Economics of the crisis

The book adopts a refreshing approach to explain economics to those who seek answers to the many real life economic issues.

THE public image of professional economists and their craft has never been lower. It has been a steep climbdown for the tribe, as popular opinion has turned from awe to derision. Four years after the biggest economic meltdown in history in terms of scale and magnitude, people across the world are clueless about what caused the situation they remain mired in.

The failure of economists not only to provide a cogent explanation of what went wrong but also to point out who was responsible for the crisis that wrecked lives obviously makes people feel let down. Economic journalists too have not fared any better in these testing timestheir frequent predictions about an economic recovery being just round the corner have been repeatedly belied.

In particular, this feeling of being let down badly applies to the economic policy wonks who had their hands on the wheels of policy-crafting when their economies went adrift. After all, people rightfully expect that this class of experts to be just as accountable as the businessmen and politicians who put entire economies on the road to ruin.

It is obvious that the cussed insistence on understanding economic phenomena through the prism of the market has something to do with the decline in the popular standing of professional economists. The expert explanations of professional economists, for instance, about what triggered the financial crash in the United States or about why it is logical and reasonable that petroleum product prices ought to go up and up in India, are far removed from what people see as plain common sense.

The same applies to a raft of policies unleashed in the name of economic reformpolicies that advocate deregulation, privatisation, and increased space for foreign ownership of Indian assets; tax policies that shed even the pretence of equity; and policies that emphasise the need to curtail government expenditures and even the governments presence in activities that can offer a measure of relief to the people.

This is where the book by C.T. Kurien, a teacher for several generations of students of economics, charts new ground. Two features of the book stand out. For one, it refuses to dumb down the deeply problematic issues in economics. In fact, Prof. Kurien admits upfront that any economy is as much an abstraction as it is of real social relations and of production, consumption and distribution. The other critical feature is that it looks at the economy as a question of social classes as much as it is about things or money. In doing this, it brings back to centre stage social relations, which determine not only how the cake is baked but how it is cut and shared among different social groups. In this refreshingly different (not new certainly, but long lost under the onslaught of neoclassical economics) way of looking at the economy, the author sums up the central questions as: Who owns what?, who does what?, and who gets what?

Prof. Kurien takes the reader on a panoramic tour of economicsfrom the household to the national to the global. But the tour is engaging because he demolishes the most famous shibboleths of our time, a period in which the economic ideas of neoliberalism have dominated the construct of policies that have affected people across the world. As a result, although a lot of the book is about India, it would be just as useful to readers beyond its boundaries.

When Prof. Kurien delves deep into the heart of the central economic issues of our time, he hauls a harvest that is rich in detail, logic and plain old-fashioned common sense. Take the issue of economic growth, which is a major concern all over the world now. He argues that even if there is rapid economic growth, there is no guarantee that everybodyor even most peoplewould be better off.

He points out that the nature of growth is determined by the pattern of distribution of resources, which in turn determines the pattern of not only consumption but also investment. Thus, breaking down the overall numbers into sectoral components, he argues that not everybody is better off when the overall economy is growing strongly. He counters the apparently intuitive argument of gung-ho liberalisers that everybody will be better off if the economy grows by calling for investment that would result in the production of goods that are relevant to the needs of the masses. Produce more rotis than cake, he says. He admits this suggestion is ideologically loaded. But so is the prevailing orthodoxy, which is cleverly wrapped up in theories and innocuous numbers, he says.

The book, towards its end, provides a short account of the historical development of the Indian economy, which serves as a good antidote to the ahistorical mindset of the prevailing economic orthodoxy. This section is a must read for those who have been fed on the vacuous notion that economic liberalisation since the 1980s was a counterattack on the Nehruvian legacy, which is often derisively dismissed as the era of the licence raj.

Prof. Kuriens account, based on political economy, is different in focus and richer in detail and gives attention to the political nuances that shaped policy. He points out that the system of licences turned into licence raj only because big industrialists used them as a device to block the entry of others, and that the crucial slogan of land to the tiller was abandoned because the political establishment lacked the will to take on the landed gentry.

The highly unequal distribution of incomes and ownership of assets and resources in India is a recurrent theme in the book. CTK, as he is endearingly known to generations of students and academics, writes passionately about this in the booknot in a manner that will evoke pity, but in the sense that it is the foundational curse on which Indias economic problems rest.

There is much that is not in the book, but then for a canvas that is so large, it is bound to be the case. Some of the suggestions that he offers at the endfor instance, the formation of a cadre of development workers who would work towards national resurgence by addressing the heavy backlog of underdevelopmentmay appear naive. After all, even programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme, which were positioned as having revolutionary potential, have been whittled down in the face of entrenched interests that are hell-bent on subverting them.

The reader may disagree with the solutions he proposes, especially in the light of the disturbing historical record of subversion by the ruling elite. But there is no doubt that the books refreshing approach to explain economics to those who earnestly seek answers to the many real life economic issues and problems salvages some pride for professional economists in these difficult times.