Economic crisis: Why it suits neoliberals to point fingers solely on demonetisation 'shock' -Prabhat Patnaik

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published Published on Sep 14, 2019   modified Modified on Sep 14, 2019

The roots of the present economic slowdown squarely lie within the neoliberal trajectory, which has led to a crisis of overproduction. Demonetisation and ‘hasty’ GST only aggravated it.

With former prime minister Manmohan Singh resurfacing on the political landscape and articulating once more the orthodox neoliberal position, one can now clearly discern three distinct perspectives on the current economic slowdown.

The first is the orthodox neoliberal position that Singh has now articulated. This states that the crisis is a consequence not of the neoliberal policies that the country has been following since 1991, but of completely extraneous factors, such as demonetisation and the “hasty manner of introducing the Goods and Services Tax”, for which the Narendra Modi administration is squarely responsible. Singh called the crisis “man-made”, i.e, a result of human error, arising from a lack of judgement and understanding, because of which such extraneous jolts to the system were administered, rather than of any immanent tendency within the neoliberal trajectory itself.

The conclusion that would follow from this perspective for overcoming the crisis is to keep pursuing the neoliberal trajectory, but to refrain from administering such shocks to the system, by making a habit of consulting “thinking people” on economic matters.

This position does not specifically adduce any deficiency of aggregate demand as underlying the crisis, and hence does not see any specific need to inject demand into the system, not even by way of the sort of basic income scheme that the Congress party itself had come up with on the eve of the 2019 Lok Sabha elections. The Nyaya Scheme, as it was called, had visualised giving Rs 6,000 per month to each household within the bottom quintile, which would come to about five crore households. Of course, how the scheme was to be financed, how the beneficiaries were to be identified, how inter se equity among the poor was to be ensured, were all left unclear. The scheme was more an expression of intent than a worked out proposal.

Please click here to read more., 13 September, 2019,

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