Prabhat Patnaik’s Blog

Donald Trump’s recipe for reviving employment in the U.S. economy is to impose restrictions on imports from other countries. If at the same time he had taken steps to increase the level of aggregate demand in the U.S. in other ways, such as through increasing State expenditure financed by a fiscal deficit, then restricting imports from other countries would not lead to a reduction in the magnitude of such imports in absolute terms. It would not, in such a case, cause any unemployment in other countries for the sake of boosting employment in the U.S. Put differently, it would not…

In his speech to BJP workers in Delhi after the Assembly election results had been declared, Narendra Modi announced that his policy henceforth would be to empower the poor by providing them with opportunities, instead of handing out doles to them, which, he believes, is what the various “pro-poor” welfare programmes amount to. Newspapers were quick to underscore, and in general laud, this shift in approach from “welfarism” to “development”. Since government policy is set to reflect this shift from now on, its implications are worth examining. Nobody obviously prefers “doles” to development, neither the recipients of these “doles” nor…

Perhaps no other public policy debate in post-independence India has seen as much of an “inversion of reason” on the part of the government as the demonetization debate. When critics were pointing, on the basis of government statistics themselves, to the palpable failure of the demonetization measure to achieve its purported objective, which was to cripple the black economy, the government kept harping, in its justification, on the extraordinary “boldness” of the move. Its position in effect amounted to saying that any move, no matter how irrational, is justified if it involves “courage”, i.e. invokes “shock and awe”, which was…

Finance capital is always opposed to the use of fiscal measures for stimulating an economy. This is because any such fiscal stimulation undermines the social legitimacy of capitalism, and especially of that segment of it which constitutes the world of finance and which is peopled with “functionless investors” in Keynes’ words or of “coupon clippers” in Lenin’s words, i.e. of entities that play no role in the production process. If State intervention comes to be seen as necessary for stimulating the economy, then the question may arise in the public mind: why do we need all these entities? Why does…

Professor Amartya Sen in his new book Collective Choice and Social Welfare which is a considerably expanded and updated version of his 1970 book with the same title, emphasizes that democracy must be understood as “government by discussion”. The idea of democracy being “government by discussion” really belongs to John Stuart Mill, though this particular phrase was coined by Walter Bagehot. The appeal of the idea lies in the fact that if government decisions are taken after public deliberations, then their opaqueness disappears; associated with it is a narrowing of the gap between those who “govern” and those who are…

The same term is often employed by different people with different meanings, and this can be a source of immense confusion. The World Bank has done this to good effect in the past, taking over terms that are being used in a particular sense, especially by the Left, and using them in a very different sense, in order to create deliberate confusion and exploit in some way the sympathetic feeling that the term had attracted from people in its initial usage. “Structural adjustment” is a prime example of such appropriation by the World Bank. In its initial usage it had…

The Budget estimates, which have generally become somewhat suspect of late, are particularly meaningless in the case of the 2017-18 Budget for two obvious reasons: first, the early presentation of the Budget means the availability of that much less information for the current year, upon which the Budget is based; and second, the draconian demonetisation that has occurred, while certain to pull down the GDP growth rate (even the Economic Survey concedes that), makes any precise prediction impossible. Let us therefore look at the broad strategy of the Budget rather going into its numbers in any detail. One obvious thing that…

The name of Amitava Bose who passed away in Kolkata on January 13 may not be known to many people outside of a small circle of scholars, students, and friends, but he was in formal terms the finest macro-economist in the country, and among the best anywhere in the world. My colleagues at JNU tell me that he was also, in formal terms, the finest micro-economist in the country, and also the finest in every other branch of economic theory. I can well believe what they say, but my direct first-hand knowledge relates to his intellectual prowess in the realm…

India’s anti-colonial struggle was not just about getting independence from foreign rule. In fact, this struggle would not even have succeeded if it had been only about that. It was simultaneously, and indeed had to be, an effort to forge a new nation, of a sort that was not only unprecedented in modern world history (since the earlier emergence of nations in Europe had been part of an imperialist project which the anti-colonial struggle did not propose to emulate), but also represented, conceptually, a transformation of the country from a caste-ridden unequal society to one characterized by a fraternity of…

The demonetization of 86 percent of the currency of the country, a virtually unprecedented  measure anywhere in the world, has brought immense hardship to the working people of the country, and will damage their living standards permanently (since the Modi government plans not to replace the entire value of the demonetized notes by printing new ones). Many however believed that it was a step being taken for the greater social good, for achieving certain important social goals. Three of these goals were mentioned by the government from time to time: to attack black money, to replace counterfeit notes, and to…