April 12, 2026
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Two Fractures Effected by Neo-Liberalism

Prabhat Patnaik

The Indian government’s position on the US-Israeli war against Iran shows an unbelievable degree of pusillanimity. India attended the recent meeting of about fifty countries called by the U.K. where Iran was strongly criticised for closing the Strait of Hormuz, but not a word was uttered against the US-Israeli aggression on Iran. Likewise, India was one of the sponsors of a resolution at the UN General Assembly which criticised Iran for attacking other countries in the Gulf (though Iran was attacking only the American military bases located in those countries); but again not a word was uttered in that resolution condemning the US-Israeli aggression on Iran. It is also noteworthy that India took several days before expressing any grief over the assassination Iran’s supreme leader Ayatollah Ali Khamenei, and several weeks before expressing any shock over the dastardly killing of 175 innocent schoolgirls in Minab.

Such pusillanimity however is not confined to India: as many as 135 countries were co-sponsors of the dishonest and duplicitous UNGA resolution mentioned above, afraid that they would otherwise offend the Americans. In fact, apart from a handful of countries in the entire world, none has had the gumption to condemn unambiguously the blatantly illegal and immoral war unleashed by the US-Israeli combine against Iran. This is a matter for extreme concern, for the attack on Iran abrogates the concept of sovereignty of nations that had been the core concept in the struggle for decolonization and had underlain the entire post-colonial order; it destroys in other words the very rationale for decolonization.

This pusillanimity on the part of the third world countries is also a matter of great puzzlement: after all, these are countries that have had long and arduous anti-colonial struggles to achieve the status of independent and sovereign states; how can they remain silent when this very sovereignty is being violated in the case of a fellow third world state by the armed might of U.S. imperialism?

The answer to this question, no doubt complex, must nonetheless incorporate recognition of at least two fractures that neoliberalism has introduced into our world. One is the fracturing of the concept of the “nation” whose coming into being had been accomplished by the anti-colonial struggle. This concept of the “nation” had differed fundamentally from the European concept that had developed in the wake of the Westphalian Peace Treaties in at least three ways: first, it was inclusive and did not identify any “enemy within”; second, unlike European nationalism it shunned any imperial ambitions of its own, in the sense of having designs over the resources of distant lands; and third, it did not apotheosize the nation as standing above the people whose “duty” supposedly was to serve it.

The coming into being of this inclusive concept of the “nation” was in turn a reflection of the fact that the anti-colonial struggle was a multi-class struggle; and the dirigiste economic regime that was erected after independence, though it promoted capitalist development, also sought to put curbs on rampant capitalism in the name of achieving “national” development. This was in the interests of preserving its multi-class support base, which even the monopoly capitalists were not averse to at that time, since they had wanted a trajectory of development where the state exercised relative autonomy vis-a-vis imperialism. The existence of a large public sector was a part of this trajectory. Further, the policy of non-alignment pursued by these dirigiste regimes had complemented this quest for development in relative autonomy from imperialism. Michal Kalecki, the well-known economist, had erred in calling such regimes “intermediate regimes” and suggesting that the middle classes held decisive power in such regimes; but he had been right in identifying state capitalism (public sector) and non-alignment as the two most distinctive features of these regimes.

With globalization of capital, however, things changed. The domestic monopoly bourgeoisie integrated itself with globalized capital and abandoned its agenda of pursuing a development trajectory that was relatively autonomous of the metropolis. Sections of the upper professional and bureaucratic segments of society, keen to send their children to study and settle down in the metropolis, joined in as supporters of the neo-liberal regime that emerged under the aegis of this globalized capital. The landed rich too sought their fortunes within this new neoliberal order, which not only promoted rampant unrestrained capitalism, but came down heavily against workers, peasants, agricultural labourers, petty producers and the lower salariat. A schism was effected within the class alliance that had been forged in the course of the anti-colonial struggle.

It was no longer the “nation” against the metropolis that was in focus, but big capital including multinational capital against those social groups which stood in the way of instituting rapid “development” defined exclusively in terms of GDP growth-rates. The interest of big capital was, by a sleight of hand, identified as “national interest”, and the duty of all classes was to promote it. This shift in the meaning of the term “nation” meant in effect a fracturing of the “nation” whose coming into being was the desideratum of the anti-colonial struggle. Freedom of the “nation” from imperialist domination, far from being the over-riding objective, was no longer even a desired or a relevant objective for the government within a neoliberal setting.

This is the first instance of “fracturing” referred to above. Because of this fracturing, the criterion on the basis of which the government of a neoliberal regime takes decisions is not whether a particular stance defends national sovereignty, but whether it promotes the material interests of big capital which are considered identical with those of the “nation” in its new meaning. Siding with the US-Israeli alliance appears on balance more advantageous than standing with Iran, the victim of aggression, from the point of view of the interests of big capital in countries of the global South; this would go some way to explain the deafening silences, mentioned earlier, in the UNGA and other resolution.

There is also a second “fracture” brought about by the neo-liberal regime. While the neoliberal regime is “sold” to the global south as ushering in export-led growth that would bring about a higher GDP growth-rate for all countries compared to the earlier dirigiste regime, this claim is completely false. Since the growth rate of aggregate world demand does not increase when more countries pursue an export-led growth strategy, the neo-liberal regime that generalizes this strategy among all countries is in effect forcing them to engage in Darwinian competition against one another, that is, to pursue a “beggar-thy-neighbour” strategy.

Some countries’ higher growth-rate than before under the export-led growth strategy, it follows, must be at the expense of other countries that now experience lower growth-rate than before. Countries engaged in a race to outdo one another can scarcely be said to be “co-operating” with one another. The effect of a general pursuit of the neo-liberal strategy therefore is a de facto abandonment of non-alignment, of a trajectory where countries of the global South stood with one another to face up to imperialism. Now, countries of the global South, each obsessed with achieving higher GDP growth and hence, within the neo-liberal paradigm, obsessed with drawing in larger metropolitan investment for this purpose, would rather curry favour with imperialism in order to outdo their neighbours. This leads to a fracturing of the non-aligned movement, which is the second fracturing we mentioned earlier.

The silence of most countries of the global South in the face of the US-Israeli aggression on Iran, which may appear puzzling at first sight, is not so puzzling after all. Neo-liberalism has been at work for quite some time in subverting both the concept of the nation and the concept of non-alignment, abandoning the anti-imperialist core that characterized these concepts, and substituting in their place alternative concepts that prioritize the task of currying favour with imperialism over everything else. The outcome of this process is what we see today.

Capitalism is invariably hostile to any collective praxis against it, even if this collective praxis takes the form of just trade union action. It believes in atomising economic agents. Neoliberal capitalism which represents a return to unrestrained and uncontrolled capitalism once more brings to the fore this tendency towards the atomization of economic agents, through a break-up of the class alliance that had participated in the anti-colonial struggle, and through a subversion of the non-aligned movement that had stood for collective opposition by countries of the global South to imperialist hegemony.

It is for the people of the global South, not the governments currently promoting the interests of the ruling big bourgeoisie, to extend solidarity to the people of Iran; the struggle of Iran against the US-Israeli alliance is of crucial importance for recovering the sovereignty of the global South.