April 23, 2012
Economist Prabhat Patnaik on the Global Crisis
What Should People Fight For?
After an engaging half-hour interview with
India’s pre-eminent Marxist economist during a conference at New York
University, I told a friend about my one-on-one time with Prabhat
Patnaik.
“There are Marxists in India?” came the bemused response. “I thought India was the heart of the new capitalism.”
Indeed, we hear about India mostly as a rising economic power that is
challenging the United States. While there certainly are no shortages
of capitalists, there are still lots of Marxists in India, as well as
communist parties that have won state elections. Patnaik represents the
best thinking and practice of those left traditions — both the academic
Marxism that provides a framework for critique of economics, and the
political Marxism that proposes public policies — which is why I was so
excited to talk with him about lessons to be learned from the current
economic crisis.
In the interview, conducted during a break in the NYU Institute for Public Knowledge’s “Futures of Finance” conference,http://rethinkingcapitalism.ucsc.edu/ I
asked Patnaik two main questions: First, is there a “golden age” of
capitalism to which we can return? Second, can we ever expect ethical
practices from the financial sector of the global capitalist economy?
Before explaining why his answer to both questions is “no,” some
background.
Prabhat Patnaik started his academic career in the UK, earning his
doctoral degree at Oxford University and then teaching at the University
of Cambridge. He returned to India in 1974 to teach at Jawaharlal Nehru
University in New Delhi until his retirement in 2010. He’s the author
of several influential books, including The Value of Money,
published in 2008. Patnaik-the-politician served as Vice-Chairman of
the Planning Board of the state of Kerala from 2006-2011 and is a member
of the Communist Party of India (Marxist). He regularly writes on
economic issues in the Party’s journal and addresses trade union
meetings.
In the United States, where people believe Marxism was buried under
the rubble of the Berlin Wall and communism can only mean Soviet-style
totalitarianism, his political affiliations would guarantee a life on
the margins. But India’s political spectrum is considerably wider, and
left ideas have a place in the national political discourse there. (What an absolutely envigorating thought!) On
the world stage, Patnaik brings an unusual perspective: An experienced
economist with a history of political organizing; an Indian who is
engaged in the political debates of the West; a leftist who is not
afraid to critique the weaknesses of the left tradition.
The quixotic quest for a “golden age”
Ever since the financial meltdown of 2008, there’s been more and more
nostalgia in the United States — especially among liberals — for the
immediate post-WWII period, the so-called “golden age” of capitalism
during which profits and wages rose, and unemployment was low. This was
the achievement of Keynesianism, the philosophy that unwanted market
outcomes can be corrected through monetary and fiscal policy designed to
stabilize an otherwise unstable business cycle. Primarily through
“military Keynesianism” — massive spending on wars and a permanent
warfare state — the U.S. government helped stimulate the economy when it
went into inevitable periods of stagnation. That worked until about the
mid-1970s, when growth started to slow.
Whether or not that system was good for everyone (lots of people in
the Third World, for example, were not particularly happy with it), the
question remains: Can we go back to that strategy? Patnaik says that
golden age was necessarily short-lived, as the pressure for global
investment pushed nations to give up the ability to impose controls on
capital. This globalization of finance made national Keynesian policies
less relevant. At about the same time, steep increases in the price of
petroleum generated even more capital in the oil states, which went
looking for investment opportunities around the world.
Globalization — this concentration of capital moving freely around
the world — meant that no single nation-state could go up against
international finance. And with the global flow of goods, the large
“reserve army of labor” (the unemployed and under-employed) in places
like China and India meant that workers in the advanced industrial
countries had less leverage. So, productivity continued to rise, but
wages stagnated. Patnaik said it’s important to see the contemporary
crisis in that historical context.
“The collapse of the housing bubble in the United States is certainly
part of the problem but not the root cause of the problem today,” he
said. “The immediate crisis it touched off helps make the underlying
problem visible.”
If this financialization of the global economy, which has put so much
power in so few hands, is at the heart of the problem, the question is
clear: In the absence of a global state, who is going to control
international finance capital?
If capital is going to be concentrated, can we at least make it behave?
If the power of finance capital can’t be diminished, is there a way
to at least make it follow some sane rules to prevent the worst from
happening again? Short answer: No.
“It’s important to understand that capitalism is a spontaneous
system, not something that is always necessarily planned or controlled,”
Patnaik said. Because the reward for ignoring, evading, or getting
around rules is so powerful, the attempts to make capitalism follow
ethical norms are bound to fail.
“Keynesianism worked in a specific time and place, but capitalism
escaped Keynesianism,” he said. New rules will suffer a similar fate,
absent a force as strong as international finance capital to enforce the
rules.
Although Patnaik often talks in detail about the complex workings of the global economy,
he also articulates simple truths when that kind of straightforward
analysis is needed. In doing so, he often draws on aspects of Marx’s
analysis that the world tends to forget.
To make the point about the futility of talking about ethical norms
in capitalism, Patnaik pointed to Marx’s insight that a capitalist is
“capital personified.” Here’s the relevant passage from the first volume
of Marx’s Capital:
“[T]he possessor of money becomes a capitalist. … [A]nd it is only in so far as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations, that he functions as a capitalist, that is, as capital personified and endowed with consciousness and a will.”
What Marx described as “the restless never-ending process of
profit-making” and “boundless greed after riches” reminds us that as
actors on the economic stage we are less moral agents and more “capital
personified,” relentless in our restlessness and bound to believe in an
illusory boundlessness. Society might be able make some moral claims on
people with wealth if they were merely working in capitalism, but it’s
more difficult to find common moral ground with “capital personified.”
What should people fight for?
If we can’t go back to business as usual, and there’s no reason to
expect that new rules will solve our problems, what kinds of solutions
are possible? Patnaik said that neither of the two most obvious
responses to the financial crisis — creating a surrogate global state to
impose controls on finance, or “delinking” a nation’s economy from the
global finance system — are in the cards now. Even though capitalism is
in deep crisis, resistance to capitalism is not nearly strong enough to
produce movements that could make that possible.
Given his intellectual roots and political affiliation, it may seem
surprising that Patnaik argues for organizing to bring back of the
liberal welfare-state policies that developed in the advanced industrial
countries during the postwar period when Keynesian economics ruled.
“That is not about going back, which is impossible,” Patnaik said.
“We have to go forward with new ideas.” The call for a more robust
social safety net (protecting workers’ rights, unemployment insurance,
social security, health insurance, etc.) isn’t new, but such policies
can be a step toward new ideas, a transitional measure, he explained.
Rather than making those policies the final goal, as part of a
more-or-less permanent accommodation with capitalism, they should be
seen as a stepping stone toward radical change.
“We can work toward a reassertion of welfare state policies, not as
an end but as a vehicle toward greater justice, as a way of making
visible the inherent limitations of capitalism,” he said.
In additions to the limitations of capitalism, there also are
ecological limitations we can’t ignore, he said, which means the goal
can’t be raising India and China to material standards of the United
States. Patnaik recognizes the need to adjust older socialist goals to
new realities.
“The world simply has to be refashioned,” both in the Third World and
in advanced capitalist countries, and specifically in the United
States, Patnaik said, which means experiments in alternative ways of
living that are not based on material measures.
“This really is a spiritual/cultural question, about what it means to
live a good life,” he said, which should not be seen as foreign to
socialism. “Marxism shouldn’t be reduced to productionism. The goal of
socialism has always been human freedom, which is about much more than
material wealth.”
“Gandhi talked about the ethical demands of nature, but I don’t like
that phrase, being a socialist and anthropocentric,” Patnaik said with
the hint of a grin. “But we do have to live within the limits of
nature.”
The role of Marxism
It is easy to misjudge Patnaik from first impressions. Unlike many
intellectuals, Patnaik does not immediately thrust himself into a
discussion, and he’s soft-spoken both in conversation and from the
podium. But when he does speak, his passion for justice comes through
loud and clear. And, while Patnaik identifies very much as a communist,
he also is quick to poke at some of the tradition’s platitudes.
“I just came from the (Communist) Party Congress, and I keep
reminding everyone that they have to give up notions of a one-party
State, of democratic centralism (the Leninist notion that party members
are free to debate policy but must support the final decision of the
party),” Patnaik said. “Democratic centralism always leads to
centralism.”
If leftists reject the current dominance of finance in the world,
Patnaik said it’s important to reject any suggestion that a single
perspective or party should dominate.
“The hegemony of finance throttles democracy. The hegemony of finance
beats you into shape,” he said. If the goal is to resist that kind of
hegemony, then the approach of the old communist movement simply isn’t
relevant, Patnaik said, but socialist principles are more relevant than
ever.
“Any resistance has to be about opening up alternatives, opening up
critical thinking to imagine those alternatives,” he said. “The only way
to challenge that global regime is mass mobilization.”
Patnaik has no off-the-shelf solutions to offer, and it’s difficult
to reduce his thinking to slogans. At the age of 66, when many people
hold on tightly to what they believe will work, Patnaik doesn’t hesitate
to say, “It’s time to invent.”
Robert Jensen is a journalism professor at the University of Texas at Austin. He is the author of Getting Off: Pornography and the End of Masculinity (South End Press, 2007). He can be reached at rjensen@uts.cc.utexas.edu and his articles can be found online at http://uts.cc.utexas.edu/~rjensen/index.html.
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