Profit Inflation, Keynes, and the Holocaust in Bengal, 1943-44

The year 2018 marks the 75th anniversary of the Bengal famine, 1943–44. This paper argues that the famine arose from an engineered “profit inflation,” described by John Maynard Keynes in general terms as a necessary measure for “forced transferences of purchasing power” from the mass of working people, entailing reduction of their consumption in order to finance abnormal wartime expenditure. Keynes had a long connection with Indian financial affairs and, in 1940, became an advisor with special authority on Indian financial and monetary policy to the British Chancellor of the Exchequer and the Prime Minister. Facing trade union opposition in Britain to the highly regressive policy of profit inflation, he gave it up in favour of taxation. But, in India, extreme and deliberate profit inflation was implemented to finance war spending by the Allied forces, leading to the death by starvation of three million persons in Bengal.