by Utsa Patnaik
Not only were the two nationalisms fundamentally different in their objectives, but they differed in their nature as well. The nationalism that came into vogue in Europe in the aftermath of the Treaties of Westphalia, which also saw the beginning of the imperial project with Cromwell’s conquest of Ireland, was not inclusive: it always located an “enemy within,” the Catholics in Northern Europe, the Protestants in Southern Europe, and the Jews everywhere. It also perceived the nation as “standing above the people”: the nation was not to serve the people, rather the people had to make sacrifices for the nation.
By contrast, the concept of nationalism that underlay the anti-imperialist struggle over much of the third world was inclusive: it had to be inclusive in order to mobilize an entire people against the might of imperialism. It did not entertain imperial ambitions; on the contrary, it had to have fraternal links with anti-imperialist struggles elsewhere, and therefore could not have ambitions of dominating them. Usually it developed a kind of “freedom charter” (such as the Karachi Congress Resolution in India in 1931), which defined how the new nation would serve the people’s interest, instead of demanding that the people become subservient and only make sacrifices for a metaphysical entity called the “nation.” In every single respect, then, anti-imperialist nationalism in the third world differed from the post-Westphalian nationalism of Europe, which was so blatantly reactivated at a later date by finance capital for its own ends, in a world of inter-imperialist rivalry.
To be sure, within the third world countries themselves the nationalism of the anti-imperialist struggle had to contend with a European-style exclusionary, anti-minority, and aggrandizing nationalism. This nationalism was not anti-imperialist but was directed against a religious, ethnic, or linguistic minority at home, and was usually encouraged by imperialism to counter anti-imperialist nationalism. The Hindutva nationalism in India, whose votaries were conspicuous by their absence from the anti-colonial struggle, is an obvious example. The struggle between these two nationalisms, an anti-imperialist and an exclusionary nationalism within most countries of the third world, still continues; and in the current era of globalization, the aggrandizing and anti-minority nationalism has gained the upper hand precisely because anti-imperialism has been rendered temporarily helpless by the hegemony of international finance capital.
The revival of the concept of nationalism that underlay the anti-imperialist struggle and that is not reactionary as is alleged, on the basis of a new agenda that transcends neoliberaism, is essential for reenergizing an inclusive concept of the nation. For this, the welfare of the people must be its main preoccupation, thereby halting the process of disintegration that afflicts much of the third world. To debunk it as “reactionary” is a gross error, particularly because the only force capable of carrying forward such a new agenda in today’s world is the left, and its political leadership should prevent the development of this “nationalism” in a direction that is anti-internationalist.
The left can play this role of reviving an inclusive nationalism around an agenda that can constitute a new freedom charter, and make this nationalism a bridge to internationalism, as the Bandung spirit in an earlier period had attempted, only if it overcomes its ambiguity toward globalization by distinguishing between the different concepts of nationalism. Nationalism in the European context may carry unsavory connotations, but this is not universally true.
The Pitfalls of Productionism
A second reason for the ambiguity toward globalization among sections of the left, especially within the third world, is the view that it has brought about a massive development of productive forces over much of the third world, measured in terms of the growth rate of the Gross Domestic Product, and is still capable of doing so. Since a mode of production according to Marxist understanding, it is argued, becomes historically obsolete and ripe for transcendence only when it becomes a fetter on the development of the productive forces, the view that globalization, and hence by implication capitalism itself, has become historically ripe for transcendence, is erroneous.
This view is often expressed alternatively, in mundane parlance, as follows: when globalization has brought enormously high growth rates, indeed unprecedented growth rates, to at least some countries of the South, for the people in such countries to demand de-linking from globalization would be nothing short of folly. It would be like chopping off the branch on which one is comfortably ensconced. And people in other countries of the South should await higher growth from globalization rather than de-link from it.
The first problem with this argument is that the historical obsolescence of a mode of production has nothing to do with the growth rates of the Gross Domestic Product. Economic historians have pointed out that in the period before the First World War Russia was experiencing high growth rates, with its industrial output rising by 50 percent over a period of merely five years. As far as world capitalism was concerned, the Victorian and Edwardian booms had brought high growth rates. And yet Lenin had no compunctions about calling capitalism “moribund” and asking for its overthrow at its weakest link at the time, namely Russia.
The reason was that he saw the system in its monopoly phase as being punctuated by devastating wars as a consequence of inter-imperialist rivalry, where the workers of the belligerent countries were offered a stark choice: either to kill fellow workers across the trenches or to turn their guns against the system that forced them to do so.3 Exactly the same choice was offered to the people recruited from the colonies to fight on behalf of their metropolitan “masters.” Or, in Rosa Luxemburg’s words, the system had come to a pass where the choice was between socialism and barbarism. The historical obsolescence of the system was established by these outstanding Marxist writers not in terms of GDP growth rates, but in terms of the fact that it had brought mankind to a state of barbarism, from which socialism alone could rescue it.
This distinction between a phase of capitalism when it is historically progressive and a phase when it is historically regressive and hence obsolete is not very apposite, especially when one looks at capitalism in its world setting. Capitalism has always developed the productive forces on the one side and created growing absolute poverty on the other. Its “progressive” and “regressive” roles have always gone together, and not sequentially in phases. The earlier accepted proposition that the distinction between the two phases corresponds to one between pre-monopoly or free-competition capitalism and monopoly capitalism, though it appeared compelling at the time it was put forward, that is, in the context of imperialist wars, would scarcely appear convincing today.
The distinction between the two phases, even if interpreted in terms of the growth of productive forces as measured by GDP growth rates, will not pass muster, since the so-called Golden Age of Capitalism occurred, after all, in a period that belongs to the monopoly phase. Even if the distinction between the two phases is interpreted in terms of capitalism’s descent into barbarism in one phase compared to the other, no temporal division of its history is possible on these lines. Capitalism was always barbaric in the colonies in the pre-decolonization period. And it continues to be barbaric even today, despite the absence of formal colonies, because of its ruthless imposition of income deflation on the working people of the third world.
The overthrow of capitalism for achieving human freedom comes on the agenda when theory has unraveled the deadly logic of its working, when the need for its overthrow for achieving human freedom has become apparent. True, some periods are more propitious for this purpose than others, but that is quite different from postulating a binary between a progressive phase and a phase of historical obsolescence. Our argument has been that the current period is a propitious one for the socialist project, because not only is capitalism at an impasse from which it does not appear as yet to find a way out, but also because, caught in this impasse, it is conjuring up the forces of fascism everywhere. This fascism, while it will not replay the history of the 1930s and early 1940s, will be siniste
r nonetheless because it will have an abiding presence. What we shall witness, in other words, is not necessarily wars and death camps, but a more or less protracted period of fascification of society, from which socialism alone can rescue mankind.
We have called this idea of judging the potential of capitalism in terms of the rate at which the productive forces are developing “productionism.” Left ambivalence toward globalization on the basis of a “productionist” argument is wrong in our view for two reasons. First, productionism itself is wrong, and the potential of capitalism cannot be judged on this basis. And second, the two-phase conceptualization of capitalism on the productionist criterion lacks any substance. Of course, such a two-phase conceptualization based on any other criterion also lacks any substance. But productionism is usually the criterion in terms of which this twofold conceptualization is done, and de-linking from globalization is opposed typically by invoking this criterion. If productionism is inapposite for judging the potential of capitalism, then it follows that the ambiguity with regard to globalization and the opposition to de-linking from it represents an erroneous trend within the left.
Unless the left overcomes this ambiguity toward contemporary globalization and mobilizes the working people around an agenda of transcending the neoliberal order by de-linking from it, and thereby commencing a journey toward socialism, mankind will be long mired in crisis and fascism.
Notes
1 A MONEY-USING ECONOMY
1. While this is clear and obvious, the theoretical apparatus that Keynes had developed, around the concept of marginal efficiency of capital, to give expression to this, is logically flawed. The marginal efficiency schedule in competitive conditions would not slope downwards; the reason given by Keynes for it, namely that the cost of producing capital goods at the margin increases as investment increases, is invalid, because the marginal efficiency of capital being an ex ante concept, its sloping down for this reason can happen only under oligopsony. But while the Keynesian apparatus is wrong, this does not negate the proposition that greater liquidity preference must cause a fall in the production of investment goods even under competitive conditions.
2. Prabhat Patnaik, The Value of Money (New York: Columbia University Press, 2009).
3. They are discussed in detail in ibid.
4. Nikolai Bukharin, Imperialism and the Accumulation of Capital, ed. Kenneth Tarbuck (London: Lane, 1971).
5. This distinction between accumulation and investment was drawn clearly in Paul Sweezy, The Theory of Capitalist Development (New York: Oxford University Press, 1942).
6. Karl Marx, Theories of Surplus Value, Part II (Moscow: Progress Publishers, 1968).
7. Roy Harrod, “An Essay on Dynamic Theory,” Economic Journal 49, no. 193 (March 1939).
8. Michał Kalecki, “Observations on the Theory of Growth,” Economic Journal 72, no. 285 (March 1962); Prabhat Patnaik, Accumulation and Stability under Capitalism (Oxford: Clarendon, 1997).
9. R. M. Goodwin, “The Non-linear Accelerator and the Persistence of Business Cycles,” Econometrica, Volume 19, No.1 (January 1951).
10. This argument was first advanced by Joseph Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1979, originally published in 1952).
11. It may be thought that though lowering the price to sell more may invite retaliation from rivals, firms may still do that if the overall demand for the good is price-elastic. But if the overall demand is price elastic then the original price itself would not have prevailed; it would have been lowered even in the absence of any innovation
12. Michał Kalecki, “Observations on the Theory of Growth,” Economic Journal 72, no. 285 (March 1962); Prabhat Patnaik, Accumulation and Stability under Capitalism (Oxford: Clarendon, 1997).
13. W. Arthur Lewis, Growth and Fluctuations 1870–1913 (London: Allen and Unwin, 1978).
14. Since Mv = pQ, it follows that with v, the income velocity of circulation of money, constant, ṗ/p must equal Ṁ/M - ̓/Q. The growth rate ̓/Q in turn can only equal the rate of growth of the labor force in “efficiency units,” as full employment is always assumed to prevail. This growth rate is called the “natural rate of growth.”
15. Joan Robinson, The Accumulation of Capital (London: Macmillan, 1956).
16. Michal Kalecki, The Theory of Economic Dynamics (London: Allen and Unwin, 1954)
17. Ashok Mitra, The Share of Wages in National Income (Bloomington: Indiana University Press, 1954).
18. Michał Kalecki, “Class Struggle and the Distribution of National Income,” Kyklos 24, no. 1 (February1971), republished in Selected Essays in the Dynamics of the Capitalist Economy 1933–1970 (Cambridge: Cambridge University Press, 1971).
2 MONEY IN SOME THEORETICAL TRADITIONS
1. Frank Hahn, Equilibrium and Macroeconomics (Oxford: Clarendon, 1984).
2. Robert W. Clower, “A Reconsideration of the Microfoundation of Monetary Theory,” Western Economic Journal 6, no. 1 (1967).
3. Clower’s lead has been followed by others, notably Bryce Hool, “Liquidity, Speculation and the Demand for Money,” Journal of Economic Theory 21, no. 1 (1979), in conceptualizing a transactions demand for money in a Walrasian world with an auctioneer.
4. David Ricardo, Works and Correspondence of David Ricardo, vol. 1, ed. Piero Sraffa (Cambridge: Cambridge University Press, 1951); Maurice Dobb, Theories of Value and Distribution since Adam Smith (Cambridge: Cambridge University Press, 1973). See also Marx, Theories of Surplus Value, Part I (Moscow: Progress Publishers, 1969).
5. Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, 2 Vols. (Indianapolis: Liberty Fund, 1981), 466.
6. Dobb, Theories of Value and Distribution since Adam Smith.
7. Ricardo, Works and Correspondence of David Ricardo, vol. 1.
8. Joan Robinson, Economic Heresies (London: Palgrave Macmillan, 1972).
9. Karl Marx, A Contribution to the Critique of Political Economy (London: Lawrence and Wishart, 1971).
10. Joan Robinson, The Accumulation of Capital (London: Macmillan, 1956).
11. John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936).
3 THE MARXIAN SYSTEM AND MONEY
1. The discussion that follows is based on Prabhat Patnaik, The Value of Money (New York: Columbia University Press, 2009).
2. Michał Kalecki, Theory of Economic Dynamics (London: Allen and Unwin, 1954).
3. Nicholas Kaldor, “Monetarism and U.K. Monetary Policy,” Cambridge Journal of Economics 4, no. 4 (December 1980).
4. Ashok Mitra, The Share of Wages in National Income (Bloomington: Indiana University Press, 1954) provided an argument for why money wage increase would lead to real wage increases even within a broadly Kaleckian framework without going into the question of the value of money.
5. The contradiction between these two properties of a money-using economy and an isolated capitalist sector is discussed at greater length in Prabhat Patnaik, “‘Capital’ and the Labour Theory of Value,” in Reading ‘Capital’ Today, Ingo Schmidt and Carlo Fanelli, eds. (London: Pluto 2017).
6. For a discussion of tax-financed appropriation of surplus from India under colonial rule, see Utsa Patnaik, “Revisiting the ‘Drain,’ or Transfers from India to Britain in the Context of Global Diffusion of Capitalism,” in Agrarian and Other Histories, Shubhra Chakrabarti and Utsa Patnaik, eds. (Delhi: Tulika, 2017), and our chapter 10 below.
7. This, to recapitulate, means that starting from any initial situation that is not on the warranted growth path, which itself has a knife-edge property, the economy would tend to converge to a stationary state. This is a property of the system, so that any observed positive trend, through cycles, can only be explained by exogenous stimuli.
4 CAPITALISM AND ITS SETTING
1. Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976, originally published in 1951).
2. R
. F. Harrod, “An Essay on Dynamic Theory,” Economic Journal 49, no.193 (March 1939).
3. This argument can be formally expressed as follows. Denoting the level of capacity utilization in period t by ut which is a pure number (Ot/Ktß), with O and K denoting output and capital stock respectively and β the technological output-capital ratio, the desired level of capacity utilization by u*, and assuming that a ratio δ of capital stock “dies” every period, we can say
The output in any period is determined by the multiplier, that is:
Ot = It. / s … (ii)
where s is the (constant) savings ratio. Equations (i) and (ii) yield two possible steady-state solutions or uniform trends, which, expressing (I-δK)/K as i, are given by: (a) i = 0; and (b) i = u* sß – δ. The first of these trends is a stable trend, while the second, analogous to Harrod’s “warranted growth rate,” is an unstable trend.
4. This conclusion, which draws on Rosa Luxemburg’s argument, was derived by Michal Kalecki, “Observations on the Theory of Growth,” Economic Journal (March 1962), for a range of investment functions which take into account the sensitivity of investment to demand.
5. Josef Steindl, Maturity and Stagnation in American Capitalism.
6. W. Arthur Lewis, Growth And Fluctuations 1870–1913 (London: George Allen and Unwin, 1978).
7. P. A. Baran and P.M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
