What will it take to acknowledge our own? Indian Economists before Independence

Last week a discussion on a small WhatsApp group of Gokhale Institute alumni turned a bit acrimonious. It began with a general query on who could be termed the "Father of Economics in India" - some names that came up - Gopalkrishna Gokhale, MG Ranade - but the discussion soured fast when one member took affront to the topic itself - the argument given was that Adam Smith has been generally recognised as the father of Economics, because of his conceptualization of the problem at hand and later economists built on the methods and concepts he developed; who did something first is hardly important, what follows is what matters. "On this count all the Indian names mentioned as "fathers" do not deserve that title because nothing of any consequence followed."

The last line struck me hard as I found this line of argument singularly unappealing - yes, identifying a "Father of Indian Economics" may be debatable, trivia for many, may not be considered of any "serious" value.  However, to say that "nothing of any consequence followed" from the work of Indians in the field of economics before independence is not because their work was unworthy. 

 "nothing of any consequence followed" because we didn't take their work forward. In fact, the point of the discussion now should be limited to the fact that many do not want to even recognise that we have forgotten our own stalwarts; worse, in the current political atmosphere, such reading has unfortunately become contentious.

As economics students in India, we are not told about our own, and their contributions. Why does this matter? Let us at least start by looking at the work we have ignored. One of the best references on Indian Economists prior to independence is "Toward Development Economics: Indian Contributions 1900-1945" by J. Krishnamurty. Read his article in The Wire, "Looking Back at a Hundred Years of Research in Indian Economics" to get a good idea of the research in India prior to independence. 

"Among the important papers published in the IJE before independence, I would single out four papers, all of which are reproduced in my book. I am confident others would come up with other lists.

• In 1934, Radhakamal Mukherjee published a highly original paper on the ‘Broken Balance of Population, Land and Water’ dealing with the ecological problems of the Gangetic valley. This was long before environment economics became part of professional and popular discourse.
• In 1935, Gyanchand in his paper ‘The Essentials of Economic Planning for India’, questioned the then current euphoria over economic planning. He pointed to the futility of achieving redistribution with growth in a colonial setting. This paper was a precursor to the debates after independence on the relevance of trickle-down economics and whether growth by itself would lead to better redistribution.
• Again, in 1935, P.J. Thomas in his paper, ‘A Plan for Economic Recovery’, used the employment multiplier of R.F. Kahn to plead for public works in the context of the 1930s depression in India. He estimated that four men newly employed in public works would lead to three or four more secondarily employed. Unfortunately, the government in India was tied to conservative finance and did not give up its belief in balanced budgets.
• What was perhaps the most original paper published in the IJE in 1938. This was V.K.R.V. Rao’s paper, ‘The Problem of Unemployment in India.’ It was the earliest attempt to apply Joan Robinson’s concept of disguised unemployment to a less developed country."

I was fortunate to work with Krishnamurty* for some years. It was during this research that I was struck by the ideas of Radhakamal Mukherjee. Though I do not agree with all of Mukherjee's views, I remain absolutely fascinated by his Borderlands of Economics - read more about him in my earlier post Economics and Development Choices.

Today, the move to "decolonise economics" is growing in momentum worldwide. Tirthankar Roy has a nice post on what this means to someone who has studied economics in India. He points out that the Indian economy is deeply impacted by the monsoons, so "Surely, any worthwhile economics for such a region should start with an account of geography and environmental risk. In the American textbooks that we read, geography and environmental risk did not exist."  Radhakamal Mukherjee had brought that out in 1925. But we didn't, we don't read him. 

Surely, it is on us to acknowledge our own now? We can then add to the strands on pluralistic approaches to economics that are coming through across Africa, Latin America and South-east Asia. Through this blog, I will be adding more references on this, to make it a resource for me, and for all others who may be induced to read more (A starting point could be Ali Al-Jamri's post, "Let's Decolonise Economics Education")

This is, I stress here, not about insisting that all that is Indian is good, or the best, or the first.  It is not about accepting everything any single person has said. This is about allowing for more nuanced discussion, recognising that we need not be straitjacked by the methodology given by the West, and then we can pick and use what is appropriate for the right policy choices for India. But, this can happen only when we allow ourselves to read, and take forward their legacy as appropriate and relevant today, without prejudice.

*"India and Development Economics:External influences and internal responses" (in Ragnar Nurkse (1907-2007): Classical Development Economics and Its Relevance for Today, edited by Rainer Kattel, Jan Kregel and Erik Reinert). 

Covid-19 has brought out the faultlines in Economics - will economists get this shift?

"The weaknesses of the field of economics have long been known, but the Covid-19 pandemic has laid them bare. Of particular concern in the wake of this pandemic is the discipline’s understanding of economies as markets separated from the rest of the societies in which they are embedded and heavy reliance on methodological individualism and quantitative modelling. We argue that society’s unpreparedness and inadequate response expose weaknesses in the very foundations of the dominant economic paradigm." 

As I explore various critiques of current mainstream Economics, here is an excellent paper by Carolina Alves and Ingrid Harvold Kvangraven (Changing the Narrative: Economics after Covid-19, RAS Volume 10 No 1 January-June 2020). A must read for all students and researchers, the paper is a trove of references as it sets out the path that the discipline has taken, as it has aimed at becoming a hard science, removing the social and historical contexts. Now the faultlines in understanding and analysis have been exposed with the pandemic, as the authors show how the emphasis on markets and efficiency has impacted public policy, making for reduced welfare. The authors make a clear case in favour of heterodox economics, rather than the current mainstream principles, to look at alternative views of human behaviour, and not the narrow world of rational optimising agents and the methodological individualism. Such an approach will allow for analysis of inequalities based on gender, class, and race. 

"If we thought of structuring our society along the lines of resilience and robustness rather than efficiency, our societies’ preparedness for a pandemic would be much greater (Trosper 2009; Derissen, Quaas, and Baumgärtner 2011). In such a case, we would be more likely to have had adequate equipment and structures in place to respond effectively."

The authors call for more diversity in the responses of governments to this virus - decisions should allow for varied evidence and expertise and evaluated by advisory groups that are also more diverse.  Germany for instance also included philosophers and historians in the advisory group. By broadening the discourse, all societal aspects of policy decisions can be accounted for, with full public scrutiny.  

The central point of the paper is that it is important to change the narrative of economics and place distributional conflicts at the centre of analysis. I feel that even "regular" economists will get this point clearly when they look at a) the inequalities in the global value chains now - the disruptions caused by the pandemic as countries closed borders showed that emphasis on efficiency has led to chains being, what the authors call "hierarchical and imbalanced with core hubs that exert disproportionate influence" and b) the unequal impact of the disruption caused by the lockdown on migrants and small businesses - in India, it feels like the bottom has fallen out of our economy, as we knew it. Ignoring such conflicts will only lead to social and political tensions, something our country can ill afford.

The authors concluding note rings true for us in India too, we need to adapt our analysis and policy responses appropriately: 

"In the coming months and years, there will be a battle to define the narrative of the pandemic. We need an explanation of the crisis that is capable of seeing the economy as more than just markets and, rather, as embedded in society. It should be capable of linking the causes and consequences of the pandemic to our systems of production and distribution. A fundamental change in the prevailing economic narrative is necessary for a more just, robust, and democratic society."

Perspectives from Africa on policy responses to Covid-19

There is a very interesting set of interviews by Folashadé Soulé and Camilla Toulmin giving perspectives from Africa on the policy responses to the Covid-19 pandemic. Two interviews are highlighted in this post that bring out issues that merit much more policy attention from governments who are currently narrowly focused on Covid-19 numbers - the deep debt distress and the disproportionate negative impact on women have long term implications for the resilience of societies and economies. 

Pr Benno Ndulu, the former Governor of the Bank of Tanzania, flags the severe debt distress that the Covid-19 pandemic is accentuating in many African countries - "There has been a huge change in the composition of African debt: it’s shorter in maturity, and commercial to a large extent which means reputational risk is a much bigger issue than it has been in the past. That’s where the rating agencies come in. Unfortunately, rating agencies have tended to act in procyclical way: when things are bad, that’s when they pronounce you to be in really bad shape. African countries now have also to deal with a creditor coordination problem. It used to be the Paris Club and everything was settled there, but now there are new donors like China and the real question is how does one get coordination among all the creditors to deal with this issue."

He also raises the need for countries to get digitally ready and inclusively, pointing to the increasing role of technology in improving productivity and formalisation as well as globalisation through tele-migration taking "jobs to where people are rather than having to force migration of people from the rural areas into the cities in order to be able to offer their services."

Takyiwaa Manuh, Emerita Professor of African Studies at the University of Ghana, brings out the impact on women: "We’ve been very concerned about the gendered impacts of COVID-19. Government statements hardly mention gender, but mainly focus on the economy. It is expected for instance that GDP growth will fall from more than 6% this year to 2% and this will affect tax revenues, production, trade and commodity prices. Government speaks of these things as if there are no people who lie behind the changes, but just disembodied activities. But when you begin to disaggregate, say the tourism sector, which has been badly affected, you find the hotel industry, food chains, restaurants and catering establishments are run mainly by women, so there’s a disproportionate impact."..."even when there is a focus on gender it tends to be on the economic aspects, and not on the human rights and bodily integrity of women, which are essentially considered as private matters."  

Responsible modelling in times of uncertainty

Axel Leijonhufvud's piece on economists, "Life Among the Econ" did a brilliant takedown of what he termed "modls" as in "recognized status has come increasingly to be tied to cleverness in modl-making." Raising model-making to such high status has created considerable scepticism towards the discipline. There is now a new brilliant paper by 22 researchers - a manifesto with five principles to ensure that mathematical models best serve society (June 2020 Nature 582(7813):482-484).

1. Mind the assumptions: The results of models are only as good as their assumptions, which are often not adequately assessed. Solutions from one model therefore do not fit alternative situations. The recommendation is to undertake global uncertainty and sensitivity analyses - that is, allowing all that is uncertain — variables, mathematical relationships and boundary conditions — to vary simultaneously as runs of the model produce its range of predictions. Many a times the uncertainty in predictions is substantially larger than originally asserted, there should be transparency about the analysis to provide real value and applicability.

2. Mind the hubris: Researchers must resist the attraction of adding complexity to a model without reason. The authors note the lack of accountability leads to such hubris: "Whereas an engineer is called to task if a bridge falls, other models tend to be developed with large teams and use such complex feedback loops that no one can be held accountable if the predictions are catastrophically wrong."

3. Mind the framing: This is a critical principle that many forget to factor into their work. The example given of cost-benefit analysis is a common one we run up against when projects are being evaluated.
"Modellers know that the choice of tools will influence, and could even determine, the outcome of the analysis, so the technique is never neutral. For example, the GENESIS model of shoreline erosion was used by the US Army Corps of Engineers to support cost–benefit assessments for beach preservation projects. The cost–benefit model could not predict realistically the mechanisms of beach erosion by waves or the effectiveness of beach replenishment by human intervention. It could be easily manipulated to boost evidence that certain coastal-engineering projects would be beneficial7 . A fairer assessment would have considered how extreme storm events dominate in erosion processes."
"Modellers should not hide the normative values of their choices."
The authors therefore recommend that there should be international guidelines for a set of social norms that would include how to produce a model, assess its uncertainty and communicate the results.

4. Mind the consequences: The authors take examples from the ongoing Covid-19 crisis to show how quantification can backfire towards giving precisely wrong results and spurious predictions cause significant harm. The recommendation therefore is to avoid opacity, and give full disclosure on the uncertainty - this alone will build trust and utility of modelling.

5. Mind the unknowns: Acknowledging ignorance is no crime, in fact it builds accountability and trust. "Experts should have the courage to respond that “there is no number-answer to your question”, as US government epidemiologist Anthony Fauci did when probed by a politician."

These principles have been set for responsible modeling in all disciplines, but will mean the most towards setting appropriate policies in developing economies.