Market forces have rendered ineffective the nation-State as an agent of intervention in this era of global capitalism, noted economist Prabhat Patnaik has said. He was speaking at a seminar on ‘An Inquiry into the Philosophy of Economics’ organised at the College for Women, here, on Thursday.
This inability of the State to intervene in economic situations is in direct contrast to the view of economist John Maynard Keynes who held that the State stood outside of the individual’s transactions and ‘rationality,’ ready to intervene to ensure a larger social rationality. Such a view of the State necessarily meant that the State did not have to submit to the logic of the market, that it did not have to kow-tow to the “confidence of investors”, that it did not have to worry about its “credit-rating” by the market and that it did not have to tie its hands through fiscal responsibility legislation for the sake of pleasing investors.
All these constraints upon the State, which characterise contemporary capitalism, negate the role perceived for the State by Keynes —“an external force rectifying the aggregate outcome of the pursuit of private ‘rationality.’” Rather, they make the State subject to the whims of capital and hence the logic of private rationality, he said.
These constraints entail the ‘annexation of the State’ by the market and hence its elimination from the position of being the only force that can intervene in the functioning of the market to achieve a socially rational outcome. The constraints recreate a closed universe where the State that could achieve social rationality, according to Keynes, has been ‘assimilated.’ The reason for this assimilation is that the State has remained a nation-State while capital has become globalised. Keynes had warned against this, he said.
