John
Maynard Keynes, though bourgeois in his outlook, was a remarkably
insightful economist, whose book Economic Consequences of the Peace
was copiously quoted by Lenin at the Second Congress of the Communist
International to argue that conditions had ripened for the world revolution.
But even Keynes' insights could not fully comprehend the paradox that
is capitalism.
In a famous essay ''Economic Possibilities for our Grandchildren'',
written in 1930, Keynes had argued: ''Assuming no important wars and
no important increase in population, the economic problem may be solved,
or be at least within sight of solution, within a hundred years. This
means that the economic problem is not, if we look into the future,
the permanent problem of the human race (emphasis in the original).
He had gone on to ask: ''Why, you may
ask, is this so startling? It is startling because, if instead of
looking into the future, we look into the past, we find that the economic
problem, the struggle for subsistence, always has been hitherto the
most pressing problem of the human race… If the economic problem is
solved, mankind will be deprived of its traditional purpose.'' He
had then proceeded to examine how mankind could fruitfully use its
time in such a world.
True, after Keynes had written there has been the Second World War,
but thereafter mankind has had six and a half decades without any
''important war'' of the sort that could interrupt what he had called
the ''era of progress and invention''. And the rate of population
growth has also not accelerated to a point that can be considered
to have invalidated Keynes' premise. And yet if we take mankind as
a whole, it is as far from solving the economic problem as it ever
was. True, there has been massive accumulation of capital, and with
it an enormous increase in the mass of goods available to mankind;
and yet, for the vast majority of mankind, the ''struggle for subsistence''
that Keynes had referred to has continued to remain as acute as ever,
perhaps in some ways even more acute than ever before.
To say that this is only because not enough time has passed, that
over a slightly longer time period Keynes' vision will indeed turn
out to be true, is facile. The fact that the bulk of mankind continues
to face an acute struggle for subsistence is not a matter of degree;
it is not as if the acuteness of this struggle for this segment of
mankind has been lessening over time, or that the relative size of
this segment has been lessening over time. We cannot therefore assert
that the passage of more time will lift everybody above this struggle.
Likewise, to say that while enormous increases have taken place in
the mass of goods and services available to mankind (the increase
in this mass being more in the last hundred years than in the previous
two thousand years, as Keynes had pointed out), its distribution has
been extremely skewed and hence accounts for the persistence of the
struggle for subsistence for the majority of the world's population,
is to state a mere tautology. The whole point is that there is something
structural to the capitalist system itself, the same system that causes
this enormous increase in mankind's capacity to produce goods and
services, which also ensures that, notwithstanding this enormous increase,
the struggle for subsistence must continue to be as acute as before,
or even more acute than before, for the bulk of mankind.
Keynes missed this structural aspect of capitalism. His entire argument
in fact was based on the mere logic of compound interest, i.e. on
the sheer fact that ''if capital increases, say, 2 percent per annum,
the capital equipment of the world will have increased by a half in
twenty years, and seven and a half times in a hundred years''. From
this sheer fact it follows that output too would have increased more
or less by a similar order of magnitude, and mankind, with so much
more of goods at its disposal, would have overcome the struggle for
subsistence. The reason Keynes assumed that an increase in the mass
of goods would eventually benefit everyone lies not just in his inability
to see the antagonistic nature of the capitalist mode of production
(and its antagonistic relationship with the surrounding universe of
petty producers), but also in his belief that capitalism is a malleable
system which can be moulded, in accordance with the dictates of reason,
by the interventions of the State as the representative of society.
He was a liberal and saw the state as standing above, and acting on
behalf of, society as a whole, in accordance with the dictates of
reason. The world, he thought, was ruled by ideas; and correct, and
benevolent, ideas would clearly translate themselves into reality,
so that the increase in mankind's productive capacity would get naturally
transformed into an end of the economic problem. If the antagonism
of capitalism was pointed out to Keynes, he would have simply talked
about state intervention restraining this antagonism to ensure that
the benefit of the increase in productive capacity reached all.
The fact that this has not happened, the fact that the enormous increase
in mankind's capacity to produce has translated itself not into an
end to the struggle for subsistence for the world's population, but
into a plethora of all kinds of goods and services of little benefit
to it, from a stockpiling of armaments to an exploration of outer
space, and even into a systematic promotion of waste, and lack of
utilization, or even destruction, of productive equipment, only underscores
the limitations of the liberal world outlook of which Keynes was a
votary. The state, instead of being an embodiment of reason, which
intervenes in the interests of society as a whole, as liberalism believes,
acts to defend the class interests of the hegemonic class, and hence
to perpetuate the antagonisms of the capitalist system.
These antagonisms perpetuate in three quite distinct ways the struggle
for subsistence in which the bulk of mankind is caught. The first
centres on the fact that the level of wages in the capitalist system
depends upon the relative size of the reserve army of labour. And
to the extent that the relative size of the reserve army of labour
never shrinks below a certain threshold level, the wage rate remains
tied to the subsistence level despite significant increases in labour
productivity, as necessarily occur in the ''era of progress and innovation''.
Work itself therefore becomes a struggle for subsistence and remains
so. Secondly, those who constitute the reserve army of labour are
themselves destitute and hence condemned to an even more acute struggle
for subsistence, to eke out for themselves an even more meagre magnitude
of goods and services. And thirdly, the encroachment by the capitalist
mode upon the surrounding universe of petty production, whereby it
displaces petty producers, grabs land from the peasants, uses the
tax machinery of the State to appropriate for itself, at the expense
of the petty producers, an amount of surplus value over and above
what is produced within the capitalist mode itself, in short, the
entire mechanism of ''primitive accumulation of capital'', ensures
that the size of the reserve army always remains above this threshold
level. There is a stream of destitute petty producers forever flocking
to work within the capitalist mode but unable to find work and hence
joining the ranks of the reserve army. The antagonism within the system,
and vis-à-vis the surrounding universe of petty production,
thus ensures that, notwithstanding the massive increases in mankind's
productive capacity, the struggle of subsistence for the bulk of mankind
continues unabated.
The growth rates of world output have been even greater in the post-war
period than in Keynes' time. The growth rates in particular capitalist
countries like India have been of an order unimaginable in Keynes'
time, and yet there is no let up in the struggle for subsistence on
the part of the bulk of the population even within these countries.
In India, precisely during the period of neo-liberal reforms when
output growth rates have been high, there has been an increase in
the proportion of the rural population accessing less than 2400 calories
per person per day (the figure for 2004 is 87 percent). This is also
the period when hundreds of thousands of peasants, unable to carry
on even simple reproduction have committed suicide. The unemployment
rate has increased, notwithstanding a massive jump in the rate of
capital accumulation; and the real wage rate, even of the workers
in the organized sector, has at best stagnated, notwithstanding massive
increases in labour productivity. In short our own experience belies
the Keynesian optimism about the future of mankind under capitalism.
But Keynes wrote a long time ago. He should have seen the inner working
of the system better (after all Marx who died the year Keynes was
born, saw it), but perhaps his upper class Edwardian upbringing came
in the way. But what does one say of people who, having seen the destitution-''high
growth'' dialectics in the contemporary world, still cling to the
illusion that the logic of compound interest will overcome the ''economic
problem of mankind''? Neo-liberal ideologues of course propound this
illusion, either in its simple version, which is the ''trickle down''
theory, or in the slightly more complex version, where the State is
supposed to ensure through its intervention that the benefits of the
growing mass of goods and services are made available to all, thereby
alleviating poverty and easing the struggle for subsistence.
But this illusion often appears in an altogether unrecognizable form.
Jeffrey Sachs, the economist who is well-known for his administration
of the so-called ''shock therapy'' in the former Soviet Union that
led to a veritable retrogression of the economy and the unleashing
of massive suffering on millions of people, has come out with a book
where he argues that poverty in large parts of the world is associated
with adverse geographical factors, such as drought-proneness, desertification,
infertile soil, and such like. He wants global efforts to help these
economies which are the victims of such niggardliness on the part
of nature. The fact that enormous poverty exists in areas, where nature
is not niggardly, but on the contrary bounteous; the fact that the
very bounteousness of nature has formed the basis of exploitation
of the producers on a massive scale, so that they are engaged in an
acute struggle for existence precisely in the midst of plenitude;
and hence the fact that the bulk of the world's population continues
to struggle for subsistence not because of nature's niggardliness
but because of the incubus of an exploitative social order, are all
obscured by such analysis. Keynes' faith in the miracle of compound
interest would be justified in a socialist order, but not in a capitalist
one.