Economist Prabhat Patnaik says moving back to an economic ‘golden age’ is impossible, so we must invent new solutions.



Austin, TX – 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 the 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, 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 was “no”, some background.

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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 to 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 leftist ideas have a place in the national political discourse there. On the world stage, Patnaik brings an unusual perspective: An experienced economist with a history of political organising; 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 has 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 stabilise an otherwise unstable business cycle. Primarily through “military Keynesianism” – massive spending on wars and a permanent warfare state – the US government helped stimulate the economy when it went into inevitable periods of stagnation. That worked until 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 globalisation 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.

Globalisation – meaning in this case, the 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 labour” (the unemployed and under-employed) in places such as 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 is 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.”

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If this financialisation 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 now on the cards. 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 organising to bring back 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 towards 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 towards 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 the material standards of the United States. Patnaik recognises 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.

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“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 were 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 that 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 mobilisation.”

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 and board member of the Third Coast Activist Resource Center in Austin, one of the partners in the community centre “5604 Manor“. His latest book is All My Bones Shake: Seeking a Progressive Path to the Prophetic Voice.

Follow him on Twitter: @jensenrobertw