Tuesday, July 26, 2016

Why continue with remedies that don't work?

In the last few days we have seen an outpouring of articles lauding the reforms of 1991. Now, Prabhat Patnaik, a Professor Emeritus at JNU in Delhi has written an angry, if incoherent, article criticising those reforms. He says that the reforms did not produce a 'retreat of the state' in favor of 'the market' but a change in the nature of the state." This means that instead of a state that apparently stands above all classes even while promoting capitalist development, and that protects traditional petty producers, including the peasantry and the workers, against encroachment from capital.....the 'reform regime' creates a state that becomes exclusively concerned with the interests of the globalised capital, and the domestic corporate-financial oligarchy aligned with it," he writes. So what is his solution? Increased taxes on the wealthy, price support for crops, easy creadit to farmers, quality education and health care. All these have been tried before under 'garibi hatao' campaign, which led to the crisis which led to the reforms of 1991, but even after 69 years of socialism India has the largest number of poor people in the world. He has special anger against the middle-class which has " emerged as a votary of the 'development' paradigm of the 'reform regime' and thrown its weight behind the corporate-financial oligarchy whose share of wealth and income has increased phenomenally under this regime." It is true that the number of rich people in India has grown but that is true for the rest of the world as well. A pathetic 3.2% of people in India are considered to be middle-class, of which 2.6% are in the lower middle, with an income of $10-20 per day, and 0.6% are upper middle, with an income of $20-50 per day. Anyone with an income of $20 per day, that is $7,300 per year, would be considered very poor in any western country and is lower than 'dibao', that is minimum income, in China. What is puzzling is what the professor is demanding. Does he want his favourite peasants and workers to stay as the proletariat or does he want them to climb up the social ladder? As the poor climb out of poverty they will inevitably become middle-class. The number of people who go from poverty to billionaire can be counted on the fingers of one hand, which is why they make such good stories. For the rest, it takes 2-3 generations of education and very hard work to make it to the upper middle-class category. The professor wants job creation but creating jobs needs investments, investments need capital and capital always looks for profits. That is the nature of the beast. The future is with robots, which are capital intensive but do not create jobs for humans. There is only one solution and that is to reduce the number of humans. There is still time but not much. Professors should devote their time to find out how best to achieve that. 

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