The other day someone asked me to explain why high interest rates are no good for the Indian economy. The same day another friend in a discussion about money laughed at the outright absurdity of economists pretending to understand banking and investment. Finally, there is the fun and games of the fascinating new use of the term de-growth in the newspapers.
It was coined by ecological economists in Europe to signify the need for industrialised countries to ditch capitalism in order to save the working classes of the world as well as the natural ecological processes of the earth on which we depend. But recently it was used in a very different context by A Didar Singh, Secretary General of FICCI to describe the recession in the manufacturing sector in India.
There is no subject more likely to get men, especially men, excited, than economics. Everyone claims to know the technical ins and outs of strategy and policy and the finer points of base rates and hedging and borrowing: but no one has ever told me what the purpose of the whole thing is. Why do we need growth? What is growth? What is economics?
Capitalism lurches from crisis to crisis. And there is absolutely no one on the planet who even claims to know why. Immediate triggers for banking defaults, share collapses and such like are sometimes claimed to have knowable causes. But exactly what banks do or are supposed to do to get themselves and presumably the national economies that depend on them out of these perpetually recurring crises is debated precisely because no one has a clue what is to be done, let alone what the purpose of it all is. The debates go round in circles until the banks mysteriously sort themselves out and the "economy recovers" as lending picks up.
This growth through lending by banks for commodity production is of course not claimed to be a purpose unto itself alone: even the most hardboiled neoliberal capitalists argue for growth because it creates jobs, therefore income for workers, therefore markets for goods. The commodity circle gets a kick when banks lend money: this is what growth is and why we need it, they say. Growth and development are inextricably linked in this scenario.
Now let us take the two hundred and twenty thousand people in Araria District who have been made homeless by recent floods. Can growth solve their problem? Planned, unplanned and other forms of growth and de-growth in conditions of manmade runaway climate change have a very different meaning from what these men in social media claim to be debating when they chat about economics. No one who has lost their home has the kind of job that gives her an income to pay for a loan to build a house. Interest rates to such a person are in any case immaterial as repaying the loan at any rate is beyond her. Nor is any such person likely to have any insurance.
Planned economic growth in the era of runaway manmade climate change should not be based on lending by banks. It should be based on spending by sovereign governments through local government for local housing, clean drinking water infrastructure and other family health and welfare needs. This is true whether there is flood, drought, or any other economic and ecological calamity. The unplanned de-growth in India's economy that the FICCI person referred to, as did the Government's Chief Economic Advisor Arvind Subramanian in a different way when he expressed his worry about the Indian economy recently, is hardly relevant to the fundamental challenge that Indian culture and society faces as we are coming to terms with living with manmade runaway climate change. Of course, it would be nice if the factories manufacturing ripstop nylon for tarpaulins and waterproofs would continue manufacturing their stuff for emergency shelters and jackets. But in order for the homeless and jobless youth and women and men workers to be able to afford anything manufactured by Indian industry the state has to spend money into circulation in the local economy where we live and work.
Workers have to be able to help themselves and trade with each other within walking distance of where they live in order to get themselves out of their catastrophic predicaments; whether we buy stuff made by Indian factories or stuff made or grown by ourselves. After all, one thing is clear: capitalism may lurch from crisis to crisis, which the world economy apparently did not mind during the last 2000 years of a
stable climate system. But now that the climate system has been rendered prematurely unstable by man's interference with it, it is not at all possible for nation states to cope with both capitalist crises and climate crises simultaneously.
To conclude: India's interest rates are not only too high, money in India should not be created as debt at all. Secondly, banking and investment was a bit of hocus pocus that men who trade claimed as their religion for some two thousand years or more but the happy times are over now: the world cannot trade its way out of the climate crisis, rather governments must spend their way through the crisis, which in any case is likely to last forever. And finally, de-growth is not a useful concept in the same way that growth was not a useful concept when planning how to create and use money. Plants and animals and humans grow: individually and in numbers. They also die, and return to the earth, the air, the water. But money does not grow: it is created, and it should be created, by government and not banks, for public purpose.
Anandi Sharan was born in Switzerland, lives in Bangalore, and worked in Araria District in 2016. She mainly writes about India and how we need a better money policy to help agricultural labourers and women especially to adapt to man-made climate change.BLOG COMMENTS POWERED BY DISQUS