The effectiveness of private equity has been a subject of ongoing debate in countries of the Global North. There is substantial evidence highlighting the extractive practices associated with private equity operations across Western nations. Examples include the decline of the  and the financial instability of local councils in the UK, particularly in the provision of . Similarly, in the United States, private equity has been linked to the attrition of an already fragile . In ., its influence has contributed to the deterioration of care homes, raising significant concerns about its broader social and economic impact.

In a recent blog, Michael Roberts characterized private equity as 鈥溾��, encapsulating the widely recognized critique that private equity firms function through a rentier model. These firms are frequently associated with practices such as asset stripping, worker lay-offs, and opting for excess leverage that increases the debt burdens of their acquisitions, all while failing to provide compelling evidence of value creation. This perspective aligns closely with earlier criticisms of private equity. During the 2000s, private equity operations were similarly likened to a swarm of , reflecting widespread disapproval of their extractive and often detrimental economic practices.

In summary, such analogies emphasize the aftermath of private equity operations, leaving behind 鈥渃arcasses and barren landscapes.鈥� Nevertheless, the evidence of a hollowed-out socio-economic landscape in the Global North has not deterred the international expansion of private equity into countries of the Global South. On the contrary,  have emerged in tandem with the globalization of Western private equity. In so-called 鈥渆merging markets,鈥� this expansion manifests in various forms, including an enthusiasm for deploying 鈥渕oral money鈥� through international development initiatives.

This article examines the role of private equity in Global South countries, focusing on three key characteristics: the escalation of indebtedness, the weakening of public markets, and the public subsidy function of development finance in facilitating private equity investments.

What is Private Equity?

Private equity refers to a class of alternative investments comprising capital that is not listed or traded on public exchanges. It involves funds and investors who

Public markets. Most private equity capital is sourced from institutional investors and high-net-worth individuals capable of committing substantial sums of money for extended durations.

Private equity investments are typically employed to fund new technologies, expand working capital, execute acquisitions (including buyouts of publicly traded companies that are subsequently privatized), and improve balance sheets. The primary participants in a standard private equity operation include a General Partner (GP), a set of Limited Partners (LPs), and the private equity fund. The GP provides management expertise and allocates investor capital, the LPs serve as the providers and owners of private capital, and the private equity fund is the instrument for acquisition of various investments.

 Figure 1: How Private Equity Works

Private Equity in Global South

Private Equity (PE) in so-called 鈥渆merging economies,鈥� led by countries such as Brazil, China, and India, emerged during the 1990s alongside the wave of global liberalization. By 2011, fundraising in these economies was estimated to have risen to approximately 20% of global private equity fundraising before stabilizing at around 10% (see ). However, since 2015, growth in these markets has been marked by volatility, and the global private equity landscape has experienced significant downturns in the wake of the COVID-19 pandemic.

Estimates regarding the size, scale, and number of private equity deals in niche 鈥渆merging markets鈥� are predominantly produced by private research firms. The empirical analyses and trend forecasts from these firms are often intertwined with the private equity business cycle, which poses a challenge to efforts to determine the true size of the market due to variations in research methodologies. Nevertheless, available empirical data offer insights into broader trends that extend beyond the economies of the Global North.

In 2023, PE fundraising in the Asia-Pacific region reached , according to Bain & Company. In contrast, African PE fundraising totalled , with an aggregate deal value of $5.9 billion, as reported by African Private Capital. In Latin America, the aggregate deal value for private equity in Q3 2023 was , according to Preqin.  And, in the Middle East, private equity deals were valued at  in 2023 in data from S&P Global.

Private equity investors are predominantly based in the Global North, with the majority originating from the United States (Figure 2). However, regionally significant PE funds have emerged in countries such as India, Brazil, China, Kenya, and South Africa. Additionally, institutional investors in the Global South, including pension funds, high-net-worth individuals, and family offices, have also been directly investing in private equity. Globally, PE investors are primarily concentrated in the US, Europe, and Australia. Furthermore, most domestic and regional funds often include consortia involving Global North PE investors.

As countries revise domestic financial regulations to accommodate the growth of private equity and establish frameworks for alternative investment financing and non-banking financial institutions, the role of private equity is poised to evolve. This could potentially reshape financial institutions in these regions, akin to the transformative impact observed in the United States with entities such as . As noted in the , the potential saturation of businesses and dematerialisation of wealth in the West has a counterpart in rising PE activity in Global South countries. While the pandemic put a global halt to PE investments, there is reinvigorated interest in subsiding investments through development finance matched by an increased demand for climate and renewable energy deals.

Figure 2 Value of funds raised by largest private equity firms worldwide between 2017 and 2023 (in billion U.S. dollars)

Source: Statista 2025

Private Equity Debt: Leveraging Vulnerability and Deepening Commodification

PE inverts the capital structure of public companies by placing debt in command of equity, through a process of financial engineering. By design, PE redefines the traditional model of acquisition, transforming it into a financial instrument within a broader portfolio of investments. The ultimate goal is to derive returns from ownership for the PE fund. Debt, or indebtedness, plays a central role in this model, directly affecting the stability of acquisitions. The structural inclination of General Partners (GPs) towards leveraging significant amounts of debt inherently increases the risk of distress for acquired companies. While financial distress may represent an extreme outcome, it is nevertheless an anticipated possibility within the PE framework. Indebtedness constrains operational flexibility and heightens the exposure of acquisitions to adverse external factors.

In Global South countries, PE investments face additional challenges due to the compounded effects of structural underdevelopment, limited currency reserves, restricted access to international finance, and different operational and governance systems. These factors amplify the vulnerability of acquisitions to indebtedness. However, these challenges have not deterred PE investors. As  highlight, the failures of PE are not the result of errors in identifying struggling companies or making misguided investments. Instead, PE intentionally targets companies with inherent vulnerabilities, making them susceptible to acquisition and subsequent indebtedness. The monopolistic tendencies of PE operations, such as in the , further exacerbate these extractive dynamics. In an anthropological , David Souleles describes the role of financialisation in PE as 鈥榯he abstraction of productive enterprises into the register and language of finance鈥�.

The capacity of PE to exploit vulnerabilities extends beyond commercial companies seeking quick access to liquidity. In Global South countries, the privatization of public goods has been a gradual and ongoing process. Contrary to the notion of widespread privatization following the wave of liberalization in the early to mid-2000s, this period instead witnessed a combination of partial privatizations and intermittent re-nationalizations during periods of crisis. Sectors such as healthcare, education, and financial services鈥攐ften driven by the World Bank鈥檚 emphasis on financial inclusion鈥攔emain primary targets for PE investments in these regions.

In this context, the vulnerabilities leveraged by PE extend to capturing provision of essential public needs. By targeting critical services necessary for citizens鈥� well-being, PE investments exploit the structural weaknesses of public systems in these sectors, turning basic necessities into sources of profit and deepening the dependence of these services on private capital.

Weakening Public Markets

The expansion of private investment, including in the Global North, depends heavily on the institutional infrastructure of public markets. Private equity (PE) relies on public markets for exit, often using tradable stocks as acquisition currency. This practice undermines the original purpose of public markets鈥攖o generate new capital for domestic investment. The issue is magnified in Global South countries, where underdeveloped financial markets exacerbate the challenges. Limited financing for productive capital creation within the domestic private sector constrains long-term reinvestment opportunities and stifles the potential for effective industrial policy. As a result, the increasing monetization of gains by private investors through public markets reinforces the privatized reorientation of these markets.

Moreover, PE investors often benefit at the expense of public investors and domestic private sector participants. Valuation differences between public and private companies frequently favour the latter, enabling private investors to dominate IPO markets. This trend has become even more pronounced in the post-COVID-19 era, which has been marked by weak IPO performance across several regions.

In Asia, however, PE investors have navigated IPO challenges by creating 鈥�,鈥� which serve as alternatives to traditional IPOs. These funds allow investors to sell investments directly to a fund, sidestepping conventional public market mechanisms. The legal, governance and regulatory implications of selling funds raised by investors themselves and determining pricing in such transactions remain largely unexplored. This practice underscores the capacity of PE firms to engineer profitable exits while avoiding losses and bypassing the need to demonstrate tangible public returns. Notably,  stands out as an exception, where stringent government regulations on IPOs have prevented such PE-driven trajectories.

Development Finance to the rescue? Who Pays?

Since the 2008 financial crisis, finance-based integration between developed and developing countries has intensified, driving North-based institutional investors, Multilateral Development Banks (MDBs), and International Financial Institutions (IFIs) to pursue PE investments in developing nations. Multilateral and bilateral Development Finance has increasingly been routed through private equity funds for development-oriented investments. Prominent Development Finance Institutions (DFIs) investing directly in companies include the CDC Group, International Finance Corporation (IFC), Proparco, Swedfund, DEG, FMO, and Norfund. These efforts are characterized by a growing focus on climate-focused funds, renewable energy infrastructure, Environmental, Social, and Governance (ESG) ratings, and an emphasis on supporting Small and Medium Enterprises (SMEs) and domestic businesses, which are shaping the contours of PE activity in major Global South countries.

However, the case for a potentially reformed and 鈥渟tringently regulated鈥� PE model for Global South countries through the framework of development finance has no basis, given the widely reported extractive practices. A notable example is the former prominence of the Asian and Middle Eastern private equity fund , which spearheaded the marketisation of healthcare through its . This fund aimed to raise $1 billion for investments in health-related companies, receiving backing from major institutions such as the IFC, Overseas Private Investment Corporation (OPIC), Proparco, CDC, African Development Bank, and the Bill and Melinda Gates Foundation.

The eventual , often cited as a glaring case of corruption and illegal extraction, is frequently portrayed as an outlier. However, its practices are not fundamentally distinct from those of other Western PE funds. The protracted legal proceedings that led to Abraaj鈥檚 downfall have not been similarly applied to other funds engaging in comparable activities. Beyond the specific case of Abraaj, the broader role of PE in development finance, often misconstrued as 鈥減atient capital,鈥� fails to exhibit either patience or demonstrable value creation. Furthermore, it has yet to show any significant contribution to the structural transformation of Global South economies.

Why replicate failed models in the Global South?

PE, as a manifestation of private markets in Global South countries, operates as a mechanism that facilitates and normalises the pursuit of short-term yields. Extensive research from the Global North has underscored PE鈥檚 role in fragmenting and segmenting labour markets, exacerbating precarity within outsourced production networks, and hollowing out markets. These dynamics suggest that the role of PE in Global South economies must be critically examined through a financialised lens. PE鈥檚 impact on Global South economies with a predominance of the informal sector, a combination of diverse  listed and unlisted companies as well as a diversity of Global South conglomerates and rapidly changing financial markets demands attention to the dynamics of subjugation to monopoly capital in the Global North.

This is because PE does more than simply substitute the traditional role of finance as a service鈥攊t exploits the limited access to finance faced by firms in Global South markets. This structural vulnerability allows PE to entrench itself as a dominant financial force, often at the expense of long-term economic stability and development. While China provides an illustrative example of how rigorous state intervention can regulate and control PE activity, this approach addresses only the symptoms rather than the root issues. Even under stringent regulation, PE鈥檚 capacity to deliver meaningful value addition remains unproven. Furthermore, the inherent contradictions of PE, such as its reliance on indebtedness, extraction of value rather than its creation, and prioritization of investor returns over structural transformation, highlight the limitations of reformist approaches. A deeper reassessment of the structural objectives of PE entails examining its long-term socio-economic impacts, its contribution鈥攐r lack thereof鈥攖o domestic capital formation, and its influence on labour and public goods.

Farwa Sial听is a Research Associate at the Department of Economics, School of Oriental and African Studies (SOAS).

Born in 1931, C. T. Kurien contributed to rethinking economics through his various writings, particularly books and his vision for a practical B.A degree in Economics at Madras Christian College (MCC), an autonomous college situated in Chennai, a port city in Southern India. Besides MCC, another institution he contributed to was Madras Institute of Development Studies (MIDS), a research-only institute, also in Chennai. Kurien passed away in July 2024 aged 93.

This blog post provides a brief introduction to Kurien鈥檚 life and economics.

Brief Life

While at school in Kerala, Kurien was struck by the glimpses of Indian socio-economic realities found in Minoo Masani鈥檚 Our India, which was a text for his English course. It was recommended that he study logic and history before undertaking a degree in economics; and so, Kurien pursued his Intermediate (today鈥檚 class 11 & 12) from St. Joseph鈥檚 College, Bengaluru between 1948 and 1950.

Kurien did his B.A (Hons.) Economics at MCC (1950-53). In an autographical discussion in Rethinking Economics: Reflections Based on a Study of the Indian Economy (1996), Kurien shares details regarding his academic life. As a BA student, Kurien had to study 6 papers and write one essay; in the first year, he had 鈥楶rinciples of Economics鈥� and 鈥楨conomic History鈥�; and in his final year, he had 鈥楶ublic Finance鈥� and 鈥楻ural Economics鈥�. The 鈥楶rinciples of Economics鈥� course dealt with the theory of consumer behaviour drawn from marginalist economists such as Lionel Robbins. It was in the 鈥楶ublic Finance鈥� course where the students were exposed to contemporary discussions related to the Indian Economy.

Since Madras University recognised BA (hons) as equivalent to an MA in Economics, Kurien was eligible for lectureship. And so, after his BA, he joined the teaching faculty at MCC in 1953. Kurien was to be associated with MCC for 25 years鈥攈e left MCC in 1978.[1] Between 1953 and 1958, Kurien (1996) identifies two debates, which took place in the pages of Economic Weekly that influenced him. First was VKRV Rao鈥檚 critique of Keynesian economics based on the standpoint of Indian specificities. The second was the debate on the choice of technique in relation to questions regarding planning. In the former, KN Raj, Joan Robinson, Amartya Sen, and others participated.

Taking a leave of absence from MCC, Kurien moved to Stanford University in 1958 to begin work on his PhD, which was completed in 1962. His teachers included H. Houthakker, K. Arrow, Irma Adelman, Hollis Chenery, Lorie Tarshis and Bernard Haley. Kurien鈥檚 Ph.D supervisor was Chenery, and when Chenery left to join the Kennedy administration, Moses Abramovitz became Kurien鈥檚 supervisor. Kurien鈥檚 Ph.D thesis was titled Factor Market Structure and Technological Characteristics  of an Underdeveloped Country: An Indian Case Study. The central argument was that there was a rational basis 鈥渇or factor market imperfections in underdeveloped countries, particularly those said to be characterised by surplus labour鈥� (p. 27).

In 1978, Kurien left MCC and joined MIDS as its director. MIDS was founded by Malcolm Adisheshiah in 1970 and in 1977 was reconstituted as an Indian Council for Social Science Research (ICSSR) institute. Kurien served as Chairman of MIDS from 1997 to 2003. At MIDS, he supervised ten PhD dissertations (for the list, see Appendix A). In 1996, Kurien received UGC鈥檚 Lifetime Achievement Award. In 2002, he served as the President of Indian Economic Association.

Rural Transformation

Kurien鈥檚 book Dynamics of Rural Transformation:  A Study of Tamil Nadu, 1950-1975 (1981) was a pioneering one in regional economics, and it was adapted as a model study for other states by ICSSR. Published in 1981, the book examined the nature of rural transformation in Tamil Nadu between 1950 and 1975.

Kurien outlines the following ways to interpret changes in Tamil Nadu鈥檚 rural economy.

1. Commodity flow approach: this mostly involves the 鈥渃onversion of all quantities into value categories鈥︹�� (p. 119). Within this, the commonly used methods are the neoclassical aggregate production function and the disaggregated input-output.
2. Class approach: since classes are 鈥渃onceptual categories鈥�, their usage allows for commenting on long-term changes. Moreover, when applied to studying short-term changes, the translation of 鈥渃onceptual categories into operational empirical categories鈥� have been found to be 鈥渄ifficult鈥� (p. 120). Kurien, here, refers to the debate between Ashok Rudra and Utsa Patnaik in 1971 in Economic & Political Weekly (p. 147, n. 4).
3. Factor analysis: this 鈥渆nables an examination of the interrelationships among a set of variates to proceed towards the construction of a composite index out of the variety of variables鈥� (p. 120). Kurien probably picked this up from Adelman, one of his Stanford teachers; she co-authored with Cynthia Morris Society, Politics and Economic Development: A Quantitative Approach in 1967.
4. Cluster analysis: it 鈥減ermits one to group a set of variables or entities whose properties can be represented by a variety of variables, into more homogeneous subgroups鈥︹�� (p. 120); this was used in his earlier work with Josef James which was published as Economic Change in Tamil Nadu 1960-1970 (1979).

Kurien eschews all these four approaches and prefers going with 鈥渁 deliberately chosen focus鈥� (p. 120) to make sense of rural transformation. In the book, he makes use of decile groups, Gini coefficients and concentration ratios. Kurien makes the issues in comparing various survey data very explicit and provides a rich description of the data sources. There are insightful discussions on cropping patterns in the districts versus the state (pp. 37-41), increased mechanization of agriculture (p. 35), increased consumption of fertilizers (p. 36), decline in rural real wages (p. 100).

Markets in Economic Theory

Kurien鈥檚 R.C. Dutt lectures on political economy, given in 1990, was published as a book in 1993. It was titled On Markets in Economic Theory and Policy.

While he has not made theoretical contributions to the notion of markets, as a student of development economics, Kurien has 鈥渢ried to understand the phenomenon of the market in the context of the evolution and transformation of economies鈥� (p. 7). He rightly observes that 鈥溾�hile theory has the facility to make abstractions from reality, policy cannot abstract away from reality鈥� (p. 12). After stating that 鈥淸t]here are different theoretical traditions in economics鈥�, Kurien draws our attention to the 鈥渢wo very broad traditions鈥� outlined by Amartya Sen: 鈥渢he 鈥榚thical鈥� and 鈥榚ngineering鈥� traditions (p. 8). Kurien鈥檚 standpoint is best captured by this sentence: 鈥渢he market must be considered both as a social institution and as embodying certain logical properties鈥� (p. 10).

In his lectures, Kurien focuses his attention on four thinkers: Adam Smith, Karl Marx, John Hicks, and Karl Polanyi. In this blog post, we shall restrict our attention to Kurien鈥檚 view of Adam Smith鈥攅specially because of the dominant view which incorrectly views Smith as a precursor of marginalist economics and a champion of free market.

Kurien rightly points out the state of affairs that Smith is not pleased with: guilds and restrictions on trade. Smith wished that people had the freedom to enter the market and compete. And, most importantly, 鈥溾�mith鈥檚 position is that the exercise of self-love must be seen within the context of a kind of social relationship built on justice which includes protecting the weak and chastising the guilty鈥� (p. 15). Kurien makes his own position very explicit when he writes that he favours the 鈥渆thical tradition鈥he institutional approach鈥� (p. 11).

Traditions in Economics

Kurien鈥檚 engagement with various approaches in economics is visible in his Dynamics of Rural Transformation (1981), On Markets in Economic Theory and Policy (1993), and 鈥楬istory, Logic and Narrative in Pedagogy鈥� (2019)鈥攁 chapter in Pluralistic Economics and Its History, a book I co-edited with Ajit Sinha.

Drawing on Sen, Kurien (1993) places Socrates, Aristotle and Kautilya in the 鈥渆thical tradition鈥� and Walras in the 鈥渆ngineering tradition鈥� (p. 9). But in fact, Sen places Kautilya in the engineering tradition alongside Petty and Walras. Sen, in his slim book On Ethics and Economics (1987), writes: 鈥淭he 鈥榚ngineering鈥� approach also connects with those studies of economics which developed from the technique-oriented analysis of statecraft. Indeed, in what was almost certainly the first book ever written with anything like the title 鈥楨conomics鈥�, namely Kautilya鈥檚 Arthasastra, the logistic approach to statecraft, including economic policy, is prominent鈥� (p. 5).

Such a distinction is a poor one because Smith鈥檚 political economy is a mix of logical and ethical considerations. More significantly, such a distinction is problematic because it obfuscates the truth鈥攖hat there exists contending paradigms within the so-called engineering tradition. For example, Ricardo is a classical political economist while Walras is a marginalist economics鈥攁nd both were concerned about ethical matters.

On the first point, Kurien also agrees. As he writes: 鈥渢here is no incompatibility between the ethical and engineering approaches鈥� and 鈥溾�he tendency to think of the two traditions as mutually exclusive, and even as antagonistic 鈥� is an error and a pity鈥� (p. 9). Kurien also calls them the 鈥渋nstitutional approach鈥� and the 鈥渓ogical approach鈥� (p. 10).

In Kurien (2019), he begins by noting that economics teaching is dominated by neoclassical (I prefer marginalist) economics owing to the dominance of textbooks by Mankiw (and in the past, Samuelson and Marshall). While Kurien (1981) distinguished between the neoclassical production function and class analysis, his subsequent writings draw from Sen鈥檚 classification. In Kurien (2019), he calls the two approaches in economics as the 鈥渟ubstantive approach鈥� and the 鈥渇ormal approach鈥�. He places Smith in the former and Ricardo, Jevons, Walras, Arrow, and Debreu in the latter.

Concluding Thoughts

Kurien had a life-long interest in the pedagogy of economics. In Kurien (2019), he recommended the inclusion of real-life issues, history of economic thought and economic history, and the collection and analysis of data in the economics curriculum. And so, when I sent him my book Macroeconomics: An Introduction (2021), which is built on my standpoint of contending (鈥渆ngineering鈥�) approaches in economics, I was a little anxious. I was reassured and delighted when he wrote that he found my work as 鈥渁n original contribution to economics as a branch of the social sciences鈥� (personal correspondence, 17 July 2021).

Kurien鈥檚 work helps us understand the specificities of the Indian economy better. Initially, he used descriptive statistics, and later in life he employed narratives鈥攁ll with the clear purpose of ensuring a good life for all.[2] Let me end this essay with an excerpt from Kurien (1993): 鈥淢y view is that鈥ny serious study of social issues and of society, or of the economy as part of the study of society, is related to two basic queries: 鈥榃hat is my responsibility to myself?鈥� and 鈥榃hat is my responsibility to my neighbour?鈥�, precisely because society (and economy) consists of myself and my neighbours and of our interaction鈥� (p. 11).  

ALEX M. THOMAS is Associate Professor of Economics, Azim Premji University, Bengaluru, India. He is the author of Macroeconomics: An Introduction (Cambridge UP, 2021). He is a founding member of the Indian Society for the History of Economic Thought (ISHET) and serves as a council member for the European Society for the History of Economic Thought (ESHET).

Photo: C. T. Kurien, Source: 

This blog post is based on the online presentation I gave at The Reading Club, Department of Economics, MCC on 3^rd August 2024; I am grateful to Arun Koshy for inviting me to commemorate Kurien鈥檚 life and work. The content and opinions expressed are mine and are not endorsed by and nor do they necessarily reflect the views of Azim Premji University.

APPENDIX A

Table: List of PhD students supervised by C. T. Kurien at MIDS

Source:

[1] Under Kurien鈥檚 leadership, the faculty body at MCC restructured their undergraduate curriculum; a report of that exercise, including the syllabus, was published as 鈥樷�� (1976) in Economic & Political Weekly (vol. 11, no. 51, pp. 1962-1966). I am grateful to C. Selvaraj for alerting me to this article.

[2] He reviewed a variety of economics books for the magazine Frontline; it would be fruitful for someone to write a paper studying his numerous book reviews. For a list of reviews, see (for drawing my attention to this aspect of Kurien鈥檚 work, I acknowledge Raghunath Nageswaran).

Indian economist Amartya Sen has posed a devastating challenge to the dominant capitalist understanding of development. But Sen鈥檚 own analytical framework doesn鈥檛 go far enough in exposing the inherently exploitative logic of capitalism.

Amartya Sen is one of the most influential thinkers about development in the contemporary world. Since the 1970s, he has published widely across the disciplines of economics and philosophy. He received the Nobel Prize for Economic Science in 1998. In 2010,听Time听magazine rated Sen as one of the world鈥檚 one hundred most influential people.

There is a predominant notion of development trumpeted by international institutions, many academics and journalists, and politicians of most stripes. It holds that economic growth provides the basis for human development. Given that under capitalism, economic growth is for the most part rooted in capital accumulation, 鈥済rowth-first鈥� notions of development are essentially capital-first notions.

This way of thinking places capitalist firms, managers, and the states that back them at the helm of the human development project. It conveniently excuses the ways in which such growth generates, and is often based upon, novel forms of poverty and oppression for workers. Sen鈥檚 writings pose a major challenge to the growth-first/capital-first idea of development.

A Contradictory Vision

However, his work is two-sided (or contradictory). On the one hand, Sen punches big holes in mainstream explanations for manifestations of poverty and deprivation that are caused, often directly, by capitalist development. He also provides an approach to development that, on the surface, counters the emphasis on growth and capital accumulation.

On the other hand, Sen sets out a vision of development that promotes the expansion of capitalist markets. This two-sidedness stems from the fact that Sen can identify problems with capitalist development but is unable to penetrate the veil of capitalism itself.Amartya Sen punches big holes in mainstream explanations for manifestations of poverty and deprivation that are caused, often directly, by capitalist development.

His understanding of capitalism is shallow and rooted in the liberal ideology that presents it as a system based on market exchange between free agents, rather than one rooted in exploitative productive relations, as a Marxist framework would suggest.

There is much in Sen鈥檚 work that we can usefully deploy to develop a critique of capitalism. But this has to involve linking his insights to an alternative, labor-centered version of political economy.

The World Food Crisis

In the context of climate breakdown, global environmental collapse, and mass hunger, the inability of the world food system to feed an expanding population is an ever-present subject of concern. In 2022, over 820 million people globally .

Sen鈥檚 1981 book  was an essential intervention into the political economy of famine and the analysis and alleviation of hunger. Born in 1933, the economist grew up in British-controlled India and experienced firsthand the 1943 Bengal famine, in which at least three million people perished.

Dominant explanations of the Bengal famine as well as other famines and episodes of widespread hunger resort to food availability decline (FAD) arguments. Simply put, they argue that there were too many mouths to feed.Sen鈥檚 1981 book Poverty and Famines was an essential intervention into the political economy of famine.

By contrast, Sen showed how in a series of cases, from Bengal in the 1940s to the Bangladesh famine of 1974, food was available at the time 鈥� often in higher quantities than during non-famine periods. Crucially, it was not the absolute volume of food that determined whether people died or lived, but the capitalist price mechanism.

Sen demonstrated that the Bengal famine was caused by rapid price inflation rather than crop failure. British military and civil construction investments, including air strips, barracks, munitions, and clothing for soldiers and civilians, fueled such inflation. It pushed up food prices in relation to agricultural wages, leaving agricultural laborers unable to afford food.

Since there was no general crop failure, peasants with access to land were relatively unaffected by price inflation. On the other hand, nonmilitary or civil construction wage workers, mostly in the rural sector, were particularly vulnerable. These sections of the wage-labor force bore the brunt of the catastrophe.

Keynes and the Bengal Famine

Sen鈥檚 arguments in Poverty and Famines were a necessary counterargument to the mainstream apologetics for mass hunger. Such arguments often ended up blaming the poor themselves for being too numerous, conveniently obscuring how the capitalist economy continually reproduces poverty.Despite his perspicacity, even Sen himself underestimated the deliberately manufactured causes of the Bengal famine.

However, more recent scholarship has shown that despite his perspicacity, even Sen himself underestimated the deliberately manufactured causes of the Bengal famine. His analysis is thus incomplete as an explanation for the persistence of global hunger.

Indian academic Utsa Patnaik鈥檚 study of the Bengal famine demonstrates how the price inflation in Bengal represented a deliberate British policy. This policy was recommended by none other than the famed liberal political economist John Maynard Keynes.

In the context of the UK鈥檚 wartime crisis, Keynes advocated 鈥減rofit inflation鈥� to achieve a 鈥渇orced transference of purchasing power鈥� from the mass of the population to the British exchequer. Military investments in Bengal were to be paid for by printing money, without regard for their impact upon the poor of the region.

The increased money supply pushed up prices, benefiting the region鈥檚 capitalists who were then taxed in turn by the colonial state. The state used these funds to raise its military investments in India itself while siphoning off surplus funds to the UK exchequer to finance its European war effort.

As Patnaik :

Without deliberate state policy of curtailing mass consumption, over 拢1,600 million of extra resources could not have been extracted from Indians during the war, with the bulk of this enormous burden falling on the population of Bengal since the Allied forces were located in and operated from that province. The state policy was to induce a very rapid profit inflation which redistributed incomes away from the working population, towards capitalists and companies, which were then taxed.

Sen鈥檚 emphasis on the capacity of the capitalist price mechanism to generate mortal threats to millions of people is indispensable for any analysis of the current world food crisis. But we also need to identify deliberate state policies designed to further weaken the poor and accelerate marketization.

Changing the Food System

In response to the continued existence of hunger and malnutrition in the contemporary world, mainstream institutions still resort to arguments about the availability of food. One  comes from the UN鈥檚 Food and Agricultural Organization:

By 2050 the world鈥檚 population will reach 9.1 billion, 34 percent higher than today. Nearly all of this population increase will occur in developing countries . . . In order to feed this larger, more urban, and richer population, food production (net of food used for biofuels) must increase by 70 percent.

The reality is rather different. At present, the world already produces 1.5 times the amount necessary to feed everyone on the planet 鈥� indeed, it produces  even a population as high as ten billion by 2050.The problem of world hunger is not insufficient food but rather the poverty and unequal power relations that are intrinsic to capitalism.

The problem of world hunger now, as in the cases analyzed by Sen, is not insufficient food but rather the poverty and unequal power relations that are intrinsic to capitalism. The world鈥檚 poor simply do not have the money to pay for the food they need to live healthy lives.

Moreover, the argument that the world needs to ramp up food production to avoid mass hunger in the future deliberately obscures how the contemporary food system is itself a major generator of hunger. The concentration of land for agribusiness entails mass dispossession of rural populations, often facilitated by the states that rule over them.

The capitalist profit motive drives firms to produce more lucrative crops 鈥� such as soy for feed to animals, or corn for ethanol biofuels 鈥� instead of food for humans. Wages in agriculture are often too low for workers to听.

Collective Resistance

The Bengal famine occurred under antidemocratic British colonial rule. In Poverty and Famines, Sen called for greater democracy as a counterbalance to the ability of undemocratic states to ignore the needs of the poor. Yet while postcolonial India has not experienced famines like that in Bengal, it still suffers from .

Since 1997, for example, more than three million small-scale farmers have committed suicide in response to falling incomes as a consequence of the . The existence of electoral democracy is not enough in itself to solve deep-seated problems of inequality and exploitation.Poverty and Famines largely ignored the collective action of workers to bring about improvements in their social conditions.

Poverty and Famines largely ignored the collective action of workers to bring about improvements in their social conditions. This reflected a latent methodological individualism in Sen鈥檚 conception of social change, which came to the fore in his later work. As professor Pritam Singh told me, this means overlooking important forms of popular resistance during the 1943 famine:

The better organized working class in Calcutta forced the then British government in India to arrange for food for them and was thus significantly less affected than the scattered, illiterate, and unorganized rural population.

Singh notes that the British government demolished refugee camps for famine victims, which worsened their conditions. Once again, it was the rural masses rather than what Singh calls the 鈥渕ore conscious and more organized urban population鈥� who were the main targets of the colonial state.

Real democracy does not just mean the right to vote and the existence of a free press. In order to combat world hunger, our goal should not be to ramp up food production, but rather to establish the democratic distribution of power and resources. In particular, this would mean land reform under the democratic control of rural and urban workers.

The Problem With Development

Capitalist development is brutal. It requires the formation of large working classes that lack property and are often subject to political brutality, whose members will then be available for exploitation by capitalist firms. From the emergence of agrarian capitalism and the first industrial revolution in the UK, to the catch-up development by the so-called Tiger economies of East Asia and their giant neighbor China, this economic system has always prioritized capital accumulation over real human flourishing.

When capitalist development does not deliver the promised results for the majority of people, which it never does, its defenders often argue that these shortfalls merely arise because such development has not taken place on a sufficiently broad scale. By doing so, they deflect attention away from the problems that capitalist growth itself causes, from dispossession and poverty wages to heightened reliance upon unpaid domestic labor to sustain the long working hours of family members. Such arguments lead to the call for more growth as the solution to those problems.In Development as Freedom, Sen noted that much growth-based development had the effect of suppressing freedom.

Sen鈥檚 1999 work  was his second profound intervention into the field of development. By the time it was published, Sen had already become one of the world鈥檚 leading thinkers on the subject. He initially delivered the book鈥檚 core arguments in the course of six lectures at the World Bank, reflecting his major presence in the development community.

In Development as Freedom, he noted that much growth-based development had the effect of suppressing freedom. He argued that human development could and should be understood instead 鈥渁s a process of expanding the real freedoms that people enjoy.鈥�

Sen adopted an individualistic conception of 鈥減eople,鈥� rather than a collective one. This constituted a major source of tension as he elaborated on his vision. For Sen, development as freedom meant expanding the abilities of individuals and thus the choices available to them, rather than simply increasing their incomes.

Development as Freedom called for the expansion of 鈥渋nstrumental freedoms鈥� that Sen considered essential to development. These included being able to live a life free of starvation, undernourishment, and premature mortality. Other such freedoms arose from the possession of literacy, numeracy, and the right to engage in uncensored speech and political participation.

Such instrumental freedoms may not have been as radical as the rights associated with classical visions of socialism, such as collective democratic ownership of the means of production and substantive social equality. However, much that unfolded in the history of capitalist development would simply not have been possible if Sen鈥檚 instrumental freedoms had taken priority over the capitalist growth imperative. In fact, capitalism itself would be at risk if we prioritized these freedoms over economic growth.

Idealizing Markets

The problem with Sen鈥檚 vision was not necessarily that it was insufficiently radical. Although he identified some of the elements required to bring about real human development, he does not consider the shift in class relations 鈥� in particular the mass struggles from below 鈥� through which they could be achieved.

In Development as Freedom, Sen ultimately put his faith in capitalist markets. His criticisms of capitalist development gave way to a contradictory celebration of those markets and the pro-capitalist logic that governs mainstream development thinking.Despite its critical thrust, Development as Freedom veered toward a relatively uncritical celebration of the power of markets to deliver development.

For example, he argued that 鈥渇reedom of exchange and transaction is itself part and parcel of the basic liberties that people have reason to value.鈥� In words that would be music to the ears of pro-capitalist thinkers, he also spoke about 鈥渢he persistence of deprivations among segments of the community that happen to remain excluded from the benefits of the market-orientated society鈥� (my emphasis), as if such 鈥渆xclusion鈥� was merely a malfunction of the system.

In Poverty and Famines, as we have seen, Sen showed that it was the capitalist price mechanism, not the availability of food per se, that functioned as the core determinant of whether the poor lived or died. Yet in Development and Freedom, he portrayed capitalist markets as spheres that promote freedoms, and called for the expansion of those markets as a remedy to the poverty and inequality they generate.

Sen鈥檚 analytical weakness derived from his understanding of capitalist markets as spheres of freedom. He conceptualized them as systems of exchange between individuals that all parties entered into freely, ignoring the reality of productive relations based on the exploitation of subordinate social classes. Despite its critical thrust,听Development as Freedom听thus veered toward a relatively uncritical celebration of the power of markets to deliver development.

Development as Liberation

We can still embrace Sen鈥檚 advocacy of real human freedom over economic growth. But this requires us to conceive of freedom as liberation from capitalist rule. Instead of 鈥渄evelopment as freedom,鈥� it would be better to think in terms of 鈥渄evelopment as liberation.鈥�

India provided us with a recent glimpse of what movements for development as liberation might look like. In 2020鈥�21, hundreds of millions of workers went on strike to support a  opposed to Narendra Modi鈥檚 attempt to ram through the marketization of Indian agriculture. For over a year, in the face of brutal state repression, the  engaged in nationwide strikes, sit-down protests, and the blockade of India鈥檚 capital, Delhi.

This mass movement generated class solidarity among laborers and cross-class alliances between workers and small farmers. It stopped, temporarily perhaps, the continued commercialization of Indian agriculture, and illustrated the potential of mass movements from below to shape state policy.

However, the major challenge remains how to go beyond such defensive struggles, important as they are, and transform private means of production into a commonwealth, in the true sense of that term. This is part of the struggle for development as liberation.

Benjamin Selwyn听is a professor of international relations and international development at the University of Sussex, Brighton, UK. His publications include The Struggle for Development (Polity Press: 2017). Photo:

In Price Wars: How the Commodities Markets Made Our Chaotic World, sociologist and filmmaker Rupert Russell travelled to some of the world鈥檚 most chaotic places: war zones in Ukraine, Iraq, and Somalia, the climate wars in Kenya and Guatemala, and Venezuela鈥檚 economic catastrophe. Told as gonzo investigation into what made the 2010s so tumultuous, Russell links each of these eruptions to swings in commodity prices, and the financial speculators whose bets set their prices.

Farwa Sial: The central tenant of your book 鈥楶rice wars鈥� is questioning the seemingly neutral basis of prices of goods and services. You frame pricing as a magical system, comparing diverse examples such as Alan Greenspan鈥檚 belief in the invisible hand of the market to the belief of the Melanesian cargo cultists. What exactly is the problem with the pricing system?

Rupert Russel: I found it profoundly strange that perhaps the most consequential social invention – market prices – are so little understood. We see the impacts of prices everywhere: oil and gas prices in Ukraine, bond prices on government spending, food prices on hunger and poverty, inflation statistics on government approvals, to name just a few. But how these prices are formed is ultimately a mystery. If I, or anyone else could tell you, they鈥檇 be a trillionaire – or richer. Indeed, banks and hedge funds pour endless resources in trying to divine what really makes a price, and if they can for a fraction of a second, untold riches can be – and occasionally are – unlocked. Prices are at once familiar, we use them every day, but just like peering down a microscope, when truly interrogated even everyday objects appear alien.

Prices are supposed to be formed through the negotiation of the world鈥檚 buyers and sellers. Usually, we think of that as people trading physical goods or timely services. But over the last three decades, other 鈥榖uyers鈥� and 鈥榮ellers鈥� have entered this market with different motivations. These are the banks, hedge funds, university endowments, and asset managers who see the economy as divided upon into distinct asset classes. Crucially, these enter a kind of meta-market where they are priced relative to one another, and not those physical and timely parts they鈥檙e supposed to. Commodities, as my chosen example, were turned into an asset class, and this 鈥榓sset鈥� was then used to 鈥榟edge鈥� against inflation or ensure 鈥榙iversification鈥� from the volatility of the stock market. 

Furthermore, when a market becomes truly speculative – or dominated by speculators – the game is won not by guessing where the real-world fundamental economy is heading. Instead, as Keynes showed in the 1930s, it is guessing what the other guessers are guessing. Trading strategies are simply new ways of trying to win this guessing game, and each year brings new tactics and strategies, as hedge funds compete in an arms-race like fashion. One of many strange examples I found, was the use of satellite data to predict harvests. What the hedge funds wanted from the start-up that produced crop-predictions based on such data was not the real harvest projections, but what other government reports (think of the ending of Trading Places), said they would be. Because that鈥檚 what the other speculator – or guessers – would be reacting to.

This to me was totally insane, and revealed the insanity of social arrangement by which we produce and distribute essential goods like food and fuel. When I say we do not really know what makes prices, it鈥檚 because the strategies these hedge funds are using are secretive. We can see the incentives, but the actual mechanisms are hidden from view. This is a political choice, and a very recent one. But despite the lack of transparency, the effects of this alto-driven guessing game are all too clear. The volatility is rising year on year. Any information entering the market – be it a climate shock, a war, a revolution – is amplified. I wrote in the book about ISIS invading Mosul pushing up oil prices by $5 over a week. That was headline news in the Financial Times. That was 2014. This year, we鈥檙e seeing $30 jumps in a single day. And in 2003, before the deregulations of 2000 really had taken hold, Bush鈥檚 invasion of Iraq – magnitudes greater in terms of potential supply disruption – did not cause oil prices to jump at all. In fact, Osama Bin Laden complained vocally about this in 2004!

Farwa Sial: Isn鈥檛 it amazing to consider that global pricing is a consequence of financial deregulation in a single country? The American financial system. As you show in the book it is such an important determinant for the transformation of the global landscape leaving wars and conflicts in its wake, altering the course of life for millions of children, and wreaking unimaginable ecological havoc.

Rupert Russel: This is really where we see the US as the dominant player in the global economy. The US has frequently set the 鈥榬ules of the game鈥� for the rest of the world. The finanicalisation of the commodities markets takes up the bulk of my book, but the final chapter delves into the longer history of the commodities markets.

The OPEC-embargo of 1973 led to the doubling – and then quadrupling – of the oil price. Oil importers across the world were forced to borrow dollars from Wall Street banks, Citi especially, to pay for the US dollar dominated oil deliveries. When Volker sent interest rates to 20% in 1979, he triggered what would become known as the Third World Debt Crisis. The Global South could no longer afford to serve the debt.

But one overlooked aspect of this story I found, was the role of Fed Chairman Arthur Burns. He was a conservative economist, and taught both Greenspan and Friedman, but was also subservient to Nixon who wanted to keep the economy running hot. He鈥檚 often neglected in the pantheon of Fed Chairs, but he made one policy change that made him perhaps the most consequential for the rest of the world. When Peru defaulted on its debts to Wall Street in 1976 and 1977, it was Burns who reimagined the IMF as world鈥檚 debt enforcer. He was facing his own Lehmann moment: if countries began defaulting on loans made to US banks, the US financial system could implode. So his solution was to simply make them pay back the loans in full through the IMF, which would demand austerity in return.

We know what happened next. Decades of 鈥榮tructural adjustment鈥� programs built the Neo-liberal world order. Its origins lay, however, in the commodities crisis of the 1970s, and the Fed鈥檚 role in trying to manage the fallout as a way to protect US financial interests.

Farwa Sial: I thought the analogy of Al-Shabaab to describe how global Hedge funds operate was very interesting. For some it may be a bit far-fetched, but you successfully demonstrate that the material impact on people is the same. Can you elaborate?

Rupert Russel: When I went to Somalia and heard how Al-Shabaab operated, it kept reminding me of what I had been hearing from hedge fund managers I was interviewing. For one, it鈥檚 not entirely just an analogy. Al-Shabaab earns a large share of its income by commodity trading. By smuggling commodities, they essentially engage in a kind of tariff arbitrage. All of this is just standard economics, and it wasn鈥檛 the first place that I made the connection between financial economies and economies in chaotic places. In Iraq and Venezuela, I had also noted how militias or black-market re-sellers were also operating by the same logic I saw in the world of hedge funds. For me, finance capitalism reproduces itself on every social scale: from the absolute apex in Upper East Side penthouses all the way down to those cleaning houses in Caracas. That is, I discovered, what it means to live in a market society.

But I took the argument further in Somalia because, at the end of my journey, I was reflecting on responsibility. I鈥檓 by no means the first to argue that financial institutions drove the food price bubbles in 2008 and 2011. The UN Special Rapporteur on the Right to Food came to the same conclusion. Scholars of Somali conflict and famine showed that the drought and spike in hostilities in 2011 were only possible because of high food prices internationally. Al-Shabaab, rightly, had been accused of weaponising hunger in this period. But their use of the food weapon was only possible because of the international situation, one that had been driven by financial speculators. At least the chaos Al-Shabaab wrought was confined (largely) to the Horn of Africa. Whereas the global food price spike launched a tsunami of suffering to dozens of countries that saw spikes in hunger and poverty, riots, and revolutions. Yet, only one side of this story was being told.

The counter-argument rests on one of intention. Speculators do not intend to cause mass suffering. We can debate whether or not that matters. But what they do do, and boast about doing, is profit from chaos. It鈥檚 a truism that volatility is 鈥榞ood鈥� for traders. It creates opportunities for explosive profits (as well as explosive losses). When a crisis hits – a drought, a war, a revolution – speculators are the first to act. In fact, the algorithms have often traded before the human traders are even aware. And this makes many finance professionals I spoke to sanguine about political risks. Many in the City of London, for example, were relaxed – even optimistic – about Brexit. The chaos of leaving the EU was just another event certain to breed volatility; volatility they were posed to exploit. 

And, as I documented in my book time and again, this volatility does bring mass human suffering. If we鈥檙e going to have a morality about suffering – as we must – we really need thing about causal cascades. And not just restrict ourselves to only blaming easy villains in faraway lands.

Farwa Sial: Rather than a break from the past, the pandemic was a reset which ended up deepening this inherently flawed pricing system. What does this mean for the future?

Rupert Russel: Sadly, the future is already playing out. When I finished the book, I wondered if the phenomena I was describing was diminishing. After all, commodities prices had been depressed overall since 2014. Economists told me of abundant overproduction of wheat and a coming green transition that would end the world鈥檚 addiction to oil. I thought that the history of the tumultuous 2010s stood up in its own right: the decade of global chaos deserved an explanation.

The war in Ukraine has shown precisely how the chaotic engine that powered the 2010s is still very much alive. In fact, the speed at which the war created chaos in the commodities markets, and those markets have transmitted that chaos across the world is far faster. Over the past six months, we鈥檝e seen high commodity prices embolden Putin鈥檚 invasion, and that invasion has lead to surging commodity prices: inflation across the world, and a hunger crisis among the world鈥檚 most vulnerable. The way in which chaos spreads, mutates, and amplifies is due to the way in which modern financialised commodity markets are designed. This is why I called prices agents of chaos.

听is a Research Fellow at the University of Manchester in the UK. Her research focuses on comparative development, Industrial policy, corporations, economic geography and the changing landscape of development assistance. She tweets at听.

The structure of anti-trust laws is generally and neatly divided into ex-post enforcement and ex-ante regulation of market conduct and its participants. It is a matter of social and economic policy choice as to whether any regulation should precede 鈥榟arm鈥� or follow it, as is the construction of 鈥榟arm鈥� across statutes. For example, the requirement of a means to understand and assess the market impact of a merger. On the other hand, abuse of dominant position is an ex-post assessment once the dominance has set in, which may be in the long run. The determination of abuse is subject to a rule of reason and analysis by the competition authorities. Against this background, the question is what happens in the intervening period when an undertaking is slowly and surely inching towards domination, engaging in conduct which would be punished only once it becomes dominant ? What happens to the process of concentration of markets, along with the practices in concentrated markets? These questions are not borne out of academic interest alone and are not completely answered by a simple focus on anti-competitive agreements, as will be seen below. The analysis will zoom in on the Indian market conditions to make a case for questioning the timing of regulatory intervention and proceed to show that new economic methods may be required in this task.

The evolution of anti-trust action, a case study of India

The retail sector in India has been growing and constantly changing. A pertinent example of the risks that Big Tech entities present to such a market can be understood through Amazon鈥檚 along with Flipkart鈥檚 position in India. This analysis does not focus on the e-commerce platform as the market but the larger marketplace in which the platform occurs and competes with extant structures, including traditional businesses.

In India, two disputes, five years apart, against the same opposite parties, with largely the same issues have led to diametrically opposite outcomes on the anvil of 鈥榯erm鈥� based dominance. The Amazon and Flipkart entities have been embroiled in litigation in India since a long time, most notably due to the competition concerns they portends for the economy of the country. They are not only competing with other platforms but also with various myriad types of retail arrangements through deep discounts, exclusive offerings and a web of related companies which are the significant sellers on the platforms. These practices not only impact the other sellers on the platform but also the players in the value chain. As a digital and online intermediary or marketplace, a platform replaces other intermediaries such as retailers and distributors. This displacement of livelihood has led to calls for 鈥榗apital dumping鈥�^[1] to provide a discursive handle to a problem that arose due to such massive capital backing that erasure of alternatives is inevitable.

Since 2015, the competition regulator, Competition Commission of India (鈥淐CI鈥�) has due to their apparent lack of dominance in the market, as defined.^[2] It must be noted that this decision took into consideration the 鈥榮hort term鈥�, when e-commerce was just gaining foothold in the Indian markets. While the market practices did not draw the regulator鈥檚 ire then, within a short span of five years, they have by the CCI Directorate General,^[3] only to be , curious to understand this volte face by the CCI. The regulator concluded that it will investigate these companies for their market practices, but not for the dominance as they are jointly dominant, a conduct not punishable per Indian law ! In the long term, the share of Amazon has increased to 36% of all online commerce in the country, with Flipkart controlling another 53%.^[4] It has caused enough damage not only to the sellers on the platform but also to the other retailers in the offline channel of the market. While the leverage of a dominant entity to gain a foothold into a market is punishable if abusive, the conclusion of dominance is a technical one, often dependent on the delineation of a relevant market. The point is that given the narrow scope covered through the relevant service market of online retail, the judgements are largely devoid of any discussion about the disruption or the impact of the abuse on the retail market as a whole, especially for the offline mode of commerce.^[5] These omissions aggravate the tricky situation of striking the iron at the right time, lest the market be considered 鈥榙ynamic鈥� enough to not need any change or study.

A call for a new normative for markets

This is not to say that competition law is wont to miss out on this commercial movement, from treading the path of dominance to the abuse of it. For example, the conclusion of being incurred by an emergingly powerful entity, in its dealings with downstream players, can prevent resultant harm by the entity as it will become a dominant one. It halts dominance in its tracks, if the market conduct is anti-competitive though it may be restricted only to the platform as a market unless there are sufficient dealings between the online and offline channels. Further, the European Union is cognizant of the ills of the temporal determination and is discussing various measures to supplement its competition law and its application in the digital sphere. The key examples are the and the . These policy tools allow regulators to monitor market conduct of platforms, designate them as 鈥榞atekeepers鈥� and carry out regulatory intervention tailored to suit the needs of a healthy and fair economy throughout the period of such monitoring, beyond the strict boundaries of time based action and damage.

In light of these new beginnings, the question I wish to raise is, whether there are any economically rigorous tools that anti-trust authorities can use to decide such claims, even in the short run based on holistic predictions? This would change the wait for long run damage to set in as such predictive claims don鈥檛 fit within the neoliberal theoretical prescriptions, governing competition laws. With the economic sphere undergoing a significant churn due to digitisation, it is an opportune moment to invigorate this discussion. The aim is to devise means within the scope of law, think of the disruption the breadth of a market and account for its irreversibility once it is set into motion so that the loss of livelihoods is not perceived as a short run cost for development.

Notes

[1] Note that capital dumping is theoretically undersketched and hears calls from across the spectrum of voices. It is used by emerging domestic unicorns, funded by foreign funds to , big businesses like , but also the association of against all online commerce; domestic or foreign. 

[2] In Re: Mohit Manglani v. Amazon Seller Services Pvt. Ltd. and Ors. (2015)

[3] Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and its affiliated entities and Amazon Sellers Services Pvt Ltd. and it affiliated entities (2020)

[4] It must be noted that according to another estimate, both hold approximately 30% of the online commerce and that online commerce forms a small part of total retail, around 5% but it is .

[5] It has been decreasing, see and .

Anushka Mittal is an incoming candidate for the MSc. in Social Science of the Internet, Oxford Internet Institute. She tweets at .

Photo by .

We鈥檝e witnessed a revival of debates about the Washington Consensus and the future of neoliberalism in recent months. Recent increases in public spending have led to conclude, or , that decades of neoliberal consensus have been shattered. Much of this debate is misguided, rooted in a mistaken dichotomy between 鈥榮tates鈥� and 鈥榤arkets鈥�, and a corresponding conception of neoliberalism as primarily involving a reduction in the role of the former. Efforts to rehabilitate the Washington Consensus, meanwhile, rely on flimsy and heavily ideological counterfactuals.

In this post, I want to take up another angle on this question, asking: what is 鈥榯he market鈥� in practice? In particular, I take a closer look at the emergence of the idea that 鈥榠nterest rates should be market-determined鈥�. This was a core tenet of the 鈥榃ashington Consensus鈥� in John Williamson鈥檚 . It was also, historically, a key argument of neoliberal economists. From the early 1970s, several influential pieces (e.g. McKinnon 1973; Shaw 1973) urged the deregulation of interest rates, arguing that while usury caps were intended to assist small farmers, they wound up forcing banks to concentrate on relatively low-risk loans to government or large-scale industry.

In practice, though, the relatively simple proposition that 鈥榠nterest rates should be left to the market鈥� invited a whole range of difficult questions and political challenges.

In a recent article in tracing the history of World Bank agricultural credit programmes (Bernards 2021), I show how neoliberal approaches to development have never really involved 鈥榮hrinking the state鈥� and unleashing markets so much as fraught and failure-prone efforts to figure out who and what should be governed by, and how to construct, markets.

Agricultural credit at the World Bank

Agricultural credit projects were loans made by the World Bank for on-lending to farmers, whether through state-owned development banks or more complex structures of intermediation meant to involve commercial banks. By the mid-1970s, agricultural credit took up more than half of the Bank鈥檚 lending for agricultural projects and merited extended discussion in the landmark Assault on World Poverty report (World Bank 1975).

The Bank understood credit as a key component of agricultural 鈥榤odernization鈥� (see ) — the adoption of new technologies, the marketization of input and output sales, and the commercialization of farming — as far back as the 1950s. The general unwillingness of commercial banks to lend for agricultural production, especially with respect to longer-term loans for capital investment, was thus seen as a significant obstacle to agricultural modernization. Agricultural credit projects, in essence, sought to resolve this impasse.

Initially the Bank鈥檚 agricultural credit programmes focused on lending for large, capital-intensive farms. In the 1970s, as the Bank under Robert McNamara increasingly emphasized poverty reduction, there was an increased emphasis on lending to smallholders. The Bank鈥檚 landmark Assault on World Poverty report framed access to agricultural credit as a key means of alleviating rural poverty by building effective markets for agricultural goods: 鈥榗redit facilities are鈥� an integral part of the commercialisation of the rural economy鈥�.

Fixing interest rates

In practice, the Bank鈥檚 approach to building financial markets changed very slowly. Interest rates were a particular point of difficulty. Until the mid-1970s, the vast majority of projects included interest rates for final borrowers that were fixed in project documents. Frequently the Bank, concerned mainly about the financial viability of project partners, did push project partners to increase rates for farmers. But fixed rates remained the norm, and debates during project negotiations about interest rates largely focused on where rates should be fixed.

This started to change as the results of earlier projects showed a recurrent problem with fixed interest rates that turned out to be negative in real terms because of high inflation in project countries. This was a growing concern for Bank officials insofar as a number of projects seriously strained the finances of project participants, agricultural development banks which were generally meant to be self-financing. In Gujarat, India, for instance, a project evaluation concluded that, because the rate of inflation exceeded the rate of interest on project loans, the project had enabled borrowers to gain access to very cheap credit, while decapitalizing the project partner — the latter had 鈥榯hus subsidized them, at the expense of its own balance sheet鈥�. A major review of agricultural credit projects completed in 1976 concluded that in most projects 鈥榯he structure of interest rates imposed by the program and by the financial system in which it operates not only subsidizes the farmer but threatens the viability of the channel and forces it to act in a manner contradictory to the purposes of the project鈥�. The review, notably, was explicit in emphasizing, not so much the effect of subsidies on borrowers, 鈥榖ut the effect the interest rate and cost structure has on the participating institutions鈥�.

Projects in the latter part of the 1970s initially sought to resolve this issue in one of two ways: by setting minimum interest rates, or by trying to predict inflation rates over the term of the project and set rates accordingly. In practice, neither route worked out very well. Simply raising fixed rates based on predictions of inflation was difficult because these projections often turned out wrong in unstable macroeconomic conditions. Interest rate floors didn鈥檛 work much better. Without specific criteria for when or how rates should be raised, resistance to raising rates from governments worried about the potential backlash often prevented credit prices being raised above the floors set in project documents.

Within a few years, the Bank thus started to insist much more strongly on 鈥榤arket鈥� based interest rates. In practice, this typically involved indexing the rates paid by farmers either to inflation or to average cost of funds in the commercial financial sector. While this shift to market-based means of pricing credit undoubtedly reflected the preferences of neoliberal economists, the Bank鈥檚 move towards these mechanisms was driven as much by pragmatic concerns as by any ideological preference for 鈥榤arket鈥� rates. In the first instance, then, the turn to 鈥榤arket鈥�-like forms of credit pricing — while it took place alongside the broader period of structural adjustment — was tentative, contested, and driven by longstanding practical concerns as much as any broader ideological shift.

Moreover, by the late 1980s, the pre-occupation of the Bank with interest rates itself started to come in for criticism in internal project evaluations. In Thailand, the evaluation of a 1980 project noted that the Bank鈥檚 strong emphasis on raising rates as a way of ensuring the financial sustainability and expanded lending capacity of the partner bank had 鈥榬educed any incentives鈥� to either government on the Thai Bank for Agriculture and Agricultural Credit 鈥榯o encourage growth in domestic deposits鈥� as well as inhibiting wider financial sector reforms.

In short, the move to more explicitly 鈥榤arket-based鈥� rates — whether negotiated between lenders and borrowers or indexed to inflation or cost of funds — reflected as much these operational concerns as it did an ideological preference for markets. It was not always consistently followed through in practice by governments with competing political imperatives, which contributed to the Bank鈥檚 growing emphasis through the decade on wider 鈥榮tructural鈥� reforms, and increasingly reforms to governance into the 1990s.

Equally, neoliberal development in practice rarely involved shrinking the state and growing the market so much as trying — at times with considerable difficulty — to coax the private sector into doing developmentally desirable things (like lending to small farmers) or to make public institutions operate on a more expressly commercial basis.

Why does this matter?

Placing the Bank鈥檚 halting, troublesome experiments with agricultural credit alongside the rise of the Washington Consensus shows how even institutions at the heart of the neoliberal project were decidedly ambivalent about how to actually carry out that project in practice. Marketizing development often did not involve shrinking the state, as many contemporary takes on the 鈥榚nd鈥� of neoliberalism seem to assume, so much as changing how state institutions work in an effort to conjure markets. The Bank sought, by trial and error, to sort out how credit should be delivered to support marketized, commodified agricultural systems. Could state-backed agricultural banks be reformed to operate on commercial terms? If not, could commercial banks be coaxed into lending to small farmers? In practice, the answer was 鈥榥o鈥�, or 鈥榥ot without considerable difficulty鈥�.

The central contradiction reflected here is a deep-rooted problem for neoliberal approaches to development, one which is clearly reflected in contemporary approaches to development as well. In short, mobilizing private capital, or 鈥榖uilding markets鈥�, to deliver development outcomes involves trying to coax capital into doing things that are risky and unlikely to prove profitable. We can read recent efforts to 鈥榙e-risk鈥� or 鈥榚scort鈥� capital into the global south (; ), and indeed the shifting role of the state as 鈥榩romoter, supervisor and owner鈥� of capital in global development () as responding to much the same problem.

The Washington Consensus was always in no small part a fantasy. Behind a simple-seeming proposition like 鈥榠nterest rates should be market-determined鈥� lay a whole range of fraught and failure-prone attempts to actually conjure those markets in practice, or at least to approximate them. Our efforts to make sense of the contemporary direction of neoliberalism would benefit from taking seriously the deep-rooted contradictions with which neoliberal development strategies have historically grappled with.

References

Alami, I., A.D. Dixon, E. Mawdsley (2021) 鈥楽tate capitalism and the new D/development regime鈥�, Antipode, DOI: .

Bernards, N. (2021) 鈥楾he World Bank, agricultural credit, and the rise of neoliberalism in global development鈥�, New Political Economy, DOI: 10.1080/13563467.2021.1926955.

Bernstein, H. (1990) 鈥楢gricultural 鈥渕odernisation鈥� and the era of structural adjustment: Observations on sub-Saharan Africa鈥�, Journal of Peasant Studies 18 (1): 3-35.

Gabor, D. (2021) 鈥楾he Wall Street consensus鈥�, Development and Change, DOI: .

McKinnon, R.I. (1973) Money and capital in economic development, Washington: Brookings Institute.

Shaw, E.S. (1973) Financial deepening in economic development, Oxford: Oxford University Press.

Tan, C. (2021) 鈥楢udit as accountability: Technical authority and expertise in the governance of private financing for development鈥�, Social and Legal Studies, DOI: .

World Bank (1975) The assault on world poverty, Washington: World Bank Group.

Nick Bernards is an Assistant Professor in Global Sustainable Development at the University of Warwick. He tweets at .

By Arun Kumar and

In 1959, the Ford and Rockefeller Foundations pledged seven million US$ to establish the International Rice Research Institute (IRRI) at Los Ba帽os in the Philippines. They planted technologies originating in the US into the Philippines landscape, along with new institutions, infrastructures, and attitudes. Yet this intervention was far from unique, nor was it spectacular relative to other philanthropic 鈥榤issions鈥� from the 20^th century.

How did philanthropic foundations come to wield such influence over how we think about and do development, despite being so far removed from the poor and their poverty in the Global South?

In a recent paper published in the journal , we suggest that metaphors – bridge, leapfrog, platform, satellite, interdigitate – are useful for thinking about the machinations of philanthropic foundations. In the Philippines, for example, the Ford and Rockefeller foundations were trying to bridge what they saw as a developmental lag. In endowing new scientific institutions such as IRRI that juxtaposed spaces of modernity and underdevelopment, they saw themselves bringing so-called third world countries into present鈥揹ay modernity from elsewhere by leapfrogging historical time. In so doing, they purposively bypassed actors that might otherwise have been central: such as post鈥揷olonial governments, trade unions, and peasantry, along with their respective interests and demands, while providing platforms for other – preferred – ideas, institutions, and interests to dominate.

We offer examples, below, from three developmental epochs.

Scientific development (1940s 鈥� 70s)

From the 1920s, the 鈥榖ig three鈥� US foundations (Ford, Rockefeller, Carnegie) moved away from traditional notions of charity towards a more systematic approach to grant-making that involved diagnosing and attacking the 鈥榬oot causes鈥� of poverty. These foundations went on to prescribe the transfer of models of science and development that had evolved within a US context – but were nevertheless considered universally applicable – to solve problems in diverse and distant lands. In public health, for example, 鈥樷��. Similarly, the Tennessee Valley Authority鈥檚 model of river鈥揵asin integrated regional development was replicated in India, Laos, Vietnam, Egypt, Lebanon, Tanzania, and Brazil.

The chosen strategy of institutional replication can be understood as the development of satellites鈥撯�揳s new scientific institutions invested with a distinct local/regional identity remained, nonetheless, within the orbit of the 鈥榤etropolis鈥�. US foundations鈥� preference for satellite creation was exemplified by the 鈥楪reen Revolution鈥欌�攁n ambitious programme of agricultural modernization in South and Southeast Asia spearheaded by the Rockefeller and Ford Foundations and implemented through international institutions for whom IRRI was the template.

Such large-scale funding was justified as essential in the fight against communism.

The Green Revolution offered a technocratic solution to the problem of food shortage in South and Southeast Asia鈥攖he frontier of the Cold War. Meanwhile, for developmentalist regimes that, in the Philippines as elsewhere, had superseded post-independence socialist governments, these programmes provided a welcome diversion from redistributive politics. In this context, institutions like IRRI and their 鈥榤iracle seeds鈥� were showcased as investments in and . Meanwhile, an increasingly transnational agribusiness sector expanded into new markets for seeds, agrichemicals, machinery, and, ultimately, land.

The turn to partnerships (1970s 鈥� 2000s)

By the 1970s, the era of large鈥搒cale investment in technical assistance to developing country governments and public bureaucracies was coming to an end. The Ford Foundation led the way in pioneering a new approach through its population programmes in South Asia. This new 鈥榩artnership鈥� mode of intervention was a more arms-length form of satellite creation which emphasised the value of local experience. Rather than obstacles to progress, local communities were reimagined as 鈥� that could be mobilized for economic development.

In Bangladesh, for example, the Ford Foundation partnered with NGOs such as the Bangladesh Rural Advancement Committee (BRAC) and Concerned Women for Family Planning (CWFP) to mainstream 鈥榚conomic empowerment鈥� programmes that co-opted local NGOs into service provision to citizens-as-consumers. This approach was epitomised by the rise of microfinance, which merged women鈥檚 empowerment with hard-headed pragmatism that saw women as reliable borrowers and opened up new areas of .

By the late-1990s private sector actors had begun to overshadow civil society organizations in the constitution of development partnerships, where . Foundations鈥� efforts were redirected towards brokering increasingly complex public-private partnerships (PPPs). This mode of philanthropy was exemplified by the Rockefeller Foundation’s role in establishing product development partnerships as the institutional blueprint for global vaccine development. Through a combination of interdigitating (embedding itself in the partnership) and platforming (ensuring its preferred model became the global standard), it enabled the Foundation to continue to wield 鈥樷��.

Philanthrocapitalism (2000s 鈥� present)

In the lead up to the 2015 UN Conference at which the Sustainable Development Goals (SDGs) were agreed, a consensus formed that private development financing was both desirable and necessary if the 鈥榯rillions鈥� needed to close the 鈥樷�� were to be found. For DAC donor countries, the privatization of aid was a way to maintain commitments while implementing economic austerity at home in the wake of the global finance crisis. Philanthrocapitalism emerged to transform philanthropic giving into a 鈥樷��, as grant-making gave way to impact investing.

The idea of impact investing was hardly new, however. The term had been coined as far back as 2007 at a meeting hosted by the Rockefeller Foundation at its Bellagio Centre. Since then, the mainstreaming of impact investing has occurred in stages, beginning with the aforementioned normalisation of PPPs along with their close relative, blended finance. These strategies served as transit platforms for the formation of networks shaped by financial logics. The final step came with the shift from blended finance as a strategy to impact investing 鈥樷��.

A foundation that embodies the 21^st c. transition to philanthrocapitalism is the Omidyar Network, created by eBay founder Pierre Omidyar in 2004. The Network is structured both as a non鈥損rofit organization and for鈥損rofit venture that 鈥樷��. It has successfully interdigitated with ODA agencies to further align development financing with the financial sector. In 2013, for example, the United States Agency for International Development (USAID) and UK鈥檚 Department for International Development (DFID) launched Global Development Innovation Ventures (GDIV), 鈥樷��.

Conclusion

US foundations have achieved their power by forging development technoscapes centred in purportedly scale鈥搉eutral technologies and techniques 鈥� from vaccines to 鈥榤iracle seeds鈥� to management鈥檚 鈥榦ne best way鈥�. They have become increasingly sophisticated in their development of ideational and institutional platforms from which to influence, not only how their assets are deployed, but how, when and where public funds are channelled and towards what ends. This is accompanied by strategies for creating dense, interdigitate connections between key actors and imaginaries of the respective epoch. In the process, foundations have been able to influence debates about development financing itself; presenting its own 鈥榮uccess stories鈥� as evidence for preferred financing mechanisms, allocating respective roles of public and private sector actors, and representing the most cost鈥揺ffective way to resource development.

Whether US foundations maintain their hegemony or are eclipsed by models of elite philanthropy in and , remains to be seen. Indications are that emerging philanthropists in these regions may be well placed to leapfrog over transitioning philanthropic sectors in Western countries by 鈥樷�� from the outset.

Using 鈥榮imple鈥� metaphors, we have explored their potential and power to map, analyse, theorize, and interpret philanthropic organizations鈥� disproportionate influence in development. These provide us with a conceptual language that connects with earlier and emergent critiques of philanthropy working both within and somehow above the 鈥榝ield鈥� of development. Use of metaphors in this way is revealing not just of developmental inclusions but also its exclusions: ideascast aside, routes not pursued, and actors excluded.

Arun Kumar lectures at the University of York. He tweets at .

is an Honorary Fellow at the University of York.

Read the Portuguese translation of this article . Headline photo by / Jean-Marc Ferr.聨

A flawed understanding of the concept of 鈥減ublic good鈥� hampers the fight for equitable access to the upcoming COVID-19 vaccine

The term 鈥済lobal public good鈥� has been used in very different ways by policy makers, economists and others. The term 鈥済lobal鈥� is not particularly controversial, and in this context is generally understood to involve cases where the benefits of the service or good impact residents of more than one country, even if not necessarily the whole world. The term 鈥減ublic good鈥� is subject to more diverse uses, often depending upon one鈥檚 educational or professional training.

For many people, perhaps most, the term 鈥減ublic good鈥� is loosely defined to include cases where governments are willing to undertake measures to expand access, with universal access at least an aspirational goal. However, among the other influential definitions of 鈥減ublic good鈥� is one that is exceptionally restrictive. A proposal by Paul Samuelson first published in 1954, meant at the time as an extreme and polar case, has found its way into countless articles, textbooks and academic courses, and has parameters that are rarely met in practice. At times, Samuelson鈥檚 66-year-old paper is actually an obstacle to collective efforts to supply and distribute goods that have considerable impact on society.

The COVID-19 pandemic presents an astonishing global challenge regarding the control of the pandemic and the reduction of harm. The health impacts are large, particularly for older patients, and growing unpredictably, and the pandemic has had an enormous social and economic impact on everyone, with no obvious end in sight.

Biomedical technologies to combat the pandemic are important, particularly diagnostic tests, drugs and vaccines, and the world needs innovation, testing, evaluation, access and affordability. A number of political leaders, health groups and other entities have called for COVID-19 vaccines and drugs to be treated as public goods. For example, the South Centre issued a听听on the launch of the World Health Organization鈥檚 COVID-19 Technology Access Pool (C-TAP), noting that 鈥渁ims at ensuring that the technologies needed to address the pandemic are considered, as a matter of principle, global public goods.鈥� The MSF Access Campaign听听that 鈥淐OVID-19 medical tools should be considered 鈥済lobal public goods鈥� and should be 鈥榓ffordable, safe, effective, easily administered and universally available for everyone, everywhere.鈥欌�� The Secretary-General of the United Nations, Ant贸nio Guterres, issued a听听on May 20, 2020, which said that 鈥淎frican countries should also have quick, equal and affordable access to any eventual vaccine and treatment, which must be considered as global public goods.鈥�

鈥淭he benefits of a COVID-19 vaccination accrue not only to the person being vaccinated, but also to the community, as widespread vaccination eliminates hosts for the virus, and contributes to the control of the pandemic.鈥�

In the negotiations over a World Health Assembly (WHA) resolution on the COVID-19 pandemic, the European Union submitted an听听The draft 鈥淩ecognizes population-wide immunization against COVID-19 as a global public good for health and the crucial role of quality, safe, and efficacious vaccines therein.鈥� The United States objected to the inclusion of 鈥減ublic good鈥� in the text, on grounds that it was not well-defined, and proposed that global public good be changed to 鈥済lobal benefit.鈥� There was also a discussion in the drafting process about the distinction between vaccination being a global public good, and the vaccines themselves. The Third World Network听听that the Chair of the WHA drafting committee on the resolution 鈥渃larified that it recognized that 鈥榩opulation-wide vaccination鈥� was a global public good for health but the vaccine itself was not.鈥�

The distinction between vaccination and the vaccine was based upon the definition that Samuelson proposed more than six decades ago. The benefits of a COVID-19 vaccination accrue not only to the person being vaccinated, but also to the community, as widespread vaccination eliminates hosts for the virus, and contributes to the control of the pandemic. In this sense, the benefits of vaccination have an external benefit for the community, and that benefit is non-excludable. But the vaccine itself, as a product, is neither non-rival in consumption, nor non-excludable, the two key features highlighted by Paul Samuelson in his original definition of public goods, as set out in听听听in 1954 and 1955. If individuals cannot be effectively excluded from the use of a good, it is non-excludable in nature; if its use by one individual does not reduce availability for others, the good is non-rival. While first proposed as an 鈥渆xtreme鈥� or 鈥減ure鈥� case for public expenditures, the definition has become widely quoted without an appreciation for its limits.

In the mid-1950s, the world was deeply engaged in a cold war between governments that were extolling the virtues of either market or non-market models for the production and distribution of goods. Samuelson was interested in presenting a mathematical model where private markets would not exist, as 鈥渁n extreme polar case鈥� that would be used to contrast 鈥渢he admittedly extreme polar case of traditional individualistic general equilibrium.鈥� The 鈥済rand Walrasian model of competitive equilibrium鈥� was the extreme polar case at which Samuelson was aiming, in which markets and market prices were efficient, and in some simplified versions, perfectly efficient.

Samuelson鈥檚 1955 paper provides ample caveats regarding the relevance of this model, which was illustrated by the examples of 鈥渁n outdoor circus or national defense鈥� as two goods that were non-excludable and non-rival in consumption. He acknowledges that 鈥減ublic expenditure and regulation proceed from considerations other than those emphasized in my models,鈥� redistribution of incomes, paternalistic policies, where 鈥渁tomistic competition鈥� is not realistic, and 鈥淢yriad 鈥榞eneralized economic and diseconomy鈥� situations, where private pecuniary interest can be expected to deviate from social interests.鈥� Notably, in his 1955 paper, Samuelson states 鈥淚 regret using 鈥榯he鈥� in the title of my earlier paper.鈥� In a 1958 paper on 鈥減ublic expenditure theories,鈥� Samuelson notes that a good that 鈥渞efuses to fall in my polar case for a pure public good will not thereby obligingly go into the other polar case of a pure private good,鈥� using the example of an information good with a zero marginal cost to make his point.

鈥淚n the context of COVID-19, Samuelson鈥檚 1950s definition of a 鈥減ure鈥� public good is a poor fit, whereas everything about the development, manufacturing and access to diagnostic tests, drugs or vaccines fits his broader framework for public expenditures quite well.鈥�

The two characteristics Samuelson used in his 鈥減ure theory of public expenditure鈥� benefit from some reflection, since they capture such a small subset of goods that governments actually spend money on. Goods that are both (1) non-rival in consumption and (2) non-excludable exist, but are rare.

The phrase 鈥渘on-rival in consumption鈥� eliminates drugs or vaccines as products, as well as hospital beds, services of health care workers, and much of what governments subsidize or directly provide. Knowledge is one good that is often held out as an important good that is non-rival in consumption, and in the context of COVID-19, this would include the inventions, data and know-how to make diagnostic tests, drugs or vaccines, as well knowledge gained by the evaluation of the efficacy and safety of products.

For knowledge goods, non-excludability can be a hard condition to meet. Some of the knowledge from the evaluation of the safety and efficacy of products will also have a non-excludable quality, although recent developments in regulatory policies on test data have made even that an ownable and excludable asset in many jurisdictions.

Intellectual property is a term given to a growing set of rights, often exclusive, that are granted to inventions, expressions, designs, data, know-how and clinical evidence used for regulatory approvals. The primary mission of laws governing intellectual property is to make knowledge goods excludable鈥攅ven when expressions are published, patented inventions disclosed or data is cited by governments or published research, or through various technical protection measures or secrecy, including restrictions on worker mobility, and non-disclosure and non-compete agreements.

Samuelson anticipated and also reacted to criticism of his definition by arguing that 鈥渋n almost every one of the legitimate functions of government that critics put forward there is to be found a blending of the extreme antipodal models.鈥� However, Samuelson also ventured that 鈥渁ny function of the government not possessing any trace of the defined public good (and no one of the related earlier described characteristics) ought to be carefully scrutinized to see whether it is truly a legitimate function of government.鈥�

In the context of COVID-19, Samuelson鈥檚 1950s definition of a 鈥減ure鈥� public good is a poor fit, whereas everything about the development, manufacturing and access to diagnostic tests, drugs or vaccines fits his broader framework for public expenditures quite well.

There are certainly non-excludability aspects of both herd immunity and the elimination of the colossal cost of the pandemic responses, as well as robust non-rivalry in consumption characteristics of inventions, data, know-how and knowledge from testing and evaluation of products. When you include, as Samuelson did, 鈥渞edistribution of incomes, paternalistic policies, where 鈥榓tomistic competition鈥� is not realistic, and 鈥淢yriad 鈥榞eneralized economic and diseconomy鈥� situations where private pecuniary interest can be expected to deviate from social interests鈥� then the case for public expenditures is very strong for COVID-19 biomedical inventions.

In the case of COVID-19 policy makers and policy experts should refrain from using Samuelson鈥檚 鈥渆xtreme鈥� case for a 鈥減ure鈥� public good as one that is both non-rival in consumption and non-excludable as the working definition for global public good. This can be difficult, given the attractive elegance of Samuelson鈥檚 鈥減ure鈥� case, and the need for authors to acknowledge Samuelson鈥檚 influential earlier work. For example, consider the struggles by contributors to听Providing Global Public Goods, a听听edited by Inge Kaul, et al, in 2003, to find ways to label all sorts of obviously useful global interventions as 鈥済lobal public goods.鈥�

For COVID-19, what does it mean to treat a biomedical innovation such as a diagnostic test, drug or vaccine as a global public good? As a practical matter, and in the context of this pandemic, it would mean, as听, that policies should facilitate a diversity of manufacturers, and the open licensing of intellectual property rights for drugs and vaccines effective against the virus, since the 鈥渨orld has an overwhelming interest in ensuring these will be universally and cheaply available.鈥�

We fully expect that in the coming months governments with the most resources will seek preferential access to new drugs or vaccines for the virus, as they already have with regard to personal protective equipment and therapeutics, and through advance purchase commitments with vaccine manufacturers. The hoarding of scarce products is deplorable, but predictable, and policymakers will at best moderate the hoarding. What is completely indefensible is to hoard the intellectual property rights and the know-how necessary to manufacture and ensure quality for an effective therapeutic or vaccine. The non-rival nature of the knowledge necessary to make a product is a compelling reason to treat this as a public good, even though intellectual property rights and secrecy make it possible to be exclusionary.

James Love is Director of Knowledge Ecology International. His work focuses on the production, management and access to knowledge resources, as well as aspects of competition policy. He tweets at .听This article first appeared in , a blog co-published by the India China Institute and the Julien J. Studley Graduate Programs in International Affairs at The New School.

The coronavirus pandemic has required states to take unprecedented steps to backstop the world capitalist economy. This has included enormous liquidity injections into financial markets, guaranteeing the wages of furloughed workers, and temporarily requisitioning and coordinating parts of the private sector. Yet last year a different threat 鈥� not epidemiological but proletarian 鈥� similarly forced states to adopt redistributive policies against their wills, albeit on a smaller scale.听

From the vantage point of the current uprisings against racist police violence, the empty streets of the early 2020 lockdown appear as a brief exception to the broader trend of mass unrest. In , streets, avenues, and squares in different parts of the world flooded with protestors decrying the pro-rich policies of their respective governments. The scale, endurance, and spectacular disruptiveness of these popular explosions pressed governments from Western Asia to Europe to Latin America to abandon so-called neoliberal fiscal rectitude and reluctantly embrace Keynesian stimulus policies.

In Chile, on the eve of the autumn 2019 revolt, billionaire austerian president Sebasti谩n Pi帽era a classic metaphor of neoliberal stoicism to explain how he would resist popular opposition to his painful reform programme: 鈥楿lysses tied himself to a ship鈥檚 mast and put pieces of wax in his ears to avoid falling for the 鈥� siren calls鈥�. Less than one month later, this modern Ulysses had broken free from his tethers, announcing increases in the minimum wage, healthcare benefits, pensions, electricity subsidies, and the reform of Chile鈥檚 very constitution. There are clear with France鈥檚 Emmanuel Macron, a former investment banker who assumed power in 2017 on a platform of market discipline, only to buckle under the weight of the relentless Gilet Jaunes movement and announce a 鈧�17 billion package of concessions.

How are we to grasp the jarring Keynesian U-turns of such cartoonish neoliberal governments in the face of mass protest and pandemic? It is commonly assumed that the neoliberal project represented the shrinking of the state sphere and its replacement by the cold logic of the marketplace. The 2008 bank bailouts appeared to buck this trend, as states were called upon to undertake drastic interventions. But this turned out to be a hiccup in neoliberalism鈥檚 larger narrative arc, as austerity quickly took hold. Yet perhaps this latest accumulation of crises will at last force states to reclaim the territory they had ceded to the market. After its 鈥樷��, is neoliberalism finally dying?

The IPE of states and markets

Underpinning this question of neoliberalism鈥檚 impending demise (which has been proclaimed and ) is an implicit understanding of states and markets as opposed entities engaged in a zero-sum power struggle. This framing echoes early interventions in International Political Economy鈥檚 (IPE) 鈥榞lobalisation debate鈥�. In the wake of the collapse of the Bretton Woods system in the 1970s and the rapid globalisation of economic relations, such 鈥榞lobalist鈥� accounts heralded a new 鈥榖orderless world鈥� in which the state would 鈥榳ither away鈥� under pressure from unrestricted capital flows. Neoliberalism was presented as the political manifestation of this phenomenon, whereby free-market ideologues captured the reins of state power for the purpose of overseeing the state鈥檚 retreat in the face of metastasising and globalising market logics.

While this notion of a state-market tug-of-war is still presented as the IPE mainstream, this characterisation is in fact long outdated. In our New Political Economy , we argue that a critical consensus has emerged within the discipline around the concept of the 鈥榤utual constitution鈥� of states and markets. According to this approach, states do not intervene at the expense of markets, but rather markets only exist because states reproduce them. The intellectual scaffolding of the mutual constitution thesis is provided by Karl Polanyi鈥檚 concept of embeddedness, whereby states and markets are understood to constitute an interwoven social whole. Market mechanisms are always embedded in and underpinned by specific arrangements of political authority, institutional design, and ideational paradigms.听

For this approach, which emphasises states鈥� market-making powers, the question of whether increased state intervention signals the demise of neoliberalism is incoherent. Neoliberalism never entailed the advance of a self-regulating market at the state鈥檚 expense 鈥� this was sheer mythology. Rather, neoliberalism denotes a particular pattern of state-market relations, in which the state forges the framework for free commerce and polices the market鈥檚 functioning. This follows from Polanyi鈥檚 insight that laissez-faire was, and continues to be, planned. Perhaps a better question, then, is: given today鈥檚 unprecedented conditions, what new political-economic constellation is emerging to replace the neoliberal one? According to the mutual constitution thesis, the horizon of possibilities is broad: there are innumerable potential combinations of state and market authority. Which combination will prevail is a matter of politics.听

While the mutual constitution thesis is a welcome improvement on globalist IPE accounts, it ultimately relies on a false dichotomy: either the capitalist market is reproduced by state power (a view it endorses), or the capitalist market has a self-regulating character that disciplines states (which it rejects). In reality, both propositions are simultaneously true. In all social orders, economic activities are rooted in a thick network of political relations. Yet the uniqueness of capitalism is that the specific form that this political-economic matrix takes gives rise to an autonomous, dominating logic that imposes itself back upon state and market actors alike.听

The mutual constitution thesis therefore offers a transhistorical truism, inadequate for grasping this historical particularity of capitalism. Further, as this approach denies the capitalist market鈥檚 inherent disciplining logic, it cannot but frame neoliberalism as one contingent institutional set-up among others. Neoliberalism is a 鈥榙angerous idea鈥�, but nothing more.

Alienation in the global economy

In contrast to 鈥榤utual constitution鈥�, we propose Marx鈥檚 concept of alienation as a way to grasp capitalism鈥檚 historically unique double-sidedness, whereby economic reality is regulated by states, yet appears as an externally imposed logic. Unlike common interpretations, we understand alienation not as a description of workers鈥� subjection to the denigrating nature of capitalist work, but as the objective domination of the whole of society by the profit-or-perish dynamic of capitalist competition.听

This generalised alienation stems from the peculiar role that money plays as the key medium of socialisation in capitalism. Capitalism is a fragmented society whereby the mass of people lack direct access to the necessities of life and where production is carried out independently by competing private firms. Money re-socialises this atomised society by bringing firms and people together within the marketplace, the former seeking profits and the latter looking to satisfy their needs.

In the capitalist market, the value of different goods is measured not by their beauty, weight or utility, but by the labour time society expends on average for their production. Money communicates these average productivity levels through the mean prices that different types of goods obtain on the world market. The profitability of market agents thus rests on their capacity to produce their goods within this timeframe. Money brings to life a compelling system of labour time commensuration which rewards laggard firms with ruinous sales and those at the productivity frontier with high profits. Although market exchange is a process carried out by real individuals, it nevertheless escapes the control of social agents whose economic survival now rests on their capacity to produce in accordance with prevailing productivity norms.

It is states themselves that breathe life into this alienated system at the level of the global market. By interlocking their currencies through exchange rate systems, individual nations enable a systematic comparison of one another鈥檚 productivity levels and in doing so give rise to world productivity averages. Once brought into the web of international commerce, then, each national economy must constantly adapt to world market standards in order to secure its viability. Despite the market鈥檚 reliance on political authority, states inadvertently propel a dynamic of worldwide competition over labour productivity that in turn disciplines and regiments state action. In short, the market-making powers of the state amount to one鈥檚 capacity to make the rope that ties one鈥檚 own hands.

Thus, power rests neither in the market realm nor the state; neither in the hands of the most powerful governments nor the so-called 1%. Instead, the agents of capitalist society are impersonally dominated by the objective necessity to abide by the world market鈥檚 productivity standards for the sake of their own survival.听

Governing Alienation

Understanding the world market as a realm of impersonal domination bears crucial implications for making sense of the different forms that liberal governance can take, from neoliberalism to Keynesianism. To maintain the viability of the national economy, states must adapt to world market productivity standards, while to ensure political legitimacy, the interests of the people must be defended. Caught in between the competitive pressures of the world market and the spectre of revolt at home, the government of the day is called to simultaneously enact competitiveness-enhancing policies and ensure a degree of social cohesion. Liberal governance thus involves the anxiety-riven management of this alienated world, in which productivity averages clash with people鈥檚 needs.

Neoliberal and Keynesian variants of liberal thought respectively articulate the two ends of this governing contradiction. As shows, neoliberalism is not a mere ideological current, but a theorisation of the governing principles objectively required to ensure the smooth functioning of the market economy. Liberal governments must constantly resist the pressures of the demos for greater involvement in policy-making, as this could inhibit market actors鈥� capacity to respond to the price signals of the world economy and raise their competitiveness. Various forms of depoliticised policy-making, from central bank independence to the ratification of international free market treaties, reflect the different ways governments seek to enforce market discipline across social spheres while keeping political pressures at bay.

For Keynesianism, as brilliantly demonstrates, the promise of greater wealth through increased market competitiveness is insufficient to secure a stable, governable social order. Precarity, unemployment, and poverty breed social restlessness and threaten the liberal order with disintegration. To placate unrest, Keynesianism calls for a discretionary state that is able to strategically intervene in key economic areas, through for instance fiscal expansion, and render the proletarian condition more bearable.

Mutual constitution approaches fail to account for the contradictory tendencies of modern state economic management. Governing alienation requires governments to loosen the purse strings when a riotous mass or a pandemic threatens the social order, but to govern in an authoritarian fashion when macroeconomic indicators reveal a decline in national competitiveness relative to world market standards. Macron or Pi帽era鈥檚 aforementioned U-turns demonstrate the impossibility of coherently navigating the double pressures of liberal governance, as political elites are called to abide by both imperatives simultaneously.听

By emphasising the regulatory powers of the state, the mutual constitution approach insinuates that a socially sustainable form of political control over the capitalist market can eventually be instituted. However, the burden of governing alienation confronts every aspiring state manager. This is evidenced by the history of pro-market U-turns by left parties, from the French Socialists in the 1980s to Syriza in Greece more recently. Governments of varying political colours attempt to straddle the line in different ways. Yet none can escape the necessity to impose market discipline when the balance of payments is in the red, or the temptation to enact stimulus packages when social fissures widen dangerously.听

Neoliberalism and Keynesianism are not expendable paradigms that can be declared dead when governments tilt to one side or the other under the threat of capital outflows or the pressure of the street. They are rather fundamental expressions of an inescapable antinomy inherent to liberal governance between the necessity to obey market dictates and the need to palliate the accompanying social misery.听

The choice of human dignity over market competitiveness 鈥� of human health over economic growth 鈥� seems obvious enough. Yet it is impossible to pursue within the alienated world of capitalism, where nations are locked in a productivity race that can only be won at the expense of life itself.

Jack Copley is a Lecturer in Political Economy at the University of Bath. He tweets at听.

Alexis Moraitis is an Associate Lecturer at the University of York, but will soon be joining Lancaster University as a Lecturer听in International Political Economy. He tweets at听.

Photo by听Yannes Kiefer.

The global pandemic and associated developing global recession are calling into question a whole range of economic truths and demanding novel solutions to various interlinked societal problems. In this blog post, I want to connect what we鈥檙e currently seeing in the retail sector during this pandemic to deep-seated narratives about the nature of economic exchange, in particular to the notion of 鈥渢he market鈥�.听

The market is one of the most dominant concepts for making sense of the social world, primarily because of the prestige of the economics discipline and the elevation of the market concept by the discipline (albeit in a highly abstract manner). At its most basic, it paints the economic sphere as akin to a marketplace, where there is a level playing field and rivals compete for custom primarily through having the keenest of prices. Other, more complex, ideas often get laid over this concept, such as the market pricing mechanism allowing supply and demand to equilibrate, price signals communicating complex information to market participants, and, as such, the market allowing for decentralised decision making led by consumer demands. (For a much (much) fuller account of the market concept, see .)

However, as a result of the coronavirus pandemic increased demand for basic goods 鈥� such as toilet roll, hand sanitiser and flour 鈥� has put a strain on the distribution of these goods and has engendered a response quite dissimilar to the narrative of the economic system as a competitive, decentralised, profit-maximising market. What we have seen, instead, is retailers working as sites of governance in order to ensure a degree of equity in the distribution of resources.听

We鈥檝e seen this governance occur in a variety of ways. Amazon first sought to through suspending the accounts of individuals selling hand sanitizer, face masks, and toilet paper at large mark-ups on its platform. Later, Amazon it will stop warehousing and shipping non-essential items from third party sellers and instead focus on pandemic supplies. In taking these actions, Amazon is not following private-benefit profit-maximising behaviour, but instead is focusing on meeting public and societal needs.

Supermarkets have been even more involved in governing during the crisis. Several supermarkets have introduced . Most have introduced , and have not shifted their prices substantially in response to increased demand but have instead have ordered their factories to increase production as well as working with their suppliers to meet the surge in demand. They have also sought to shape consumer behaviour, requesting younger consumers pick things up in store rather than using their delivery service.听

The supermarkets have even started to work together in the UK. The major supermarkets first put out a joint press release in national newspapers assuring shoppers that the supermarkets were working with the government, asking shoppers to be considerate in what they buy, and ending on the note that The UK government later announced that it is relaxing competition laws so that the supermarkets will be allowed to share distribution depots and delivery vans, and to share data about stock levels.听

What does this governance by corporations, then, tell us about the economic system? Well, the first thing it shows is that the economic system is far from being decentralised, even while not being run by the state. What we have, instead, is a system that is fragmentarily centralised. The market narrative鈥檚 focus only on exchange between suppliers and demanders hides this centralisation because it ignores a great deal of what corporations do 鈥� production, marketing, logistics, research and supply. This crisis makes it painfully clear that major corporations are not the same as traders in a local market who are primarily involved in competition through pricing. Instead, corporations are large-scale industrial bureaucracies whose engagement with competition is both broader 鈥� stretching into the realms of production, research, and marketing 鈥� and consequently, as there are much fewer organisations that can compete in all dimensions and at such a scale, much shallower and less cut-throat than is commonly imagined.

Second, the pandemic response shows us that prices do not necessarily function as automatic mechanisms of the economic system, in contrast to how prices are presented in mainstream economic narratives about the market. The narrative paints prices as being decided through an auction where demand can bid up the price. However, the predominant pricing mechanism in the modern economy is posted price, where customers are offered a take it or leave it price and prices are largely predictable on a day-to-day basis (eBay has both methods 鈥� an auction system and a 鈥淏uy It Now鈥� posted price system 鈥� which produce different prices). Moreover, retailers don鈥檛 need pricing information to tell them that something is or isn鈥檛 in demand, that鈥檚 what their stock monitoring system is for 鈥� that鈥檚 why the UK supermarkets want access to the stock levels of their competitors; it allows them to plan collectively.

However, because of the dominance of the market narrative, some to the pandemic have called for price gouging (see also ). Such takes show the sheer degree of belief in the market narrative, as they assume that if price is not restricted the system will naturally solve any and all problems. Promoting price gouging at a time when people are panicking and suffering also highlights the limited viewpoint the market narrative offers of the social world. What is not considered in 鈥渓eave it to the market鈥� viewpoints is the degree of human suffering that would result, the tensions that such suffering would cause (on top of the economic collapse we are seeing) and the existence of the guillotine as a mechanism of solving societal tensions.

Finally, and most importantly, corporate governance during the pandemic shows us the existence of economic power and corporate autonomy. Consumers are not kings and the major corporation does not sit as a passive receiver of consumer desires. In the above cases, corporations are actively denying people what they wish to purchase because the corporations are logistically constrained. If we extend our thinking slightly, on an everyday basis the logistical challenges that corporations overcome, at the scale that they operate, necessitates that they predict and manage demand rather than respond to it. If we look at the full range of activities that the corporation undertakes we see purchasing as the end point, not the start point, of a long-chain of actions, decisions, and long-term planning. Seeing the economy in this light, we can also better understand the everyday corporate practices that we, as consumers, regularly experience which serve to manage demand 鈥� things such as advertising, promotional offers, and clearance sales. These practices make little sense in the consumer-led market narrative.

Instead of the market, then, what the pandemic has revealed is a fragmentarily centralised, highly logistically co-ordinated, and supply-led corporate economic system. This situation shows us that the analogy to an actual physical marketplace in the market narrative about the contemporary economy does not hold empirically. Instead, the 鈥渕arket鈥� is at best a metaphor. Ironically, over the centuries that this metaphor has been applied, physical marketplaces have been replaced by corporate supermarkets.听

Dispensing with the market metaphor is essential to being able to see the major corporation, and seeing the major corporation is essential to developing an understanding of the global industrial system, the governing role of this system in our lives, and how this system is producing different crises. Since we are now in a time when governments are tearing up their rulebooks in terms of economic policy 鈥� in a time where a previously unthinkable or radical policy can become orthodoxy 鈥� the time is ripe to rethink the basic economic language that currently serves to constrain our thinking about, and our capacity to reimagine, the social world. It is time to embrace the use of alternative language, metaphors and ideas that allow us to confront the corporate economy as it is.听

Terry Hathaway听is听a Lecturer at the Norwegian Study Centre at the University of York.

Photo by听听from听