steinmetz, epistemological unconscious

(111-118): "methodological positivism"

1. ontological assumptions about nature of social reality--empiricism, which is claim that there is no difference between essence and phenomenon. cause and effect at the level of events.
   
2. epistemological precepts concerning way in which facts can be known--positivism, presupposing the invariance of empirical relationships;
   
3. scientistic-naturalist belief in unity of natural and social sciences--militating against recognition of concept-, time-, and space-dependence of social structures and practices (embodied by idea that you consider social facts as 'things')
   
4. assumptions concerning social science methodology-quantitative methods,e tc.

(117, 136, 152): danger of collapsing into particularism, in his call for concept-, time-, and space-dependence ('Hindu categories') and the call to bring back 'meaning' into science/analysis. on p. 136, he speaks of a rejection of multiple causal mechanisms...

(118): absurdity of ASR example

(120, 140): American sociology as epistemically unsettled until 1945 (question of how you measure this--it can be entirely self-confirming, unless you ask this). on p.140 he is being very definite with his periodization--surely this degree of correspondence is ambitious, at the very least.

(124): need to make epochal distinctions within capitalist modernity -- fine, but why 'discrete', epochal distinctions of the sort posited by regulation theory?

(127): why positivism after WWII? association of anti-science irrationalism with Nazism and totalitarianism

(128-131): important--but really, it was because:

1. the sense that economic crises were over--the economy was stable [but this is not the same thing as a sense of economic stasis; or at least, it need not be--this said, to me it is the most plausible of his points]
2. homogenization of consumer-citizens (so no need to think about the specificity of individual consumers, everyone was 'the same')
3. synchronization of scale of activities within the nation-state [this is more difficult--how is the argument about equality across the nation-space borne out? and what is the alleged mechanism: active State intervention in pursuit of this goal? ]

(132): collapse triggered by disappearance of "social regularities" (this is not direct--'methodological positivism' is not displaced, but its hegemony becomes progressively more uncertain). here he lists different challenges, though this is hardly very interesting.

(137): 'domestication' as too simple a notion

(140): anti-systemic movements, Vietnam war, etc., all had effects. the collapse of "patterned regularities" [but here you're starting to assert that you were no longer working with capitalism, for a time, almost. anyway, worth unpacking. too cryptic with his claims. substantiate, for me, the argument that development was more uneven, etc. here's relying on a 'common sense' to make a commonsense-style conclusion]

(145): critique of path-dependence, via a critique of normal/deviant paths. [but this is going too far]

(156): why did post-Fordism do the opposite to economics? surely there's something else to be unpacked.

- - - - - -

1. Major issue with regulation periodization. Why discrete? Isn't the 'rise and fall' of regulated epochs just a proxy of class struggle; otherwise the claims seem exceedingly mystical. In other words, the transition/turn is , rather then explained

anwar shaikh, adam smith (lecture 02 – 09/07)

different questions of equilibrium ('turbulent regulation'), looking at industrial production index

1. growth is the normal state

2. growth is exponential (linear on a log scale)

3. growth is turbulent, too. the line is fluctuating

neoclassical economics does real violence to this graph and the trends it depicts.

then looking at US real investment index, which appears only more turbulent. “investment is more volatile than output” (based on looking further ahead, making a guess re: further prospects for profit—not simply prospects re: demand, as Keynesians would argue)

then looking at US real GNP per capita—the system has grown roughly ten fold in these terms. which is a feature, clearly, of productivity growth.

all this is built into the classical vision of political economy.

(for neoclassicals, growth occurs on a 'balanced growth model' – the premise is a static framework, in which growth enters as an 'addition' to the story)

fluctuations around an anticipated trend are called the 'business cycle'

looking at a business cycle graph—the first major depression was in the 1840s, setting the context for the revolutions of 1848; you also have a boom with the mexican war, and (dampened) boom with the civil war, WWI.

using the graph to draw the distinction between 'recurrence' and 'steady cycle' – booms give way to busts, and busts give way to booms. there is an already-discussed phenomenon of overshooting equilibrium, and then falling behind it, etc., etc.

(for neoclassicals, the mismatch between producer expectations and consumer preferences is assumed away, via perfect knowledge. the most sophisticated math cannot show stability—it can only make the assumption that equilibrium exists, and even then this entails its own assumptions. a lousy answer to a lousy question.)

- - - - - - - - -

how did the classical economists try to understand capitalism, given that they did not suffer from these sanitizing assumptions? they saw fluctuations and growth—this was Smith's premises.

not sanitizing, but analyzing.

Smith begins by arguing that “wealth of nations comes from labor which they apply to production.” (Chp 1, p. 1). annual labor is the fund which provides the nation with necessities and conveniences.

(for neoclassicals, its capital and labor—but, for classicals, capital is 'past labor'. labor is the active element. this is the sense in which Smith makes this claim).

Smith then goes on to say that not all labor is 'production labor' (“productive labor” is the term Smith uses—we will use 'production' vs. 'non-production' to remove the connotations of 'productive' vs. 'non-productive'). Smith mentions lords/king/army all as 'non-production' activities, not because they're worthless/'bad' but because it's defined on the basis of its 'effects.' in short, not defined on the basis of worth or even social necessity, but on the basis of its producing effects.

implication of this, of course, relates to social reproduction. production labor produces a certain amount—part of this goes to its own reproduction, and the remainder is a surplus product. this surplus product not only has to support re-investment, but has to support the king, the judiciary, the educational system, the army, the police, etc. the spending on non-productive activities can inhibit the growth of the economy (the means of violence, etc.--on this point of view, military activities may pump up demand, but they're also parasitic in this sense)

(for modern economics, anything supported by the market qualifies as productive. a Japanese minister made a claim about 'unproductive labor' and security in the USA)

given that production labor is the fund for new wealth, it's obvious that if you could increase the productivity of labor, you'd get more with the same labor. for Smith, the central factor in increasing productivity is the division of labor ('greatest source of increase in productivity')

comes, of course, from the natural propensity to 'truck, barter, etc.' this is 'mythic anthropology', and neo-classical economics will pick up on this part of Smith, in particular. (remember--one of the most elaborate form of the division of labor is a caste system; not driven by a caste system, but by social hierarchy. or gender, which also is not a choice; socially imposed. the idea that the division of labor may make you more productive is fine, but it should not excuse the mythic anthropology here).

in short: the social division of labor as voluntary choices made by free and equal human beings.

the division of labor leads to divisions in abilities—not due to inheritance, but due to training. Smith is clear that these are not natural traits, but socially given. (this is an important counter-point to conservative mythologies re: Smith)

also, the division of labor is limited by the extent of the market. how much can you increase the division of labor? well, if there's a limit to how many pins you can sell, so there's no point to try and make production more efficient. Smith is not very clear whether this is the pin market, or the aggregate market.

money, for Smith, arises from the division of labor—to facilitate the exchanges to which it gives rise. that special commodity which gets picked in the course of the development of exchange to facilitate the transactions (different times/places pick different commodities—furs were quite common, salt, tobacco, etc.).

value—Smith says that we want to distinguish between two different definitions. one is 'value-in-use'--the utility of some particular object. the other is 'value-in-exchange'--the quantity of other goods you can get for your particular object.

the former is about its usefulness, the latter concerns its exchange ratio

the world 'utility' for Smith does not mean what it means for 'neo-classicals.' today it means 'subjective satisfaction.' no way to compare across people—a psychological reaction to a commodity, or a thing. for Smith it simply means 'usefulness'--Smith says that air, for example, has great utility. doesn't want to confuse it with 'desirability.'

'value-in-exchange' is mediated by money, of course. if exchange rates are mediated by money, then you have 'price.' Smith's concern is to explain the laws of money price.

on the surface, the market price seems to be the issue. but classical economists thought that was trivial—we're looking for a central regulating mechanism. underneath the demand and supply is there a regular center of gravity to which price is attracted.

for Smith, that regulative principle is the amount of labor expended in the production of that commodity. next time we will pick this argument up.

isaac ilych rubin, a history of economic thought (1929)

part III: adam smith

(153): birth of classical school circa 1750 as science of industrial capitalism (this was their watchword and 'cause')

(155): seeing subordination of crafstman, rise of the putter-out and buyer-up. in short, the birth of the manufactory (1600s/1700s)

(156): important--but, at the end of the 1700s, the domestic system still competes with the manufactories (because they had not yet systematically begun to implement mechanization), and the former still had the advantage of no fixed-capital costs, and workers could have subsidiary income. more co-existence, than 'elimination'

(157-158): the manufactory did, however, signify the appearence of industrial capitalism and formaiton of an industrial proletariat, though it retained continuities with handicrafts in terms of technology

1. division of society into capitalists and laborers
2. comination of production based on division of labor

(160-161): protectionism/guilds were unable to stand in its way

(164): scotland was relatively advanced, economically, in the mid-18th century

(166): smith wasn't at all absent from the great practical debates of his day (rubin emphasizes this--mercantilists had been practitioners of economics, not theoreticians), even as he could be considered the forerunner of economics as a theoretical discipline. [he inveighed against protectionism, for example]

(167): importance of natural right to his doctrine (his moral doctrine, but also his economics)

(167-169): imp, natural right re: economics--economic progress will assert itself due to capitalist man being written in to the nature of things. Quesnay had a different conception, for which institutions were very important. but Smith was infused with optimism of his liberalism, in this sense. (this is the bedrock of Brenner's critique of neo-smithian marxists, remember)

(170): for Smith, economic intercourse is intercourse between commodity-owners. exchange, in short.

(171): an obvious tautology--Smith attributes to abstract man motives and aspirations that are in fact the result of institutions and history; he uses the motives and aspirations to 'prove' the necessity of these same institutions.

(173): Smith's optimism, for all his reservations, makes him the father of economic liberalism (ie, no state interference in ec. policy, free trade). but Rubin is arguing that this could only be unproblematic in the period of the 'revolutionary bourgeoisie'--his aim was not to defend the interests of capitalists.

(178): smith's assertion that division of labour is main source of productivity puts him squarely in the manufactory period.

(179-181): important--smith misses the distinction between the social division of labour (between occupations) and the technical divison of labour (within a firm). this represents a failure to distinguish between an economy of simple commodity exchange, and a capitalist economy.

(179): Rubin here speaks about two features of the classical school

1. not understanding the social forms of division of labour, because you are concerned with its material-technical aspects.
2. individuals enjoy a harmony of interests--spinner and weaver complement each other.
   

(181-182): apprehending the social division of labour did allow Smith to see our mutual interdependence, which was a 'great service'

(183): against mercantilists, Smith understood that money was merely a facilitator--it did not represent value, itself

(186-196): in short, Smith arrives at two conceptions of value. Rubin has a very lengthy argument re: why, having to do with Smith's 'methodological dualism'. but the main point is simple--this confusion is masked Smith is looking at a simple commodity economy; but when he looks at capitalism, he is unable to understand the 'exchange' of non-equivalents between capitalist and worker.

1. quantity of labour expended on production
2. quantity of labour which a given commodity can acquire or purchasee.
   

(198-201): important, Smith made a serious advance over the Physiocrats re: the concept of social classes, replacing a concpetion rooted in a conceptual division based on 'branches of industry' with a conceptual division based on revenue (profit, wages, and land rent). this meant he took a major step towards formulating the problem of surplus value, viz-a-viz the mercantilists (for whom it was commercial profit), and the physiocrats (for whom it was rooted in the nat. properties of the land)

(202): Smith 's picture of primitive accumulation is very benign; opposite of Marx's. root of capital is relative 'parsimony'

(202-204): important, Smith recognizes labour as the source of value of the product, which would mean wages is deduction. BUT he can't carry this through to its conclusion--he confuses 'theory of distribution' with 'theory of value', and begins to deduce value from profit/wages/rent. in other words, he starts with an understanding that profits and wages are exclusive, but then arrives at a position that sees higher profits mean more value.

(203-204): Smith's theory of general accumulation--doesn't accept the 'iron law of wages'/instead a confused position on the 'wage fund', Rubin is arguing. marked by an optimism about rising workers' wages, in contrast to Ricardo.

(206): unions not useful--for Rubin, this is because he predates the union movement

(209): theory of capital, 'private economy' (a private house rented out is capital) + 'national economy' (total productive stock in economy). BUT, according to Rubin, Smith is unable to reconcile these two definitions because of baseline confusions in his theory of surplus value.

(210-212): leaves out 'circulating capital' in his discussion of total reproduction (as does Ricardo, as does Say, as does Mill)

(214-215): Smith also misunderstands the distinction between unproductive and productive labour--for Rubin (Marx), it is about the relation of the labour to the production/expansion of surplus-value; for Smith, it is about the creation of a material object.

anwar shaikh, why classical political economy (lecture 01 - 08/30)

classical economists asked this question: how can we have patterns of recurrence? how can g. depressions recur?

the surprising answer, though, is that capitalism does not work through individuals' intentions. it runs 'behind their backs.'

the market possesses powerful internal structural patterns that emerge from the centrality of the 'profit motive'

what happened in the 1930's?

the system broke because the profit motive led it to that outcome.

the key point is that the classical tradition sees the system in these terms, in terms of a pattern (boom + bust)

classical economists do not mean the same thing as the modern orthodox economists by 'equilibrium'. they see boombs past it, and busts below it--whereas the orthodoxy is content to understand the economy at equilibrium.

neo-classical position--the idea is that equilibrium is a state of rest ("attained and held state"). a gravitational attractor. you're entitled to view equilibrium as a pretty good approximator of reality (analogy to a pendulum)

classical position--the equilibrium point is itself not fixed, and the system can itself move around it. we want to talk about equilibrium points, then, but as 'turbulent regulation.' order in and through disorder. the pattern occurs through overshooting and undershooting.

- - - - - -

what is it specifically about classical economists that distinguishes them from neo-classicals?

neo-classicals

1. self-interest as the primary human motive--rational economic man makes all decisions.
   
2. utility maximization--not just as a principle for understanding firm-level decisions, but also as a principle of behavior
3. firms are price-takers, they all take a common price. competition forces firms to produce at a common price (a competitive economy)
4. profits, wages, and technology is all equal between firms. everything is studied at equilibrium.
   
5. full employment is a stable and regular outcome. if there's unemployment, wages will be bid down, and workers will be hired (unemployment is a feature of government intervention, distortions, etc.) [remember, neo-classicals aren't worried about demand]

keynes and post-keynes

arose in a post-depression context. central argument is that economy can get stuck in a state of persistent unemployment, if there's a lack of demand. unemployment, in other words, is a feasible equilibrium state.

in this context you need the state. the state becomes an important complement to the market. to 'push' it up to a full employment state of existence, which can be a 'higher-level' equilibrium

classical

the inventors of modern economics, and in search of a deeper answer to these questions. unemployment, for example, can be sustained easily, if there aren't profits to be made.

you can't re-open factories if private profit is the dominant law, even if it's socially desirable.

a better understanding of the world we live in is offered by the classicals.

key features of classical political economy

1. economic acts are embedded in a social context. not abstract agents/firms, but embedded (this opens up possibility of thinking about race, gender, etc.)
2. focus is on industrial capitalism (not merchang capitalism, etc.)
3. emphasis is on the 'laws of motion'--patterns produced by capitalism. system is always 'changing and moving'
4. emphasis is also on competition, which has its own hierarchies and forms (amongst workers, between nations. the dominant form is between firms)
5. order in and through disorder
6. expansion and growth are inherent. the system is always moving.
   
7. incentive to mechanize is inherent in the system
8. conflict between private aims/incentives and social goals.
   
9. the state now appears in a very different light, as compared to both the neo-classical and keynesian models. classical economists are more likely to see the State as a State of the 'system.' a conflict between the profit motive and State intervention.
   

the main point--the purpose of the course is not to study dead economists, but about an alternative vision of the system we (today) inhabit.

sugata bose, peasant labor and colonial capital

(2): concern with change/continuity of forms of labor extraction, together with obvious change at the level of the larger economy

(4-5): shift emphasis away from bhadralok to labour

(5): "from about 1820 rural India became subject to the influence... of a wider capitalist economy..."

chapter 1--demography

(9): population as independent or dependent variable?

(12): W. Bengal delta moribund, E. Bengal delta fertile

(12): jute from the 1870s

(13): areas with highest density of roads/railways showed highest incidence of malaria

(14): three demographic cycles (rough):

1. 1770-1860: shared in all-India trend of population increase
2. 1860-1920: W. Bengal stagnant, E. Bengal secular rise in population, area cultivated
3. 1920-1990: population rose, but relatively stagnant productivity
   

(16): neo-Malthusian position would have tough time making sense of these demographic cycles

(16): discussion of roughly Marxist approach to deficit/surplus population in rural areas--useful (absolute deficit population, relative deficit population, absolute surplus population)

(17-18): famine of 1770 not a Malthusian event--there was a relative deficit of labour. entry of Company's government as a buyer of grain contributed to inflationary pressures. revenue collection went up.

(20): review of cross-India population trends

(21): post-1770, population increase did not match output b/c:

1. high revenue demand
2. general malaise in the grain market

(22): discussion of increasing land-population ratio in the 1800s. this may have encouraged some turn to intensive, cash-crop cultivation. but noting that this was also forced (in the case of indigo)

(23): dominant relations of surplus appropriation were revenue (to the State) and rent (to the zamindar) [until now the discussion has remained 'outside' of social relations of production]

(24-25): 1860-1920, recurring pattern of malaria epidemics in W. Bengal kept population levels depressed (declining population per square mile ratios, in parts). mortality highest amongst the poor.

(27): 1860-1920, E. Bengal saved from population crunch by switch to intensive cultivation and by out-migration to Assam

(29): 1920-1970, defined by declining output in the context of an absolute surplus population

(32): 1943 famine--record harvest, "entitlement failures" rather than a problem of food availability.

(32): in this period, demographic pressures did not work to spur increases in technological productivity

(34): close analysis of population-production linkage undermines Malthusian naysayers (since population pressures can induce innovation, though they didn't do this consistently)

(34, 36-37): 'high fertility regime' in the context of absolute surplus population is best understood as a poor peasant survival strategy

(35): in short, cautioning against a Malhthusian techno-determinism or demographic determinism--only saw correlation between population and production in 1770-1860, and even that doesn't tell us about causation. (1) especially after 1820s, agrarian reality was shaped by the market (not by population, production autonomously); (2) evidence also indicates that innovation was blocked by social and political institutions, even as it might have been encouraged by demographic pressures

chapter 2--commercialization and colonialism

(39): against Alavi's treatment of this as a separate mode of production--want to consider 'articulations,' instead

(41-42): imp, no easy typology of what happens to agrarian relations under capitalism; both progression and retrogression. (1) commercialization associated with increased accumulation--plantation agriculture, etc. (tea plantations in Darjeeling and Jalpaiguri); (2) subsistence commercialization, poor peasants seeking out cash crops (jute in E. Bengal); (3) dependent commercialization, foreign merchant capital which brings agricultural production under its sway but "stops short of capitalist accumulation and consolidation of land" (indigo production in W. Bengal)

(48): bonded labor, indebtedness, and indigo production

(49-51): effect of 1840s depression on India taking a severe toll on the indigo-based economy of Bengal

(52): the rise of the railways had an inflationary effect on prices (wages jumped too, but this didn't help the smallholders). this set the context for a revolt against indigo planting in the 1860s (and the end of 'dependent commercialization', he's suggesting)

(52-55): imp, expansion of jute production in Bengal, from the 1850s to the 1930s (tea was also important in value terms--but for the vast majority, jute was what affected them the most). it was part of a subsistence strategy for poor peasants, which left them very vulnerable to market fluctuations--80% of cultivators grew equivalent of 2 acres!

(57): after 1906, credit entered in a major way, in effort to guarantee procurement stability

(59): even rice was heavily exchanged, even if not imported/exported--44% of the crop, in 1941

(59): growth of agricultural income had been sluggish around the turn of the century (but, those who had opted for jute were 'substantially' better off).

(60): WWI "broke the idyll", but recovery after 1922

Cotton production has declined by 22.95 percent as the arrival recorded at ginneries as on September 1 stood at 9,95,191 bales, showing a decrease of 22.95 percent over the corresponding period of the last year when ginneries received 12,91,550 bales.

At majority of the retail outlets of the city sugar was available at Rs 85 per kg, which is higher compared to its previous rate of Rs 75 per kg. Prices of fruits and vegetable remained all time high. Bananas were available at Rs 120 per dozen against its previous price of Rs 100; mango was available at Rs 90 per kg compared to Rs 70 last week. Similarly apple was available at Rs 120 compared to its previous price Rs 100 per kg and guava at Rs 90 per kg against its previous price of Rs 70. Price of tomato went up from Rs 60 per kg to Rs 80 during last week. Price of onion registered an increase of Rs 10 per kg and sold at Rs 50 per kg in contrast to last week's price of Rs 40 per kg. Similarly price of potato registered an increase of Rs 13 per kg and reached Rs 45 per kg in contrast to last week's total of Rs 32 per kg. People from all walks of life expressed serious concerns over the price hike in the kitchen commodities. They criticised the government for failing to provide relief to the poor masses and to keep check on price hike.

Reliable sources told The Express Tribune that the government has chalked out a two-tier plan to place a cut of up to Rs180 billion on federal and provincial budgets aimed at remaining within the IMF-agreed budget deficit target (a gap between the income and expenditure) of Rs685 billion or 4 per cent of the total size of the economy. According to officials, the federal government would save up to Rs90 billion by cutting the development programme and withdrawing subsidies. The plan is based on the assumption that the Federal Board of Revenue would achieve the Rs1.667 trillion tax collection target. But officials claimed that FBR has informed the government that it may miss the tax target by Rs50 billion. In that scenario, the federal government would have to look for other avenues to slash expenditures of equal amount in the wake of the worst flooding in the country’s history. The federal government has also asked the provinces to cut their annual development programmes in order to create fiscal space, necessary to adhere to the Rs685 billion fiscal deficit target for fiscal 2010-11. Officials said that now the provinces have been asked to create a fiscal space of up to Rs90 billion to remain within the overall fiscal framework.

Official statistics showed that the federal government transferred Rs633.4 billion to the provinces from July 2009 to June 2010 as their share in federal taxes under the Distribution of Revenue and Grant-Aid Amendment Order 2006. Though the transfers remained Rs22 billion short of allocations, these helped the provinces to finance 80 to 96 per cent of their budgets. The remaining financing was either received through provincial taxes, non-tax revenues, federal grants or borrowing from banks. However, the historical seventh National Finance Commission Award has changed the distribution mechanism and now other indicators like resource generation, poverty and disparity are also being considered. This has shrunk the Centre’s share from 55 to 46 per cent and will help provinces to get more resources but may lead to loss of provincial taxes due to the provincial governments’ inability to net the actual potential. Punjab’s total income, including federal share, stood at Rs401.6 billion and it incurred expenditures of Rs435.5 billion, recording a deficit of Rs33.8 billion. Sindh, the second most populated province, got Rs188.4 billion from the Centre, which was Rs5.7 billion less than allocation. Sindh was the worst performer in terms of resource mobilisation as it collected just Rs21.6 billion in taxes, the same as in 2008-09. Provincial taxes could only finance 8.6 per cent of expenditures and were less than 10 per cent of total revenues. It also puts a question mark on Sindh’s claim to collect sales tax on services, a cause of delay in implementation of reformed General Sales Tax.
Sindh’s budget deficit remained at Rs10.5 billion. Its total revenue amounted to Rs241 billion while expenses were Rs251.5 billion. Its 79 per cent budget was financed through receipt of federal taxes. The Khyber-Pakhtunkhwa government could only collect Rs2.4 billion in taxes, just Rs187 million more than fiscal year 2008-09. Its taxes could only finance 1.7 per cent of total expenditures and the government heavily relied on the Centre. The province got Rs80 billion from the federal divisible pool compared to its share of Rs85.4 billion. Its total revenue stood at Rs152.4 billion against spending of Rs142 billion, generating a surplus of Rs10.3 billion. The Balochistan government also could not mobilise provincial resources. It collected Rs1 billion in taxes, Rs167 million more than the year 2008-09. Provincial taxes helped to finance just 1.4 per cent of expenditures. Taking into account all income sources, including non-tax revenue, the provincial government could finance just 4 per cent of expenditures, depending on the federal pool for the remaining 96 per cent.

Sugar production in fiscal year 2009-10 amounted to 3.1 million tons and carryover stocks from 2009 were 500,000 tons. However, this year Pakistan does not have any carryover stocks. Average sugar production in one year has been around 3.7 million tons.

“We need to respond strongly to the crisis at hand, but we need to do it without losing sight of important economic reforms,” said Mr Zoellick while emphasising the need to continue the reforms Pakistan negotiated with the World Bank Group two years ago. Mr Strauss-Kahn went a step ahead and indicated that Pakistan had already pledged to continue those reforms. “Our dialogue with Pakistan on the current Standby Arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the programme later this year,” he said. "We will stay in close contact as these efforts proceed. Completion of the fifth review will allow the Fund to disburse an additional $1.7 billion, bringing total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010,” Mr Strauss-Kahn said. Pakistan pledged to implement tax and energy sector reforms, reduce inflation, curb budget deficit and give full autonomy to the State Bank.

Surely, the answer should be to begin to plug the loopholes in the tax system that allow people to evade taxes. Why must the already taxed be burdened some more when so many enjoy comfortable lives outside the tax net? If a 10 per cent flood surcharge on income already taxed can yield Rs100bn as estimated, then simply going after those evading the existing income taxes could yield several times that amount.

During the last fiscal year, the government made record borrowing from commercial banks as it was bound to remain within the limit while borrowing from the State Bank under an agreement with the IMF. Official data issued on Aug 31 showed that last year’s fiscal deficit was 6.3 per cent (or Rs929 billion) of Gross Domestic Product (GDP). It was much higher than 5.2 per cent (or Rs680 billion) deficit of the preceding year. One of the major reasons of massive borrowing is poor performance of economy. The government still claims that rate of growth could be around two per cent while many economists, including some government advisors, believe that the rate of economic growth would be zero per cent. Experts said inflation could be as high as 25 per cent due to disaster caused by floods. So far, the government has not borrowed from commercial banks, instead it made net retirement of Rs44.7 billion compared to Rs54.6 billion borrowed last year during the same period.

“We are in a very good position to cater demand from China, Pakistan and Bangladesh. They are in short supply and we have a bumper crop,” said Paresh Valia, an exporter based in Bhavnagar district in western Gujarat state.

“Fortunately India has five million bales of cotton surplus this year. The spinners have already confirmed orders for one million bales at $0.90-94 that have started arriving,” he added. He said there would be shortage of 2 million bales during October-March period and 2 million bales during April-September that would be covered through imports

Pakistan has only eleven helicopters for civilian needs, which is the lowest number in the region and insufficient to meet emergency needs like earthquake or floods, industry official said on Tuesday.

The devastation to roads has compounded infrastructure deficiencies of the country as the government added only 580km roads in two years (2008/10) against 5,052km roads in 2006/07 alone. Transport sector has been adversely impacted by the recent floods in Khyber-Pakhtunkhwa, Punjab and Sindh where most of the low quality roads were completely washed away or damaged. According to statistics, the development of high quality roads has been on decline since 1996/97, when 8,197km of hard-wearing roads and 3,725km of low quality roads were constructed. The new roads built during 1996/97 were 11,922km. In 2006/07 although the construction of sturdy roads was 7,470km, but the low quality types registered a decline of 2,418km as these were converted into developed roads. Due to heavily damaged road infrastructure, it is becoming exceedingly hard to transport relief goods to the flood-stricken people in far flung areas.

So far as the sources of higher profitability were concerned, this was primarily due to robust deposit growth, culminating in an increase in the earning assets, particularly investments in government securities, and wide spreads between lending and deposit rates. A sharp fall in the provisioning requirements also contributed a great deal in raising profits. Such a scenario developed because the government, in order to meet its budgetary requirements, kept borrowing heavily from commercial banks through treasury bills, while the banks found it convenient to hold risk-free earning instruments. It appears that the banks' profitability in the coming months would largely depend on two main factors, working almost in the opposite directions. A substantial increase in NPLs could be expected due to the massive floods, which have caused extensive damages, especially in the agricultural and SME sectors. This could result in higher provisioning and lower profitability. On the other hand, the government may have to increase its borrowings from the commercial banks to meet its growing needs and this could lead to higher profits. In balance, however, the banking sector of the country is expected to maintain a respectable level of profitability in the near future, without facing major hiccups.

Pakistan may miss the cotton production target by about 2.25 million bales due to devastation caused by the floods. At present, production of 11.75 million cotton bales is expected against the set target of 14 million bales for the year 2010/11, officials at Ministry of Food and Agriculture said. Cotton was sown on 3.199 million hectares, out of which cultivated area of 0.588 million hectares has been damaged.

Sources told Business Recorder here on Tuesday that the quarter-wise and monthly breakup of revenue collection target of Rs 1667 billion for 2010-11 has been issued to the Large Taxpayer Units and Regional Tax Offices incorporating amount to be collected from the services sector from second quarter of current fiscal year. The FBR has estimated to collect Rs 674.9 billion sales tax during 2010-11 taking into account the enforcement measures and potential of different sectors.

The three major car assemblers have more than 90 per cent share in local car sales. Pak Suzuki secured the highest profitability growth of 330 per cent, Indus Motor 55 per cent while Honda Atlas Car remained in the red though its losses dropped, according to the data compiled by Topline Research.

The government has deferred plans to export its surplus wheat, the minister for food and agriculture said on Monday, after devastating floods washed away grain stocks and raised concerns about the next crop. Pakistan, Asia’s third-largest wheat producer, said in April it would export 2 million tons of wheat after a bumper crop of 23.86 million tons in 2009-10, and a carryover of 4.2 million tons from the previous crop. But it held back exports because of low prices in the international market until a recent rally.