46 SOCIAL SCIENTIST bills. Since the former fetches a higher interest rate, this substitution is a profitable one. But, the main pomt about privatisation is that it involves the sale of public sector equity at considerably less than its market value. It does therefore involve an increase in the wealth of the private sector, an increase which is handed to it gratis by the State. Now, to the extent that the banks directly hold a part of this equity, they share in the bonanza. Even if they do not directly hold any of this equity but finance through credit the holding of such equity by others, they would extract a cut from this bonanza by charging higher interest rates on such credit (and hence by implication on all credit).4 In other words, not only do banks gain from privatisation through the substitution of high-yielding assets (equity or loan against equity) for low-yielding assets (government securities or Treasury bills) even when State equity is sold at its market value, but, what is more, since such equity is always sold below market value, they also gain from jacking up interest rates. Such jacking up, to be sure, would have a further recessionary effect upon the economy, adversely affecting the demand for credit for other purposes; but clearly, as long as the amount of State equity sold is considerable, and the difference between its sale price and market value sufficiently large, banks (and the financial oligarchy in general) would be net beneficiaries from a package of policies involving tax-cuts, welfare expenditure cuts and privatisation of State assets. 3. They benefit moreover in yet another way. We have seen above that when the magnitude of the budget deficit remains unchanged but its constituent elements change, total post-tax profits remain unaltered even through the activity level declines. This decline obviously affects the profits of some capitalists, but others gain so much that the total profits remain unchanged. Even in this case, in other words, there is a redistribution of profits within the capitalists, away from some and in favour of others. Typically, needless to say, the redistribution is away from the small capitalists and towards the larger ones who are the prime beneficiaries of the tax-cuts. When the budget deficit itself is cut, or when investment is cut on account of the higher interest rates enforced by the banks in the wake of such a policy package, the magnitude of the total post-tax profits declines. Even this decline, however, has an uneven impact. Since in conditions of recession it is the small capitalists with less staying power and less efficient equipment who go under, it is really their profits which get wiped out; the profits of the larger capitalists are not affected to anything like the same extent. In such a situation, a transfer of assets takes place, away from small capitalists towards either the creditors directly which happen to be the banks, or larger capitalists whose purchase proceeds go towards paying off the