Economic Lies Told by Governments!

Some recent headlines in newspapers regarding the country’s economy:

• “India – the fifth largest economy”
• “GDP growth rate in top gear”
• “India aims for a $5 trillion economy by 2025”
• “India’s per capita income is $2,227 per year”
• “LIC assets worth ₹42.3 trillion”
• “Adani Group chief ranks third among global billionaires”

Sources for such headlines include government economic institutions and interest-earning financial organizations like the World Bank and the International Monetary Fund (IMF). These are the figures echoed by economists and ministers alike. However, such reports are often incomprehensible to ordinary people and even the educated class from academic institutions. They believe these are matters for economists and governments, not realizing that these affect their daily lives and should be analyzed deeply for the truth. That is why the economic falsehoods propagated by rulers have been going on unchallenged for centuries, leading to increasing inequality. People suffer but rarely pause to think about the causes or the way out.

We often hear terms like development (growth), growth rate, Gross Domestic Product (GDP), per capita income, poverty line, and consumption. For instance, consider the terms ‘development’ and ‘growth rate.’ If there is more money this year than last, it is called growth, meaning more goods or services have been produced. If we consider goods and services together as production, the monetary value of this production is called GDP.

However, production value doesn’t only mean the cost of tools or wages paid to workers. For example, if tools cost 80 and wages 20, the total investment is 100. No entrepreneur produces to get back the 100 invested. They expect to get more, say 120. The extra 20 is the surplus value derived from workers’ labor. Every year, this new surplus value generated by labor is considered development.

However, this development does not reach all citizens equally. Those who own the means of production get the benefits. Workers who create surplus value receive only a fraction as wages. (Even if some intellectual workers in specific sectors receive high wages, the owners retain more. This needs further explanation, but space is limited here.) Owners earn more than just covering expenses and salaries. Suppose the profit last year was 100. If it is 110 this year, then GDP is said to have grown by 10%. If it rises further, the government statistics department declares: “GDP growth rate in top gear.”

The increase in wealth for industrial tycoons (e.g., Adani Group) is due to the surplus value created by workers. Even the growth in assets of interest-earning businesses like insurance companies and banks stems from surplus value. (e.g., the earlier headline about LIC’s ₹42.3 trillion in assets.) This is because they collect money from the public as insurance premiums or bank deposits and lend it to industrialists, earning interest. The owners pay that interest from the surplus value extracted from workers. Yet owners and banks never use the term “surplus value.” They call it “profit.” They argue: “If I invest, shouldn’t I earn profit? If I lend, shouldn’t I earn interest? If I rent land, shouldn’t I get rent?” Even workers find this reasoning natural. This is meant: “In every era, the dominant ideas are the ideas of the ruling class.” If workers don’t know some economic truths, that’s it. But explaining them isn’t hard.

About 50 years ago, I read a book in which a miners’ union leader in Bolivia explained the concept of exploitation of labour to miners very simply. He took a large sheet of paper and said: “This is how much we produce with our labor, and this tiny torn piece is our wage.” Then he showed the remaining large part and said: “This is what our employer pockets without doing any work!” What a simple explanation!

Let’s talk about ‘per capita income.’ Economists calculate it by dividing the nation’s annual income by the population. One headline stated India’s per capita income is ₹1.87 lakhs (or $2,227) per year according to World Bank figures. To understand the deception in this, consider one major investor, Mukesh Ambani, who earns ₹150 million annually. A domestic helper might earn ₹5,000 per month or ₹60,000 annually. A university professor may earn ₹1 lakh per month or ₹1.2 million per year. But according to per capita income, all three — investor, laborer, and professor — are said to earn the same! Is there a greater economic falsehood?

‘Poverty line’ and ‘consumption’ are another pair of falsehoods. The poverty line is calculated based on how much a person or family can spend monthly from their income. Workers receive wages that only cover the cost of sustaining their labor power — just enough for basic survival. That amount barely affords basic and often substandard goods. Economists never say poverty exists because workers aren’t paid the full value of their labor. Instead, governments offer token welfare schemes as charity.

Let’s also consider government tax revenue. A recent headline: GST collections in August amounted to ₹1.43 trillion.

Where do these taxes come from? They can only come from the surplus value created by workers producing goods. In other words, from the exploitation of labour! But this truth is never told by the finance minister, chief economic advisor, or TV debate panellists. That’s why it’s repeatedly said that working people must understand the economic lies told by rulers. Until that happens, capitalism and its economics will continue to dominate, as Karl Marx explained 150 years ago in Capital:

“Political Economy can remain a science only so long as the class-struggle is latent or manifests itself only in isolated and sporadic phenomena”

Ranganayakamma is a renowned Telugu author

Originally published in Andhra Jyothi