the growth of population, because of which wages would be high and population growing; in a declining state by contrast the opposite happened, while in a stationary state the capital stock and the population, and hence the labour force, was constant and so were the wages, but at a level lower than in the progressive state. Accordingly he…

The coming to power of governments led by fascists is either a reality or a threat today over large parts of the world. In Europe at present there are several countries where fascists are leading governments; France was on the verge of being added to this list, in which case it would have been the second major European power, after Italy, to have a fascist government. Had this happened, it would have been an event of historic significance, for France would then have had a fascist government for the first time after the Vichy government under Marshall Petain that had…

For the French elections which Emmanuel Macron has called in the wake of the impressive showing by the Far-Right in the European parliamentary polls, four parties on the Left, the Communists, the Socialists, the Greens, and France Unbowed (of Jean-Luc Melenchon), have come together to form a New Popular Front to take on the fascist challenge of Marine Le Pen. This development is of historic significance: the New Popular Front is reminiscent of the Popular Front of the 1930s in France that had been formed against the backdrop of the rise of fascism in Europe, especially of the Nazi take-over…

Poverty is taken to be a homogeneous phenomenon irrespective of the mode of production that is under consideration. Even reputed economists believe in this homogeneous conception of poverty. In fact, however, poverty under capitalism is entirely different from poverty in pre-capitalist times. Even if for statistical purposes poverty is defined as lack of access to a set of use-values that are essential for living irrespective of the mode of production, the fact remains that this lack is enmeshed under capitalism within a set of social relationships that are sui generis and different from earlier. Poverty under capitalism thus takes a…

The fundamental issue raised by Hollywood writers when they had gone on a strike against being replaced by artificial intelligence, somehow receded to the background after the resolution of that particular conflict; but it remains a fundamental issue. Much has been written about the various problems associated with the introduction of AI; but the one that concerns us here relates to the massive unemployment it would generate. This problem, it must be noted, relates exclusively to the application of AI under capitalist conditions; but, capitalism being the reality over much of the world, the threat of AI to the working…

There has been a significant diffusion of production occurring in the world economy. Many call this phenomenon a shift from a US-led world economy to a “multipolar world economy”, but no matter what one thinks of this description, the fact of diffusion is indubitable. In 1994 for instance the G-7 countries (US, UK, Germany, France, Japan, Italy and Canada) produced 45.3 per cent of world output while the BRICS countries (Brazil, Russia, India, China and South Africa, together with new members Iran, the UAE, Egypt and Ethiopia) produced 18.9 per cent; by 2022 however the ratios had become 29.3 and…

A Distinction is drawn in economics between demand-constrained systems and resource-constrained systems (which for simplicity and symmetry we shall call supply-constrained systems). In the former, an increase in output can occur if there is a rise in aggregate demand without causing any scarcity-induced inflation; in the latter, output is constrained either by capacity being fully used up, or by the scarcity of some critical input or of foodgrains or of the labour force, so that a rise in aggregate demand, instead of raising output, simply causes scarcity-induced inflation. Capitalism normally, that is, except in war times, is a demand-constrained system,…

The current protests in US university campuses demanding “divestment” from firms linked to Israel’s military machine, are reminiscent of the protests that had swept these campuses in the late sixties and early seventies demanding an end to the Vietnam war. There is however a major difference: the US had then been directly involved in the war, while today it is not. This had meant a draft then in the US while today there is none, which makes the current student protests completely free of even a shadow of self-interest. By the same token, direct US involvement in that war and…