Economics and Dishonesty Prabhat Patnaik
Economics is a subject where the ruling classes are forever trying to promote ideologically-motivated explanations in lieu of scientific ones. These explanations of course can be, and have been, fitted into an integrated totality of an alternative non-scientific theoretical structure that Marx had called “vulgar economy” as distinct from classical political economy. But even vulgar economy tries to cope systematically with observed phenomena in its own “vulgar” manner; what is infinitely worse is when observed phenomena are sought to be explained in an ideologically-motivated manner, but even this is done not consistently but opportunistically. That is when economics descends from…
The Triumph of the City? Prabhat Patnaik
The triumph of the City of London, the one square kilometre next to Liverpool Street station that houses the citadel of British finance, is complete. Not only did it get rid of one British prime minister, whom it distrusted, in the space of just 44 days, but even got a new one of its choice installed forthwith. Rishi Sunak is being called many things: the first British Asian prime minister, the first Hindu prime minister, and so on. These facts about him however are inconsequential; notwithstanding the hullabaloo in India over his appointment, these facts are mere trivia. What is…
Whatever Happened to Liz Truss? Prabhat Patnaik
The most intriguing question with regard to Liz Truss’ resignation as the prime minister of Britain after a mere 44 days in office is this: what is it about her economic programme that the “market” (read “finance capital”) found unpalatable? At its core after all was tax-cuts for the rich, which the “market” should have lapped up. True, the tax-cuts were to be financed through a fiscal deficit which the “market” generally does not like; but since the fiscal deficit was meant to finance transfers to the rich, and not any direct stimulation of aggregate demand by the State, there…
Hunger and Poverty Prabhat Patnaik
The Global Hunger Index (GHI) for 2022 has just come out, which shows India occupying the 107th position among the 121 countries for which the index is prepared (countries where hunger is not a noteworthy problem are left out of the index). India’s score on the hunger index is 29.1 which is worse than the score of 28.2 it had in 2014. (The lower the figure the less is hunger). One is so bombarded these days by official talk about India being among the fastest-growing economies of the world, India within sight of becoming a $5 trillion economy, and India…
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…