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Critiquing Neoliberal Perspectives

Satyaki Roy

By Sunanda Sen and Byasdeb Dasgupta
Sage, New Delhi, 2013, pp. 223, Rs. 695.00


Friedman’s Capitalism and Freedom spurred the counter-revolution against Keynesian policies resurrecting the ‘invisible hand’ once again from the fetters of state intervention. The monetarist paradigm that follows suggests that a high rate of unemployment has to be explained by inflexible labour markets which are characterized by all kinds of institutional rigidities preventing the realization of market equilibrium. Hence, de-institutionalization of labour markets—labour market flexibility, as the catch phrase goes, emerged as the panacea of all evils. What seems intriguing is that easing controls over capital makes capital freer but dismantling institutions in the labour market causes unfreedom of labour. Sunanda Sen and Byasdeb Dasgupta’s book reveals this unfreedom in waged work in India’s manufacturing sector. Invoking empirical facts using data for organized manufacturing industry at three-digit level and also from field surveys covering three SEZs and fifteen industrial clusters located in Haryana, UP, Delhi, Gujarat and West Bengal, the study critiques the neoliberal perceptions held in the discourse on labour market. The introduction and the first chapter of the book provide a theoretical critique of the mainstream arguments that strive to explain the recent phenomenon of low employment together with high growth on account of rigidities in the labour market. Three subsequent chapters reveal the unfreedom of workers in the organized sector despite high growth in the economy and in the following chapters the authors discuss various aspects of labour security and propose a composite labour security index followed by a critical review of the proposals for labour reforms suggested by the National Commission on Labour.   Sen and Dasgupta draw attention to and provide some critical comments on several versions of supply-side approaches such as skill mismatch, different versions of search models, efficiency wage arguments and those of the genre of implicit contracts and insider-outsider approach. The author criticizes positions that explain low employment elasticity of output on account of rising product wage or because of rise in domestic real exchange rate and propose downward flexibility of wages as a policy prescription. The authors also question the validity of trade driven arguments that follow from factor-price equalization theorem and variants of convergence hypotheses such as increased trade would minimize difference in wages between countries and reduce gaps between skilled and unskilled workers within the country. In spite of the fact that a large spectrum of mainstream arguments is contested in a comprehensive manner, the authors’ focus ...

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