PRAGOTI

Question 1: You have very recently published a new book on money. Can you tell us what the basic argument of the book is?

My book begins by asking the question: what determines the value of money visavis the world of non-money commodities? To this there have been two basic answers in the history of economics. One answer, commonly referred to as “monetarism”, says that the value of money is determined by its supply and demand, the same as in the case of any other commodity. This answer is logically untenable, even though it constitutes at present the core of “mainstream economics”. The second answer, which I christen “propertyism”, says that the value of money is given from outside the realm of supply and demand. Marx and Keynes are the two main authors in this tradition: in Marx the value of money visavis commodities is determined by the relative quantities of labour directly and indirectly embodied in a unit of each; in Keynes it is given by the fixity of money wages in the short run, i.e. by the fact that the exchange ratio between a unit of money and a unit of labour power is fixed in any period.

Any such fixity of exchange ratio however implies that the system is characterized generally by the existence of “idle” cash balances on the one hand (i.e. the holding of money as a form of wealth), and of unutilized productive capacity and unemployed workers on the other (i.e. it is “demand-constrained”). Monetarism is theoretically incapable of cognizing any problem of aggregate demand, while propertyism necessarily does. Marx who pioneered this theoretical tradition had in effect made two revolutions in economics, one, which is well-known, relates to his theory of surplus value; the other relates to his theory of money, which remained unrecognized until Keynes rediscovered it in the midst of the Great Depression, and rather amazingly, is still scarcely recognized.

There is however a tension between his two discoveries. Indeed in general the “propertyist” tradition, despite its unquestioned superiority over the “mainstream” tradition, is incomplete: it cannot explain within its assumed universe of a closed capitalist system, why the system remains viable over long stretches of time. It can be completed, and the tension within Marx’s theory removed, if we theoretically cognize capitalism not as a closed system but as one necessarily embedded within a non-capitalist environment which it dominates and transforms, i.e. if we bring imperialism into the theoretical picture. A theory of money in short necessarily leads to a theory of imperialism.

The book discusses the link between money in the world economy and imperialism, and characterizes the current international monetary system as an “oil-dollar standard”, whose preservation is a very important reason behind the war in Iraq, and imperialist interventions in Central Asia and elsewhere.

Question 2: You have argued in your book that capitalism, since its inception has not been a closed system in its requirement of pre-capitalist sectors for stability. In this regard, can we say that imperialism is intrinsic to capitalism? How is this formulation on imperialism distinct from the Leninist conception of imperialism? Can the two positions be reconciled?

Lenin, following Hobson, had used the term “imperialism” exclusively for the monopoly phase of capitalism, which itself was a superimposition upon the pre-existing colonial system. I use the term “imperialism” in an inclusive sense, to cover both phases, the pre-monopoly phase, of colonialism, and the monopoly phase, of “imperialism” a la Lenin. This is a matter of definitions and should not create any problems. The real issue is: to what extent is “imperialism” in this inclusive sense theoretically central to the functioning of capitalism? Rosa Luxemburg is the only major Marxist theoretician to have given an affirmative answer to this question.

Nobody in the whole of the nineteenth century wrote as perceptively, as extensively, and as feelingly on colonial exploitation as Karl Marx did; and yet in his theoretical schema in Capital colonialism hardly plays any role. We have to overcome this hiatus. True, Lenin had been critical of Rosa Luxemburg’s Accumulation of Capital, though only in passing, and had severely criticized the Narodnik authors’ invoking the market question to deny the possibility of capitalist development in Russia, even though such development was occurring in front of everyone’s eyes. But this should not be taken to mean that Lenin was a believer in Say’s Law. The entire discourse of the Narodniks was logically faulty, as Oskar Lange was to point out later. The issue of the dynamics of capitalist development concerned the plausible investment behaviour of capitalists; it could not be resolved by putting arbitrary numbers to Marx’s Reproduction Schemes, which is what the Narodniks did. Lenin’s argument, as he himself pointed out, was in the nature of a counter-example to the Narodniks’ example. It did not represent an underplaying of the market question. (That may be said of Tugan-Baranovski).

When I talk of the necessity for capitalism’s interaction with the surrounding non-capitalist sector, I am not referring exclusively to the market question. The interaction is multifarious and it stabilizes capitalism. I bring this interaction into theoretical centre-stage. In doing so, I am breaking new ground, but that should not be a cause for concern. Marx, to use Althusser’s imagery, had opened up a “continent”, and we have to explore this continent fully, instead of remaining confined to only to that corner which Marx had explored.

Question 3: How do you see the war on Iraq, Afghanistan and the threat of terrorism, in the overall schema of imperialism?

The war on Iraq was obviously for oil, though “fighting terrorism” and “eliminating weapons of mass destruction” were offered as excuses. Getting hold of Iraq’s rich oil reserves was important not just for the maintenance of American, or more generally metropolitan, consumption. It was considered necessary for stabilizing the international monetary system based on the oil-dollar standard, though in the event it has backfired upon the U.S. The war on Afghanistan, though not unrelated to Central Asian gas (and Iranian oil), was more directly linked to the objective of fighting “terrorism”.

But in my view, the U.S. will never succeed in rooting out “terrorism”, which represents a fruitless, unproductive, regressive and futile form of anti-imperialism. “Terrorism” will disappear only when a more forward-looking and progressive anti-imperialism, which necessarily has to be led by the forces of the Left, begins to emerge.

In fact, “terrorism” is a creation of American imperialism itself. The Americans destroyed Communist and progressive nationalist movements all over the Islamic world, where they were extremely powerful, by using these very “terrorist” outfits. But the anti-imperialist sentiments among the people soon infected these outfits themselves. To say this is not to whitewash “terrorism” whose reactionary character and ruthlessness are obvious. It is just to underscore the point that “terrorism” occupies centre-stage only in a conjuncture where progressive anti-imperialism has been temporarily subdued. The revival of the latter will push “terrorism” once more into the background.

The problem however is that once imperialism and “terrorism” get locked in a dangerous dialectic, each becoming more aggressive, each provoking the other into a similar escalation, and the two, between them, polarizing society, the scope for the emergence of a progressive anti-imperialism gets further restricted. Progressive anti-imperialists therefore must resist getting polarized, and in particular must resist siding with imperialism in the name of “defence of civilization” against the “terrorists”, for that will only prolong the life-span of “terrorism”.

Question 4: How do you see the present crisis in the US financial markets? Will the USA be able to come out of this crisis?

The fundamental problem of the capitalist market, as Keynes had noted, is that it fails to distinguish between speculation and enterprise, and hence allows the livelihood of the people to be determined by the caprices of a bunch of speculators. Keynes had suggested, as a remedy, the “socialization of investment” through State intervention, and a progressive end to the rentier aspect of capitalism (“the euthanasia of the rentier”). For over two decades after the second world war the Keynesian remedy worked. But, centralization of capital, taking the form of globalization of finance, not only undermined the scope for intervention by any nation-State, but also led to a reassertion of the hegemony of finance capital in a new incarnation, and with it the re-imposition of neo-liberal economic policies. The upsurge of speculation is a natural consequence of this.

Three factors compound the problem. The first is the tendency during any property price boom for speculators to be euphoric and to expect the boom to continue which increases the amplitude of fluctuations. The second is the emergence of the “derivatives” market which feeds this euphoria by causing a systematic undervaluation of risk. And the third is the tendency of the government, especially in the U.S., to “bail out” the speculators by using tax payers’ money, which emboldens them further, so that an imminent crisis is averted only at the expense of creating the potential for a far more serious crisis in the future. The severity of the present financial crisis in the U.S. is the result of these developments which contributed to the building up of the real estate bubble.

As regards coming out of the crisis, capitalism will never collapse under the weight of an economic crisis; its transcendence requires political praxis. What a severe economic crisis does is to bring about a conjunctural shift where new possibilities of political praxis open up. The Great Depression of the thirties persisted right until the war when the resurgence of military expenditure in preparation for the war finally ended the slump. In fact the unemployment engendered by the Depression was responsible for the emergence of fascism, and therefore in a sense for the war itself. How the implications of the current financial crisis, and its inevitable sequel in the form of a recession, will unfold, remain to be seen. The crisis itself will not disappear easily; but by the same token to believe that capitalism will remain submerged in it forever or collapse under its weight will be silly. It is all a matter of praxis, and of putting forward correct transitional demands in a new conjuncture. For instance the transitional demands of the American Left at present will be that any bail-out package (to prevent a recession) should be accompanied by a mortgage write off and by appropriate punitive action against the corporate executives responsible for the crisis (to avoid “moral hazard” problems).

Question 5: Given the present crisis in the financial markets, do you think that the Indian policy makers will learn from this experience and be skeptical about ushering in more financial sector reforms in the economy?

No, I do not think the Indian policy-makers will learn anything from this crisis. They are incapable of any original thought, and if the country escapes any serious fall-out of the American financial crisis, then the credit for it must go not to them but to the Left which has been stoutly opposing “financial liberalization”, anticipating precisely the sort of crisis that has arisen. The Indian policy-makers, instead of learning any lessons from the crisis, will merely wait for their cues from Washington D.C.

But what the crisis does is to undermine the ideology of neo-liberalism which gives the Left a chance to intensify its struggle against neo-liberalism. And in so far as the recession that is arising will hurt not just the workers and peasants but even sections of the middle classes which have hitherto been beneficiaries of neo-liberalism, the soil for this struggle will be more fertile now. So, the short answer to this question is that the Indian policy-makers left to themselves will not change course, but we have to make them change course.

Question 6: How do you locate the Indo-US Nuclear Deal in the overall project of imperialism?

It is significant that even though the Indo-US Nuclear Deal is being defended as being part of our energy policy, no energy policy has ever been formulated by the government. And no serious cost-benefit analysis has been made to argue the case for nuclear energy. Even the eleventh five year plan has not put much emphasis on nuclear energy. The Deal therefore has to be seen not in terms of India’s energy needs, but in terms of India’s changing relationship with the U.S. And here it cannot be seen in isolation from the spate of other agreements recently concluded with the U.S. The conclusion is inescapable that the Deal is part of the process of India’s becoming a strategic ally, a junior partner, of US imperialism.

Corresponding to the enormous hiatus that has opened up within the Indian society in the period of neo-liberalism, we now have diametrically opposite class interests in the matter of foreign policy. The high bourgeoisie that has been catapulted into the top echelons of international capital, the upper bureaucracy that gets its training increasingly from the World Bank and from metropolitan universities, the urban upper middle class that has been a prominent beneficiary of neo-liberalism, and substantial numbers of expatriate Indians located in the U.S., have an interest in the protection and consolidation of the existing global order of which the U.S. is the undisputed leader and with which India is getting closely integrated. They would like a change in foreign policy that makes India an ally of U.S. imperialism and thereby also helps in keeping down domestic resistance to this new order. On the other hand, the vast masses of people who are the victims of this order (it is wrong to think of them as merely being “excluded”), have an objective interest that is anti-imperialist, and are, even in terms of their consciousness, anti-imperialist.

The Nehruvian dirigiste economic policy had its foreign policy counterpart in non-alignment. The foreign policy counterpart of the neo-liberal economic policy is strategic alliance with the U.S. But this is as dangerous for the interests of the people, and for the cause of democracy, as is its counterpart, neo-liberalism.

Question 7: In the age of imperialist hegemony, what role can the Left play in terms of formulating alternative policies?

Precisely in the age of imperialist hegemony, it is important that the Left does not get intellectually hegemonized. It must not fall prey to the development paradigm propagated by imperialism and its agencies; it must not fall prey to the notion “let-us-put-development-above-politics”; it must not fall prey to imperialist-sponsored concepts like “governance” and “rent-seeking”; it must not fall prey to slogans like “let-us-make-development-more-inclusive” which suggest that within the same neo-liberal development strategy it is possible to accommodate everyone. The basic point is that the same development strategy that has brought enormous wealth and incomes to some, has brought absolute immiserization and dispossession to vast masses of the people, the workers, the peasants, the petty producers, the agricultural labourers, and the tribal population. The Left which stands for them has to continuously place before the people an alternative development paradigm, which goes beyond the chimera of “neo-liberal inclusivism” to a rejection of neo-liberalism altogether.

Controls over cross-border capital flows, which alone can restrict the depredations of “hot money”; trade policy to prevent domestic unemployment and peasant distress; a basic strategy of peasant agriculture-led growth (which does not preclude joint farming, group farming and the formation of co-operatives and collectives); a revival of emphasis on the public sector; the use of public and co-operative sectors as counterweight to the rapacity of private, including multinational, capital; a substantial increase in government expenditure, backed by direct taxation, to increase social expenditure and to provide employment guarantee at statutory minimum wages; and an extensive public distribution system, backed by appropriate procurement policy, to ensure both the availability of basic necessities to the entire population at “fair” prices, and the provision to producers of “remunerative” prices; must constitute the short-term agenda of the Left. This has to be backed up by a policy of land reforms that takes over surplus land from big landowners and plantations, for distribution among the landless, and that prevents the appropriation of land by land speculators, or the diversion of land for luxury use instead of the basic needs of the people.

All this may sound a tall order, but that is only because of our thraldom to imperialist ideas. This is the only way that genuine development can come about. And the Left has to continuously project it.

Question 8: In terms of alternatives to neo-liberal globalization, what do you think about the experiments undertaken in Latin America under the leadership of Chavez?

Like many others I am naturally quite excited by the recent developments in Latin America. But I have certain apprehensions about what may happen if two factors, which until now have sustained the Chavez-led experiment, cease to operate. The first is the high oil prices. This has been of immense help. But I do not expect oil prices to fall very much below their current level in the near future; so, this danger is not an imminent one. The second is the ending of American pre-occupation in the middle-east. The degree of latitude that Latin America has enjoyed till now has been possible because the Americans have got bogged down in Afghanistan and Iraq. They will most certainly try various forms of skullduggery the moment they extricate themselves out of that region.

The Latin American experiment has to be prepared to cope with that, and this requires the building of institutions, of democracy, of people’s representation, of political Parties representing the people, of progressive media, of universities committed to scientific inquiry as opposed to the ideology of imperialism, and so on. The strength of these institutions, rather than the charisma of a Chavez or a Morales, is what will ultimately serve as a bulwark against imperialism. In short, a whole revolutionary transformation has to be put through in a short period in preparation for the forthcoming imperialist onslaught.

Question 9: You have been the Vice-Chairman of the Kerala State Planning Board and have implemented many alternative policies in the state. Can you enumerate the basic contours of your policies in Kerala?

There are four broad kinds of things we have been trying to do in Kerala. The first is to provide relief to the people who have been pushed into misery by neo-liberal policies. The second is to conceptualize a threshold above which the state government will never go in accommodating the demands of capitalists for undertaking investment in the state. The third is putting in place a set of new initiatives in the spheres of production and of social security. And the fourth is to increase the size of the Annual Plan of the state, and hence of the state budget, in order to achieve all these objectives.

The setting up of the Debt-Relief Commission and the vigorous implementation of the NREGS are examples of the first kind of intervention. Kerala is the only state in the country where peasant suicides have stopped completely, and an important reason in my view is the expectation generated by the Debt-Relief Commission. Even after the Central debt relief, the Commission continues to work, providing debt-relief to cases not covered by the central measure. Under NREGS, 16 lakh households have registered in the entire state, and tangible help is reaching the people in the districts where it has been implemented.

The second in my view is theoretically the most significant contribution of the LDF government of Kerala. We have a bizarre situation in India where state governments are vying with one another in offering larger and larger “social bribes” to capitalists to locate their units in their respective states. Unless a Left government establishes a threshold beyond which it will not go in giving concessions, it will be entirely dominated by the logic of capital and lose its Left identity. If the capitalists demand waiver of taxes because the neighbouring state is offering it, then it too will have to fall in line; if the capitalists say “no strikes” because the neighbouring state is tough on striking workers, then it too will be tough visavis the strikers, and so on. For its Left identity it must be able to say: ”we can go thus far and no further; if you are not interested in investing, then so be it.” This is exactly what the Kerala government has done, renegotiating the “Smart City” deal demanding 26 percent equity, saying “no” to the Planning Commission’s proposal for a PPP to build the Kochi metro, setting up a company with at least 26 percent state government equity (which gives vetoing power) to develop IT parks in the state, and formulating a state-specific SEZ policy that keeps off land speculators, defends workers’ rights and keeps concessions strictly within bounds. All this requires that the public or the co-operative sector should be ready to undertake investment if capitalists do not. This possibility is what the government has to develop.

Among the measures in the third category the most outstanding has been the Comprehensive Health Insurance Scheme, introduced on October 2, which provides free health insurance to nearly a third of the population (which is considered BPL by the state government). While it builds on a central scheme (the RSBY) its scope is much wider. The scheme is open to the APL population as well, provided they are willing to pay the premium. And the Scheme does not negate, but rather builds on, the free public healthcare system, for which Kerala is justly famous. Certain other schemes, such as the provision of housing to the entire BPL population, are also in the pipeline.

The fourth main contribution of the LDF has been the revival of planning. At the start of the tenth plan Kerala had the highest tax-GSDP ratio among all southern states, and a higher one than the all-India average. By the end of the tenth plan this ratio was lower than the all-India average and the lowest among the southern states. Since the UDF had, on its own initiative, passed a bizarre legislation limiting the fiscal deficit to 2 percent of the GSDP, state government expenditure relative to GSDP, and especially plan expenditure, was severely curtailed during the tenth plan. The LDF has reversed this trend through a set of innovative fiscal measures, through enforcing greater tax compliance and through getting rid of fiscal conservatism, which is why it has been able to undertake the above-mentioned initiatives.

Question 10: How do you envisage the future of socialism in the 21st century?

Under the impact of imperialist globalization, there is large-scale distress for, and dispossession of, peasants and petty producers. I call this “accumulation through encroachment”, of which the process of primitive accumulation is a prime example. This upsurge in accumulation through encroachment makes the prospects of a worker-peasant alliance that much brighter in countries like ours. The support of petty property is what has till now sustained large property in its struggle against the proletariat, which after all is how the Paris Commune had been defeated. Under globalization this support dwindles, making it possible for the working class, through different stages of the democratic revolution, to advance towards socialism with the support of different sections of the peasantry. The twenty-first century in my view is going to be a century of great advances in socialism, though not in the form it had taken in the Soviet Union, given its concrete circumstances.

There is a very simple basis to my optimism. I believe, with Keynes, that mankind will not tolerate for long the absolute misery that unemployment, underemployment and semi-employment, directly and indirectly (by keeping wages low), bring in their wake. The inherent tendency of capitalism to dispossess and hence destroy the peasantry and petty producers, will only add to this mass of misery, since no amount of modern industrialization, such as is being unleashed under globalization, will absorb adequate labour. Socialism alone can provide an alternative development trajectory which protects, rather than destroys, peasants and petty producers (even though it may change the organizational form of production from individual to collective). Socialism therefore constitutes the only hope for overcoming human misery. And I have enough faith in the ingenuity of mankind to believe that it will find its way towards this solution, especially when it has the possibility of arming itself with Karl Marx’s theory.