Beyond Liberalism provides a remarkable and thought-provoking critique of the concept and notion of ‘liberalism’, typically exemplified, according to the author, in the manner in which ‘liberal democracies’ have evolved over time integrating political and economic frameworks that have gone into the formation of Capitalism.
The book has fourteen chapters, in each of which the reader can easily discern how deep Patnaik has delved into the philosophical concept of individual freedom; in particular, throughout the book, he engages with the contrasting understanding of individual freedom in Liberalism and Marxism, and the particular political praxis that each advocate. In the process, he covers a vast period in economic history and a range of authors, whose ideas and prescriptions have shaped not just the discipline of Economics but have also had significant policy implications.
The introductory chapter lays out the focus of the book in general; the rest of the chapters explicate how, over time, with changes within nation-states and across the globe, individual freedom for most people and in particular for those in paid employment is a chimera. The working of the economic system, especially in an era where Capital is globalized but not the working population, has constrained the capacity of states to intervene thereby adversely impacting the realization of individual freedom.
The chapter titled ‘Some Misconceptions in Economics’ is a must-read for teachers and students of economics alike for the unlearning and renewed learning of received notions associated with certain terms that are generally assumed to be imbued with the same meaning even when they are used in different theoretical frameworks. ‘In particular, what has not been recognized is the fact that there are two different, almost diametrically opposite, perceptions of capitalism in its totality, not just between classical and Marxian economics, but between Marxian economics on the one hand and both classical and neo-classical economics on the other… each generates a different political agenda’ (italics as in original) (p. 12).
Patnaik provides several illustrations of misconceptions: these include the important differences between the classical and neo-classical conceptions of competition, and the difference between both these on the one hand and, on the other, the Marxist conception of competition under Capitalism. The contrasting views on the origin of Capitalism have important implications for the notion of individual freedom; while the classical liberal perception sees Capitalism as an arrangement that emerges through free individuals coming together (voluntary cooperation) as employers and labourers to improve their material well-being, the alternative view expressed by Marx perceives the emergence of Capitalism through an exercise in coercion. To quote the author:
Coercion displaces some petty producers from their traditional occupations by separating them from their means of production and they become ‘free’ wage-labourers in the double sense: of being unencumbered by any means of production, and having full ownership over their bodies and hence their labour power… these labourers no doubt enter quite voluntarily into contracts with others willing to employ them, but they do so from a position where they are already dispossessed and have no other alternative…. I call this perception of the system the coercion-based or ‘coercionist’ view of capitalism (italics as in original) (p. 15-16).
Equally important is the author’s observation that, since not all those displaced from their traditional occupation through coercion are likely to find employment, and therefore remain unemployed, both wage employment and the reserve army of labour are simultaneously created by Capitalism’s act of coercion.
Patnaik provides an elaborate critique of, among other things, Adam Smith’s argument that Capitalism’s voluntarily entered-into arrangement makes everyone better off; this argument is premised on an increase in labour productivity caused by technological progress, which Smith associates with the division of labour. According to Patnaik, Smith fails to distinguish the division of labour within an enterprise from the division of labour characterizing society as a whole—a phenomenon much visible today because of the splitting up of a manufacturing process into several simple component activities and locating these components in different countries in a global value chain to reap the benefits of low wages in the Third World.
Analogous to the above, Patnaik lays bare the logical problems that characterize the neo-classical economics concept of ‘rationality’, where the self-centred individual producer maximizes profits accruing solely to him while the consumer maximizes the utility that he alone derives from the goods and services in his possession without there being any scope for situations where, say, the producer’s action could (adversely) impact the consumer’s utility. Neo-classical economists tend to address this phenomenon by bringing in the notion of ‘externalities’, which again has been discussed threadbare by Patnaik with a concrete illustration of the problem of pollution, where a view prevails that externalities can be handled by having appropriate markets. Patnaik flags two issues against the market solution for externalities. One is ethical: if those exposed to pollution are the poor rather than the rich, the former would not be adequately compensated, if at all—an argument very relevant today considering the fact that most polluting components of manufacturing processes have been shifted to the Third World from advanced Capitalist countries, implying thereby that some lives/human beings are more valuable than others. The second argument against a market solution to the problem of pollution stems from the fact that understanding the scale of damage done to people and the environment by pollution requires a certain level of scientific knowledge which people in general may not have.
Patnaik demonstrates how the economist John Maynard Keynes himself exposed a serious problem associated with the neo-classical view of Capitalism, namely, that mass unemployment was a characteristic feature of the Capitalist system and which entailed a lack of agency for the individual. While Keynes saw state intervention as an embodiment of ‘social intervention’ that could achieve full employment, Patnaik argues how states are themselves constrained in their interventions, apart from the fact that genuine full employment can never be achieved under Capitalism. Marx attributed the incapacity of states to improve Capitalism to the fact that states themselves were controlled by Capitalists—what Patnaik refers to as a sociological perception. ‘I call this understanding sociological because it sees the root of the non-malleability of capitalism not in terms of its inner functioning, its own immanent tendencies, but in the incapacity of the agency that could bring about any change in the system, to do so’ (p. 117).
While not dismissing the sociological argument, Patnaik emphasizes more the economic factors that create dysfunctionality in the spontaneous functioning of capital through the imposition of reforms by the state. For instance, the author argues that workers forming associations to fight for better wages or the state intervening to control the system in certain circumstances—all constitute breaks in the spontaneity of the Capitalist system. However, the fundamental immanent tendencies of Capital, instead of ceasing to operate, reappear in a different form, such as through centralization of Capital, or, through the changed nature of erstwhile imperialistic tendencies euphemistically now termed as economic cooperation between countries.
Patnaik also emphasizes the frenetic nature of Capitalism that arises ‘from capitalism’s own immanent tendencies—i.e., competition, accumulation and crisis (which too are expressions of this freneticism)—but also by the freneticism arising from the fact of being perennially caught in the act of combating those forces that constitute the simultaneously present negation of the system’s own essence’ (p. 153).
The above leads the author logically to the argument that Capitalism can never win the struggle to achieve individual freedom unless the spontaneity and competition characterizing Capitalism give way to a new economic order—Socialism, even when realizing that existing ‘Socialist’ countries not only do not have elected representative governments but worse, have generally ridden roughshod over individual freedom (p. 183).
Patnaik thereafter elaborates on why rectification of failures of existing Socialism is not possible as long as there exist what he calls ‘misconceptions about the nature of Socialism’ (p. 187), and goes on to describe in detail what Socialism should ideally entail. To quote him : ‘Socialism must mean the direct involvement of workers in the taking of decisions that affect their economic lives. For this, the socialist society must be characterized by a set of sub-national or regional units (communes) which are largely self-sufficient in economic terms and largely self-governing politically, where workers take decisions collectively’ (p. 190). ‘…the conception of Socialism must be seen essentially as a freedom-enhancing rather than a production-enhancing project’ (p. 192). ‘The transformation that allows a society to transcend Capitalism will necessarily be based on an alliance between workers and petty producers, especially peasants. If this transformation is to move forward towards Socialism, then the peasants must be induced to move towards collective forms of property voluntarily, without being subjected to any coercion’ (italics as in original) (p. 193).
Apart from emphasizing the need to preserve what he refers to as the ‘subjecthood’ of class alliance, Patnaik also emphatically states that the defining feature of the transition to Socialism is anti-consumerist, anti-possessive cultural revolution, that eschews the mindless, inexorable attention to the development of productive forces that Capitalism entails. Equally important is the discussion in the book on the role of ‘theory’, to create what Patnaik calls a ‘socialist consciousness’ among workers who may otherwise be familiar with a trade union consciousness. ‘If theory-making…breaks down the binary between a distinct class of theory-makers and a separate one of theory-users, then the proletariat does not get dissociated even in principle from its subjecthood’ (pp. 197-98).
As indicated right at the beginning, there is much that teachers of the discipline of economics in particular can gain from an engagement with this book. The book also provokes one to ask several questions that could be the subject-matter of another book: what lens would Patnaik use to understand the nature of development that East Asian countries have experienced, as distinct from the West? Do ‘workers’ form a homogeneous category, as implicit in the manner in which Patnaik has discussed this category of people? Would Patnaik’s ‘Socialist countries’ not face involuntary unemployment due to the introduction of ‘disruptive technologies’? How would freedom-enhancing Socialism deal with changes in productive forces that in turn impact labour absorption?
Since, as Patnaik acknowledges, existing Socialist countries have failed on several fronts, most important being their inability to enhance individual freedom, it becomes difficult to visualize who will anchor the alternative scenario he has sketched, and how.
Padmini Swaminathan is an independent researcher based in Chennai.