Well, this blog keeps saying this over and over again. Knowing history and history of economic thought is perhaps the most important thing in economics. It is a pity that both the subjects are not even taught in most places. Despite all the talk about redrawing economics curriculum to make it more historical and philosophical, it has hardly made much impact.
TCA Srinivasa Raghavan who in his columns keeps bringing aspects from Indian history of thought, has another such piece. This time he talks about how West’s recent attention on regulation and how regulation has been central to Indian thinking:
Most of the things that the economists of the Western Hemisphere are now talking about have been discussed in India since 1900 and practised since 1947. But if you read and listen to the Westerners, you would think they are the first to think of it. To see what Indian economic thinking was before Independence, students all over the world and failing that, at least in India, should be made to read J Krishnamurty’s classic work Towards Development Economics in which he summarised Indian economic thought between 1900 and 1945.
Equity was the undertow there, just as it has become so now in the West. Thomas Piketty in his book on inequality, doesn’t refer to the Indian experience even once, just as Valery Giscard d’Estaing never referred to the Indian Constitution while drawing up the European one in 2002. That project came to grief.
And as to how to practise economics, the students should be made to read the Reserve Bank of India’s history volumes – if only because it is the only place where these things can be found. The West’s economists are now claiming all of this as ‘new’ thinking.
Strong regulation – by government or community – has always been a major tenet of Indian tradition whether ancient or modern. It has never given greed a central place in economic activity. The sovereign has always been tasked with tempering it.
It was the British who altered this mode of thought because it curbed their greed. But consistent with their overall policy of double standards, in Britain they regulated their businesses very strongly. The Americans have done the same thing. They have regulated their own markets very strongly while pressing for loose regulation in other parts of the world.
Hmm.. Not sure whether need for regulation is limited to Indian thinking. Even western scholars historically have debated with some supporting it as well.
The problem with both Western teaching and Indian teaching is ignorance of history and historical writing. The success of works of Piketty is actually less to do with his pointing about inequality for the first time. Issues of production and distribution have fascinated economists fora long time. Just that we have been focusing on just the production question lately.
I mean I haven’t even heard of the Krisnamurthi book mentioned by TCA. RBI history volumes are obviously a must read. They are really detailed and give you a great understanding of evolution of institutions and thinking. Despite all the attention on the central bank, how many have even seen those volumes leave reading them? They are hardly recommended for reading even in Indian Univs and Colleges. Just the same old textbooks/papers written for a world which does not apply here.
This problem is particularly acute in India where we have just dumped much of historical research in economics/finance. In West, we atleast have some figures and some colleges where such stuff is encouraged. In India, what matters is how much of western research you know. One can just ignore Indian history/research completely.