ECONOMIC NOTES

Understanding Inflation

RULING class offensives against the labouring poor in conditions of economic crisis are typically sought to be justified by advancing theories that attribute the crisis to the labouring poor themselves. A theoretical exercise to justify an attack on the labouring poor is on at present, with regard to the inflation that has been raging in the country.

SHAMELESS PROPAGANDA

THE news was splashed everywhere: India’s GDP in the first quarter (April-June) of  2014-15 had increased at the rate of 5.7 percent over the corresponding quarter of the previous year, and that this was the highest quarterly growth rate recorded for the past two and a half years. The growth rate for the previous quarter (over the corresponding quarter a year ago) was only 4.6 percent; and the growth rate for the first quarter of 2013-14 (over the corresponding quarter a year ago) was only 4.7 percent.

“Depending On the State”

RAJASTHAN chief minister Vasundhara Raje is planning to reduce several government schemes of social support to the poor because she says that the “people should not become too dependent upon the State”. If she was only re-casting the schemes, or getting rid of some schemes to put in place others with similar intent but greater effectiveness, or removing support to the poor in one form to provide it in another form, then her proposals might merit scrutiny; and a discussion at an empirical level might ensue on which of the alternatives would be more effective.

The Case of the Argentine Debt

WHAT is happening to Argentina’s debt at the present moment is instructive for all. In the 1990s when Carlos Menem was the president of Argentina, his government tried what it thought was a neo-liberal masterstroke. It kept the value of the Argentine currency pegged to the US dollar (in the ratio of 1:1) through what is called a “currency board” arrangement, in the hope that this would keep “investor confidence” high in that country.

The Resurrection of Orthodoxy

THE social importance of the capitalist class arises from the fact that the level of activity and employment in a capitalist economy depends upon the “state of confidence” of the capitalists (or what Keynes had called their “animal spirits”). Marx had theorised that the capitalists, competing against one another (a competition or “rivalry” that does not disappear even when they collude), are caught in a Darwinian struggle where they are compelled to accumulate.

THE BRICS BANK

ON July 15, the five BRICS countries, Brazil , Russia, India, China, and South Africa formally created a New Development Bank at Forteleza, Brazil, which would be headquartered in Shanghai and would have an Indian as its first president. It would have a capital base of $50 billion to start with, contributed by the five governments, and would provide development funding to all governments for infrastructure projects.

The Rise and Fall of The Global South

A PICTURE that was painted of globalisation went as follows: the real wages in the south are much lower than in the north, since the south is saddled with large labour reserves. In a world where capital is mobile, even if labour is not, capital from the north will shift the location of its production activity from the north to the south, to take advantage of these low wages, for meeting global demand.

UNION BUDGET 2014-15

FOUR things stand out about the union budget for 2014-15 presented to parliament on July 10. First, the figures it presents are palpably unreal. Second, the basic fiscal strategy it embodies consists in providing concessions to the better off segments of the population, viz., the corporate elite and the upper middle class, at the expense of the poorer strata. Third, it unfolds a roadmap for the future that involves a significant privatisation of the economy, both through a pervasive reliance on Public-Private Partnerships and also through a massive sale of public sector equity.

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