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Archive for July 2015

Crisis and Credit System – the rise of non-performing assets

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Costas Lapavitsas in his new book, Profiting without Producing (2013) gives an interesting theoretical account of the effects of crisis on the credit economy – the growth in NPAs, bad loans, aggravating the crisis further.

The starting point of Marx’s analysis is trade credit, which is assumed to expand in the course of a boom, creating large volumes of bills of exchange and thereby stretching production and trade. As the boom unfolds, however, banking credit enters strongly into play: banks discount bills of exchange, thus supplying loanable money capital that covers the needs of capitalists for liquid funds. At the later stages of the boom, financial speculation begins to occur on a large scale mostly by creating bills of exchange purely to be discounted by banks. Such bills are often tenuously related, or even completely unrelated to productive activity. The overextension of credit (both trade and banking) contributes to overaccumulation and overproduction, resulting in inventory accumulation and excess supply in commodity markets. Given the difficulty of sales, the expansion begins to unravel and a commercial crisis emerges.

For Marx, the appearance of commercial crisis has a decisive impact on the overextended mechanisms of credit. Inability to sell finished output implies inability to honour maturing bills of exchange on the part of borrowing capitalists. Consequently banks begin to accumulate non-performing assets. As the quality of bank assets falls and the creditworthiness of borrowers declines, banks become reluctant to lend. The restriction of banking credit occurs at a moment when liquid money capital is heavily demanded by functioning capitalists pressed by the difficulty of selling. Gradually banks become reluctant to lend even to each other, with the result that the money market becomes extremely tight and interest rates rise rapidly. That is, an absolute shortage of liquidity begins to emerge.

Faced with a liquidity shortage, capitalists no longer demand money capital to sustain or expand the circuit of productive capital. Rather, they are under pressure to obtain plain money to settle bills and other loans that fall due. Maturing loans would have been incurred during the upswing in the expectation that liquidity would be easily available at the time of settlement from banks, or elsewhere. But the destruction of confidence among banks implies that fresh funds are not forthcoming; the banks (and other participants in the money market) prefer to hoard money. In a liquidity crisis, cash becomes king and promises to pay among private capitalists are devalued. In a remarkable turn of phrase, Marx claimed that in a capitalist crisis there is ‘a sudden transformation of the credit system into monetary system’.


Written by Pratyush Chandra

July 30, 2015 at 3:31 am

“The Hasty Genius of Aurangzeb”

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Iqbal was incomparable as a political thinker, and I think a small paragraph on Aurangzeb in his Stray Reflections is a proof of his genius. It must be read by everyone who wants to understand Aurangzeb as a historical figure and his hasty genius. The demonisation of Aurangzeb has never allowed people to understand the crisis of the medieval times and the advent of colonial capitalism that shaped the specific characteristics of Indian modernity. In fact, it is in the interest of the right wing to anti-politicise the masses by devalorising the cosmopolitan contributions of ‘Muslim’ thinkers like Iqbal and political personalities like Aurangzeb, without whom the transition to capitalist modernity in India cannot be understood. The backward, conservative iconisation of (‘Hindu’ and ‘Sikh’) rulers can definitely serve the petty trading and even neoliberal interests in commodifying India’s exoticism…, but even the resistances and importance of those tribal leaders and rulers, despite their localist character, cannot be comprehensively grasped, unless we understand and give credibility to historical figures like Aurangzeb… You cannot understand your freedom struggle, the specific character of 1857 mutiny without this. Of course, you don’t expect this from RSS and RSS trained leaders who did not contribute in the freedom struggle – or those who do not look for parivartan, but sanatanta in the Indian society.

The political genius of Aurangzeb was extremely comprehensive. His one aim of life was, as it were, to subsume the various communities of this country under the notion of one universal empire. But in securing this imperial unity he erroneously listened to the dictates of his indomitable courage which had no sufficient background of political experience behind it. Ignoring the factor of time in the political evolution of his contemplated empire he started an endless struggle in the hope that he would be able to unify the discordant political units of India in his own lifetime. He failed to Islamise (not in the religious sense) India just as Alexander had failed to Hellenise Asia. The Englishman, however, came fully equipped with the political experiences of the nations of antiquity and his patience and tortoise-like perseverance succeeded where the hasty genius of Aurangzeb had failed. Conquest does not necessarily mean unity. Moreover, the history of the preceding Mohammedan dynasties had taught Aurangzeb that the strength of Islam in India did not depend, as his great ancestor Akbar had thought, so much on the goodwill of the people of this land as on the strength of the ruling race. With all his keen political perception, however, he could not undo the doings of his forefathers. Sevajee was not a product of Aurangzeb’s reign; the Maharatta owed his existence to social and political forces called into being by the policy of Akbar. Aurangzeb’s political perception, though true, was too late. Yet considering the significance of this perception he must be looked upon as the founder of Musalman nationality in India. I am sure posterity will one day recognise the truth of what I say. Among the English administrators of India, it was Lord Curzon who first perceived the truth about the power of England in India Hindu nationalism is wrongly attributed to his policy. Time will, I believe, show that it owes its existence to the policy of Lord Ripon. It is, therefore, clear that in their political purpose and perception both the Mughals and the English agree. I see no reason why the English historian should condemn Aurangzeb whose imperial ideal his countrymen have followed and whose political perception they have corroborated. Aurangzeb’s political method was certainly very rough; but the ethical worth of his method ought to be judged from the standpoint of the age in which he lived and worked.

Written by Pratyush Chandra

July 30, 2015 at 2:18 am

Yakub Memon’s Impending Execution in the Light of a Passage from Foucault’s ‘Discipline and Punish’ Read through a Marxist Prism

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“The public execution did not re-establish justice, it reactivated power. In the seventeenth century, and even in the early eighteenth century, it was not, therefore, with all its theatre of terror, a lingering hang-over from an earlier age. Its ruthlessness, its spectacle, its physical violence, its unbalanced play of forces, its meticulous ceremonial, its entire apparatus were inscribed in the political functioning of the penal system.”
–Michel Foucault, Discipline and Punish

Yakub Memon’s execution will, therefore, be no aberration of our penal system. It will be an exception that is meant precisely to enable the reproduction, through confirmation, of the norm of everydayness of terror that is modernity, and capital. Albeit one that now openly displays its irrational, exceptional and coercive kernel, thanks to this being its historically concrete moment of crisis.

This phenomenon is, therefore, nothing but the norm as an unconcealed and unconcealable neurotic symptom: the norm itself as the demonstration of the crisis of normativity and normalisation. As a result, it now comes across even in its appearance as the entirely arbitrary political functionality that founds, underpins and animates the economy/rationality of the modern penal system.

Hence, let not our outrage — that is produced by the scale and magnitude of the phenomenon at hand — blind us to that. For, that would also blind us to the reformist purport of liberal politics that lies at the heart of such outrage. Instead, let us temper that outrage into a steely resolve to exceed and abolish capital and the modern state — which is nothing but the grammar of capitalist social relations, or the qualitatively equalising and thus distributionist value-relation to be precise, in its institutional congealment. After all, it’s precisely this distributionist dimension of the law of value that, as far as the modern state in its liberal-democratic Indian specificity is concerned, is the objective material basis of the ideological dominance of, among other things, Islamophobia. The ideology that evidently informs the dogged pursuit of capital punishment for somebody such as Yakub Memon.

In other words, let the cry for the abolition of death penalty, which has been sparked off by Yakub Memon’s imminent execution, not remain a weak human rights-based reactive demand placed on the Indian state. Let us strive, instead, to transform that cry into a strong call for constructing a concretely collective political project that seeks, in the here and now, to determinately abolish the state. For, the modern state in being the embodiment and operationalisation of the rule of law is genetically programmed to do precisely that which it currently seeks to accomplish in the specificity of its Indian incarnation: reinforce its monopoly over violence by re-establishing the slave-morality of ressentiment (revenge) as justice.

This is, clearly, a juridico-legal morality that is, therefore, an inseparable and integral ideological dimension of the capitalist social formation constitutive of the structure of mutual competition for domination, and its reproduction. To not grasp that and to insist on envisaging the abolition of death penalty as a human rights-based demand amounts to a blundering failure to recognise that the Benjaminian “divine” or “law-unraveling violence” rests in an embryonic form within this cry for the abolition of death penalty. And to not recognise that is to already repress that potential and distort it into “lawmaking violence”, which faces off “law-preserving violence” of the state merely as its constitutive antithesis. Not for nothing does such human rights-based ‘politics’ presuppose the conceptual and thus concrete validity of the modern state — and the juridico-legal social formation of which such a state is both an effect and reinforcing cause — that it ‘confronts’ with its politics of demand. In the ultimate analysis, such politics ends up, not surprisingly, reinforcing and reproducing the condition of possibility of precisely those enormities it claims to want to eliminate.

So, let’s not allow our outrage to be a cathartic expenditure and exhaustion of politics. Rather, let it simmer like a slow fire over which we forge the concrete strategy of how (our) red ‘terror’ can emerge with full antagonistic force against the epochal social power that orientates and articulates the continuous norming and normalisation of (their) white terror.

The essence of what one has articulated here in a hurriedly clumsy manner is put forth with elegance and aphoristic precision by Walter Benjamin in the last two sentences of his VIII thesis on philosophy of history: “The current amazement that the things we are experiencing are ‘still’ possible in the twentieth century is not philosophical. This amazement is not the beginning of knowledge — unless it is the knowledge that the view of history which gives rise to it is untenable.”

Is the banking sector in India robust enough?

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Throughout the difficult times of the ongoing economic crisis, Indian policy makers were talking about the robust banking sector that sustained the economy. Pranab Mukherjee when he was the Finance Minister used to boast about “a robust banking sector working under an efficient regulatory framework”, which other economies affected by the crisis didn’t have. But the scene doesn’t seem to be so good with “Rising bad debt hit[ting] PSU banks’ health”, on the one hand and financial sharks calling for trade in debts, on the other…

The Times of India reports today:

For several quarters analysts and bankers have warned about the deteriorating financial health of state-run banks. But policymakers have maintained that the worst was over, and that things would improve as the economy gathers steam. Drastic measures to nurse the banks to sound health are rarely talked about and the preference is for short-term steps to paper over the wounds.

“Indian banks are unlikely to reduce their problem loan ratios in 2015-16 but the new non-performing loans will probably decline,” Moody’s Investors Service said, based on findings of a poll.

For the banking sector as a whole the NPA situation is as bad as it was more than a decade ago when some radical steps – from one-time settlement to setting up asset reconstruction companies – were initiated. The global economic boom and the rapid growth in India too helped banks clean up their books. The economic slowdown and the failure of several projects to take off have once again hurt the asset quality in banks. The problem is more acute in public sector banks as they had to lend to companies and restructure loans after the 2008 financial crisis when the private sector virtually walked out of the market.

The rising levels of NPAs and capital constraints, along with low demand for loans, have forced these lenders to be very selecting in lending, something that may not augur very well for overall economic growth. “Public sector banks are facing multiple challenges. They have asset quality issues, require huge amount of capital and there are management issues. The huge recapitalization requirement has led to risk aversion and they are not growing their balance sheet significantly. Going forward we expect them to lose business because of this,” said an analyst at a leading brokerage.

Although bankers would tell you that they don’t have to deal with calls from the finance ministry any longer, the pressure of lending to various target groups and pushing government schemes is enormous. And, they have limited operational freedom. For instance, in April, HDFC Bank sold its loans of Rs 550 crore extended to Essar Steel at a 40% discount, something that an executive at a state-run bank can’t even think about. “The moment we do something there will be a CBI enquiry or a vigilance case,” said a banker.

Written by Pratyush Chandra

July 29, 2015 at 12:25 am

Posted in capitalism, Economy, India

Tagged with ,

Marxism in academia – don’t lament, but fight!!!

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I have never been comfortable with lamenting over the marginalisation of Marxism in academia, in which many comrades time to time indulge. In fact, there is no such marginalisation happening globally – just look at the publishing projects of Marxists throughout the globe, with books priced exorbitantly. Of course, this Marxism is not meant for activists – they can be fed with free blogs and free tweets/fb entries (even these are accessible to a tiny minority only)! A senior ‘Marxist’ in Delhi once told a students conference in the early 1990s, how much she and her colleagues have contributed in Marxism – the only job left for leaders and activists now is to put that knowledge in use. Perhaps the neoliberal rightwing assault on this academic comfort (and liberalism, which liberalised Marxism too) gives an opportunity to liberate Marxist theorisations, regrounding them in real class struggle and proletarian practice (even in academia).

David Laibman correctly historicised this state of Marxism and its implications in his 1997 book, Capitalist Macrodynamics:

The shifts in political and economic power have… been accompanied by ideological transformations as well. Marxism, having been largely removed from its earlier position of influence in the labor movement and other social spheres, has taken refuge in the academy. There, under intense intellectual pressure, a certain fragmentation has taken place, as the formerly unitary Marxist world view has conformed to the disciplinary specialisations: thus we have ‘Marxist sociology’, ‘Marxist economics’, and so on. The unifying generalizations of historical materialism have also come under continuous fire, as Marxists have retreated to more ‘defensible’ positions.

Written by Pratyush Chandra

July 27, 2015 at 3:58 am

SR2003: Linguistic-Communal Politics and Class Conflict in India

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Written by Pratyush Chandra

July 20, 2015 at 2:18 am

Posted in India, Marxism

Why Rosa Luxemburg must be translated in Indian languages?

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It is strange that the collected works of one of the most important Marxist revolutionaries, Rosa Luxemburg, have just begun to be translated and published in English – that is almost a century after her murder! More strangely, but quite understandably, the Chinese who seem to ride ahead of everyone in the economic race of capitalism, immediately got ready to publish the translation of Rosa’s works in Chinese. But in India in spite of rich and varied left political traditions in India, there hasn’t been such endeavours.

It is not at all surprising that Rosa Luxemburg’s writings are referred mostly to explain and critique crises in the political movements of the working class. Throughout her theoretical and practical struggles she was a staunch defender of the primacy of workers’ self activism, in which the organisational question and the issue of the revolutionary transcendence of capitalism must be grounded and resolved. It was this conviction that allowed her to comprehend the dialectic of spontaneity and organisation against the dualistic discourse that dominated the working class politics, which overstressed and celebrated organisation as a given institution, which fits and filters spontaneous class impulses, rather than as being made and remade in class self-activism. Her experience in the revolutionary movements of Poland and Germany armed her with a sensitivity towards the unevenness of the material ground of workers’ politics and their consciousness. It was this sensitivity that sharpened her critique towards the reformist and the revolutionary vanguardist tendencies within the world social-democratic movement, deconstructing them in terms of the specificities and exigencies of class struggle in particular spacetimes.

The mesmerising successes of revolutionaries in acquiring state power in countries with dominant peasantry and semi-proletarians in the early decades of the last century, without similar successes in advanced capitalist countries led to a dilution of the lessons of the Paris Commune, and even of the workers’ soviets, which symbolised the class self-capacity of the proletarians. Instead the vanguardist and statist tendencies became powerful which substituted the self-emancipatory activities of the working class, or at the most instrumentalised them in building up a strong state. The prime task now was simply to develop a powerful apparatus of the party that would acquire state power, competing with other political forces. What was lost in fact was the revolutionary project itself – of the dissolution of the capitalist power entrenched in the State and the simultaneous building up of workers’ power from below through their self-activities, in which the dialectic of spontaneity and organisation operated. Those who critiqued this situation found a powerful theoretical guide in Rosa Luxemburg in their endeavours to save and shape the emancipatory task of working class politics.

In the Indian subcontinent, the revolutionary movement since its inception was entrenched with nationalist ideologies and wedded to the immediate task of developing a United Front to attain national independence. This curtailed every possibility of an independent emergence of working class politics in the region. However, recently a lot has been done in history writing to chronicle and trace the trajectory of working class self-assertion with and without the classically recognised forms of workers politics. The unavailability of Rosa Luxemburg’s ideas in vernacular languages, except filtered through the self-censorship of South Asian revolutionaries and scholars, who could not question the institutionalised leadership and successes of the Second World, made it impossible for dissidents to use the resource of rich conceptualisations found in Rosa Luxemburg’s writings to organise and strengthen critical tendencies within the local revolutionary and working class movements. Hence, we find them mired in the same polemical and sectarian milieu. In fact, the general image of Rosa Luxemburg that prevails in our part of the world – a great tragic revolutionary heroine, a mighty eagle with whom chicken couldn’t compete in flying high, but who could and did sometime stoop a little lower than chicken. Definitely not less than a great martyr, but not more.

It is a pity that almost a century has past since Rosa Luxemburg’s death, but her works are still unavailable in vernacular languages of India. Definitely, with the post-soviet collapse and the rise of neoliberal globalisation, interests in her contribution in the critique of political economy have arisen tremendously, which we witness in scholarly writings coming even from the institutionalised left community. However, what is still lacking is her political understanding equipping activists and workers who are steeped into the labour movement and who can appreciate the full import of her writings. For this to take place, her writings must be made available to them in their languages, in the languages of workers themselves, for whom Rosa Luxemburg wrote.

Written by Pratyush Chandra

July 18, 2015 at 3:13 am

Posted in Marxism

Tagged with , ,

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