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Capitalism has always been remarkably agile is terms of responding to new conditions and creating new markets all designed to lift capitalism out of the stagnation that is has pushed itself into because it has suppressed wage incomes says Jayati Ghosh.

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Lynn Fries: This is The Real News. I’m Lynn Fries in Geneva. And this is Part 3 of a conversation on Imperialism in the 21st Century with our guest, Jayati Ghosh. A professor of economics at Jawaharlal Nehru University, Jayati Ghosh is based in India, New Delhi and is here in Geneva for a visit. Welcome. Jayati Ghosh: Thank you. Lynn Fries: In Part 2 you spoke about structures of global production and trade and the implications for workers. Talk now about how new forms of economic territory are being created. Jayati Ghosh: Capitalism has always been remarkably agile in terms of responding to new conditions and creating new markets. And in the late 20th century and the early part of the 21st century, it has been exceptionally adept at creating new markets in areas that were earlier not thought of as markets at all. One of the significant ways it has done this is through public provision and the massive reduction in public provision. In other words, neoliberalism, as we’ve talked about, it does many things. But one of the things it is very, very keen on is fiscal austerity, a reduction of public spending. And particularly public spending designed to ensure the social and economic rights of citizens. Now, what does that mean? It means, for example, that you can privatize things like electricity, the water supply, and so on but it also means that your municipal water supply may not give you drinkable water. So everybody’s forced to go to the bottled water which, by the way, is a relatively new industry. In the developing world nobody had bottled water until about 20 years ago. And now you will find even in the villages of India, in the swamps of Thailand, you will find bottled water being sold because nobody can trust whether the municipal or the local water supply is potable. That’s a whole new market that has been delivered. The market for health care, expanding dramatically, again in India because the state does not provide adequate health care people are forced to private providers. And so it’s a whole new area for capitalist expansion. You can provide health care often at completely unaffordable rates, throwing families into debt and poverty and so on, because of the fact that you’re not able to access this through public provision. The market for higher education, massive increase in privatized education across the world, both developed and developing countries. Again, a reflection of the fact that it’s no longer provided through the public. So one major way in which you’ve actually created a whole new market is by denying the public provision of these and therefore enabling profits to be made through the private. You have another form which is intellectual property rights. You have created a market for knowledge, a market. Now, this is very significant. Knowledge, it’s true, has always been power. Historically, the powerful have tried to monopolize knowledge or control it. That’s inevitably the case. But it is very, very recent that knowledge has become a marketable commodity. Where you can capture it and sell it and privatize it and make profits out of it. That’s relatively new and that’s a creation of a whole new market out of something that really, in a sense you would say, is a contradiction in terms. Because while knowledge is power, we also know that knowledge grows only when it’s shared. We know that for humanity, as a whole, the more you constrict knowledge the less actually knowledge expands. And this is also true of societies. Societies that have constricted knowledge have, in a sense, collapsed. There is a wonderful book by Jared Diamond that talks about this. Yet, we find that recent tendencies in terms of valuing intellectual property rights have actually made this constriction of knowledge a huge source of profitability for companies. Finally, I’d like to talk about a very innovative way in which a market is being created in India. We had demonetization recently. In November last year, our Prime Minister suddenly announced demonetization of five hundred rupee and thousand rupee notes which actually overnight took out 86% of the currency in circulation, in an economy which operated 95% on cash transactions. So you can imagine the disruption and dislocation that this has caused. But what is more significant is that more than seven months since this was announced, you still don’t have all that currency put back in circulation. Only about 70% of that amount has been replaced in terms of new currency. And the whole idea is that you push everybody into digital transactions, including the poor. The whole idea is that everybody must move to digital transactions because that’s modern. That’s the way of the future, and so on. Now what do digital transactions do? They actually make you pay for the transaction. Whether it is a bank or it is one of those phone payment systems or whatever. All of these new ePayment systems, they are a source of profitability for some financial company or what are called Fintech companies. So you have created a whole new market. In a sense, it’s extraordinary. This is the financialization of money. You are making a profit out of the very act of transacting. And you’re doing this often from the poorest of the poor. So yet another means of creating a market through different measures. All designed to somehow lift capitalism out of the stagnation that it’s pushed itself into because it has suppressed wage incomes. Lynn Fries: This is the closing segment. So round off the conversation with some closing thoughts and then let’s move to comments on the outlook ahead. Jayati Ghosh: I think the last three decades have been extraordinary for global capitalism because they have changed so much of the way in which it operates. They have shifted from explicit power relations to implicit rules and regulations that are determined by an international legal and institutional architecture. So governments tell their citizens, “We have no choice because these rules don’t allow us to do something any other way. And so we cannot meet your requirements as citizens.” We have a shift in the power relations in terms of new powers emerging, national powers in Asia certainly but you know, the BRICS countries and so on. But these powers themselves are very much under the sway of their own national capitalists and so it’s not something that has necessarily benefited their own working classes and their citizens in the same way. We have the emergence of an entire range of new markets that have been created by global capitalism simply because they need to find new markets as the earlier markets that they had relied on have been suppressed by their own suppression of wage incomes. And then, finally, we have this fundamental contradiction which is that as global capitalism gets less and less regulated and more and more powerful, it also finds that, in a sense, it cannot generate within itself the sustenance that it needs. In terms of the old prey-predator relationship, the predator is running out of prey. You cannot actually keep expanding if you keep suppressing wage incomes globally. You can find new ways of doing, a shift here and an expansion there at the expense of someone else but you can’t sustain this at a global level. And that gives rise to what we’re seeing today which is secular stagnation in a situation of rising inequality and rising frustration. And that, in turn, creates two senses in which the current system is unstable. It’s unstable, as I said, because capitalism cannot deliver the growth that it has promised all along for the reasons that I’ve just mentioned. And it’s unstable because it is definitely creating a political fallout. Across the world, there is resentment. It’s being contained or met in different ways but it’s erupting continuously over and over again. And I do believe that this will create a much broader demand for significant change over the next decade. Lynn Fries: Comment further on your outlook for this significant change as the global unrest that we’ve seen often gets expressed in reactionary forms rather than a progressive vision of worker solidarity. Jayati Ghosh: I do believe that across the world there is a demand among younger people for progressive alternatives. But yes, at the moment there’s no doubt that the political reaction is really pitting workers against other workers in different countries from different areas against migrants. It’s pitting ordinary citizens against one another rather than everyone combining against global capital. And it is also reducing the sense of international solidarity, which I think is essential for a genuinely progressive movement. But I don’t think that this is inevitable and I don’t think it’s written in stone. I think we know from history that these things change, and they can change often quite rapidly, and sometimes over a longer period of time. We are entering a phase of global instability, there’s no getting away from it. I think, whether you call this secular stagnation or what have you, these problems are now really deep, extensive, and they’re across the board. There is a perception among, let’s say, workers in the north that all workers in the south have it really good. They’re getting better and better off. And Chinese workers are getting better off all the time and everything is wonderful. It’s much more complicated in China. It’s true that real wages have risen dramatically. That even while in China inequality has grown, real wages have risen and therefore the bottom has also increased in terms of its welfare. But it’s combined with such severe environmental problems, such severe insecurity in a whole range of other things, that in fact it’s not such an easy equation that everyone is better off. Now all of these mean that the current system is, I believe, deeply unsustainable. Does it mean that immediately we’re going to see progressive alternatives? Not necessarily but I do think that these are there and they often come from directions that we’re not looking at. We are always looking at the established parties, and established political forces, and saying, “Well, you know, this one won’t do, and that one’s lost energy,” and so on. But through history we have known that political movements have emerged often from the most unexpected sources. And once they capture the imagination they have a spread and an extent that is quite extraordinary. It is also true, however, and this is the caveat, that, you know, today we also have a global media that is much more corporate controlled and that is much more active in presenting the interests of global capital, whether in the developed world or in the developing world. And that media plays a very negative role. We have alternative media, which is still very, very small, like the Real News Network. But we don’t have enough of a spread and a power to actually capture the minds and hearts of people in a significant way. Nonetheless, I do believe that there are forces of change out there which can be progressive and ultimately will be progressive. Which are already in the making, and which will become much more forceful. Lynn Fries: We have to leave it there in this conversation with our guest, Jayati Ghosh, on Imperialism in the 21st Century. Jayati Ghosh, thank you. Jayati Ghosh: Well it was great to be with you. I’m happy to have come. Lynn Fries: And thank you for joining us on TRNN. Link to related newsdocs END

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Dr. Jayati Ghosh is Professor of Economics and currently also Chairperson at the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi. Educated at Delhi University, Jawaharlal Nehru University and the University of Cambridge, England, her research interests include globalization, international trade and finance, employment patterns in developing countries, macroeconomic policy, and issues related to gender and development.

Among other books, she has co-authored (with Prof. C.P. Chandrasekhar) Crisis as a Conquest: Learning from East Asia, The Market that Failed: A Decade of Neoliberal Economic Reforms in India and Work and Well-being in the Age of Finance. In addition to numerous academic articles, she is a regular columnist for Frontline magazine and Businessline financial daily, as well as a weekly columnist for several newspapers.

She is one of the founders of the Economic Research Foundation in New Delhi and is on the board of various other social research organizations. Since 2002 she has been the Executive Secretary of International Development Economics Associates (IDEAS), an international network of heterodox development economists She was the Chairperson of the Commission on Farmers Welfare in 2004 constituted by Andhra Pradesh Government. She continues to be closely involved in working with progressive organizations and social movements.