PRABHAT PATNAIK Notes on the Political Economy of Structural Adjustment We live in a world where capital in the form of finance is immensely mobile across national frontiers. In such a world, quit^ clearly the ability of the nation-State to undertake independent policy initiatives is greatly undermined, a fact which I think is responsible for the current crisis not only of socialism, but also of social democracy, of Keynesianism, of welfarism, of third world nationalism, and indeed of all •those tendencies which informed praxis of varying kinds in the direction of transcending the boundaries of orthodox unreformed capitalism. Since all these tendencies aimed at reforms of differing intensities, each of them had to posit an "agency"that would be the enforcer of these reforms and the organiser of the reformed system; and the agency that they all postulated, not surprisingly, was the State, which inevitably meant the nation-State. The undermining of the capacity, of the nation-State to pursue an economic policy of its choice, owing to the progressive disappearance, in the era of international fluidity of capital, of any sort of an economic "control area" over which the writ of the nation-State could run has reduced the coherence of vision of all these tendencies, even as it has resulted in an actual increase in the level of unemployment in the advanced capitalist countries-1 There is however a second, distinct, issue, namely the emergence into hegemony of an ideology of "privatisation",and "liberalisation", which advocates a "rolling back" of the State from the sphere of production and productive investment, and a significant curtailment in the level of social expenditure, all of which go into the constitution of the package called "structural adjustment". Now, this is a distinct issue because the fact that there are objective economic limits to State action does not per se explain why the ideology of "liberalisation" should have acquired hegemony. True, the two issues must obviously be linked, but they are by no means identical. But it is not just the ideolo- Centre for Economic Studies and Planning at School of Social Sciences, Jawaharlal Nehru University, New Delhi. Social Scientist, Vol. 22, Nos. 9-12, September-December 1994