Bereft of Macroeconomic Vision

THOUGH finance minister Nirmala Sitharaman laboured for well over two hours when delivering her budget speech, it is likely that the aspect of the speech that will receive popular attention would be the restructuring of income tax slabs and reduction in rates that would benefit the tax paying middle class. That was obviously also the intention of the exercise.Budget 2021-22 was being presented at a critical time for the economy, with growth decelerating sharply, and evidence of adversity not just in the informal economy but in the corporate sector as well.

Capitalism, Socialism and Over-Production

THESE notes are meant to clarify a point made earlier (Peoples’ Democracy, June 30, 2018) about the erstwhile socialist economies not having over-production crises as capitalist economies do.It is in the nature of capitalism to have “over-production crises”, i.e., crises arising from “over-production” relative to demand. “Over-production” does not mean that more and more goods keep getting produced relative to demand, so that unsold stocks keep piling up.

Budget 2020-21: Short-Term “Fixes” Endangering the Economy

THE budget figures these days mean very little. The difference between what the budget provides and what actually happens does not come to light even after a time-lag of two years, while earlier two years were the limit. And knowing this, the government provides figures in the budget which are extravagant and hence meaningless, but look pretty. What is remarkable about the 2020-21 budget however is that notwithstanding massive liberties taken with figures, this budget still has been so non-descript that hardly anyone outside of government has had a kind word to say about it.

Layers within the Corporate-Financial Oligarchy

MARXISM teaches us that every totality is composed of elements which are different and hence among whom there are contradictions. Even when the totality is conceptualized as a totality, there must be an implicit awareness of these contradictions. This injunction should not be forgotten when we study the political economy of authoritarian or fascistic regimes.Marxists have for long seen such regimes as being based on the solid support of monopoly capital; indeed this is crucial for their coming to power.

India’s shameful record on wealth inequality

WEALTH data are quite unreliable; and wealth distribution data even more so.

Inheritance and Bourgeois Ideology

IF a head-load worker were to ask a bourgeois economist “Why does Ambani have so much wealth but I do not?”, that economist’s answer would be that Ambani has certain “special qualities” which the headload worker lacks. Bourgeois economists however are not all agreed on what exactly these “special qualities” are that are supposed to explain wealth inequalities.These “special qualities” that supposedly explain a person’s being wealthy must be independent of the fact of that person’s being wealthy, if this explanation is to have logical soundness.

Demand-Constrained Versus Supply-Constrained Systems

THE idea is an old one, but the Hungarian economist Janos Kornai clearly conceptualised it, by drawing a distinction between a “demand-constrained system” and a “resource-constrained system”. A demand-constrained system is one where employment and output in the system are what they are because of the level of aggregate demand is what it is; if the level of demand increases then output and employment in the economy will increase, with very little increase in the price-level.

Demonetisation and the Question of Bank Credit

THE demonetisation of currency notes of Rs 500 and Rs 1000 denomination in November 2016 suddenly brought a large amount of cash to the coffers of the banks. Since the banks had to pay interest on the deposits that the public was forced to make with them, they also had to use this cash in a manner that would earn them some income; otherwise its lying idle in their tills would erode their profitability.

The Rise in Inflation Rate

EVEN as the growth rate of the Indian economy is slowing down, and the index of industrial production actually showing negative growth for three consecutive months, August to October (over the corresponding months a year ago), the inflation rate in the economy has started accelerating. Significantly, the acceleration in inflation has been the sharpest precisely during these very months when the contraction in industrial output has been the most pronounced.India’s retail price inflation for the month of November 2019 (over November 2018) was 5.54 per cent.

The Perversity of the Neo-Liberal Fiscal Regime-II

THE second way, apart from defrauding the states of their legitimate share of resources, in which the centre is attempting to cope with the fiscal squeeze, which it has become subject to under the neoliberal regime, is by privatising a whole range of public sector enterprises.Not a day passes without the government announcing some measure of privatisation.

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Peoples Democracy

ECONOMIC NOTES