Remembering 2018: Year of economics’ anniversaries and milestones

The blog has been on a long break. Hoping to get back on track.. Here is the first post for 2019.

The year 2018 was quite historic given several anniversaries and milestones completed during the year. We just saw how the leaders of developed world had congregated at Paris recently, paying homage on the 100^th anniversary of end of World-War-I. World War-I in turn shaped the worldwide polity and economy over the years whose anniversaries will come in future.

Having said that, the year 2018 was quite a remarkable year for anniversaries and birthdays in the field of economics, finance and business as well.  In this article I list these key milestones.

I start with central banks where we saw several such birthdays. The world’s first central bank –Riksbank of Sweden- celebrated its 350^th year amidst celebrations in Stockholm. Riksbank hardly started as a central bank and was more like a bank to serve the monarchy. The central banking as a concept developed with evolution of Bank of England in the 19^th century. Sweden was also the first country to start banknotes in Europe. This is ironical 2018 also marks 10^th year of bitcoin, an idea which threatened the mere idea of a central bank and physical currencies.

Next we saw Denmark Central Bank celebrate 200 years. The other Scandinavian central bank of Norway was established 2 years ago in 1916. All these three central banks started mainly to counter the over-issuance of banknotes by private banks.

The next set of central banks in the list are those in Ireland, China, Pakistan and Malta which celebrated 75^th, 70^th, 70^th and 50^th birthdays. In particular, the history of State Bank of Pakistan is interesting as it was established on 1 July 1948, under highly trying circumstances after the Partition.

Some countries celebrated anniversaries of certain currencies which is different from anniversaries of central banks. For instance, in 1868 made Pestada as the official currency and let Escudo disappear, marking 150 years since the event. We also Czech authorities commemorate 100 years of their currency Koruna (after dissolution of Austro-Hungarian empire after World War-I) and Armenians celebrate 25 years of their currency Dram (after breaking with the USSR).

For connoisseurs of Indian numismatic history, 2018 also marks 100 years of Osmania Sicca Rupee, the currency issued by Princely State of Hyderabad (Kashmir also issued its own currency but circulated briefly). Hyderabad always wanted to issue their own currency but were denied by British. They finally got an opportunity in 1918, as British India struggled with supplies of silver during World War I. Infact, both notes of Rupee 1 and Rupee 2.5 were issued for the same reason in 2017. Post-Partition, Osmania Rupee went through interesting times as the Hyderabad State first wanted to be a part of Pakistan and later was made part of Indian Union.

Talking about British empire, the year also marked the 350^th year of start of British empire in India. The East India company was leased a bunch of islands (Bombay) by the British Crown in Mar-1668 and they landed on the islands in Sep-1668. Benita Fernando looked at the spate of events here: (https://www.livemint.com/Leisure/KkeKxDetn5daogULO3TMVJ/The-East-India-Company-the-founders-of-Bombay.html)

Few Indian companies also completed their milestones starting from India’s oldest business group that of Tatas celebrating its 150 years. Their own website says: “In 1868, aged 29 and wiser for the experience garnered by nine years of working with his father, Jamsetji started a trading company with a capital of Rs 21,000.” This is followed by Hindu newspaper marking 140 years followed by three businesses marking their centenaries: Britiannia, Saraswat Bank and Mysore Sandal Soap.  Hindu newspapers is also celebrating 25 years of its business paper – Hindu Business Line.

The 1991 reforms led to wide-scale reforms including those in financial sector with advent of National Stock Exchange and allowing Private Sector in Mutual Funds as the marquee of these reforms. Both competed their 25 years in 2018 with NSE hosting Prof Robert Merton in the R.H. Patil memorial lecture. The media discussed the events with the fund managers who were around during that momentous time. More importantly, the torchbearer of these reforms Securities Exchange Board of India also completed its 30 years. It started in 1988 as a non-statutory body and gained steam after 1991 reforms and Harshad Mehta Scam.

Talking about reforms, one has mention China competing its 40 years of liberalization and reforms. After the Mao-era, Chinese authorities began to gradually to open up their economy to external markets and becoming a force in world economy.

We now look at some of the names and ideas that shaped world and Indian economy. We start with who else but Karl Marx who continues to divide the world thinkers despite being born 200 years ago. A history of Indian political economy can never be complete without discussing the role of PC Mahalonobis as he completed 125 years in 2018. There are two seminal research papers which made a phenomenal contribution to economic research marking 50 years. The first is the highly celebrated work by Milton Friedman where he questioned the trade-off between inflation and unemployment as espoused by Philips Curve. The second not so celebrated is Douglass North’s paper where he estimated shipping productivity from 1600-1855. The other paper which deserves mention is Paul Krugman’s paper written in 1998, which analysed the Japanese crisis of 1990s and famously asking their central bank to “credibly promise to be irresponsible”.

It is good to end with Krugman’s paper, as the developed world faced near similar shock as Japanese economy leading to referring that very paper. We have just completed 10 years since Lehman crisis making it the shortest phase of history (along with bitcoin) mentioned in this article. The policymakers and academicians worldwide, have written and reflected on the lessons from the 2008 crisis. There is a wide belief that lessons have been learnt and we are unlikely to see repeat of the events. We will have to wait and see history enfold to see how much of this optimism is indeed true.

Till then, bidding adieu to a historic 2018 and welcoming 2019!