Fun off Economics & Economists
On September 5, the Teachers Day, I was fortunate to meet for a while three of my esteemed teachers, Prof Prabudha Nath Roy, Prof Amiya Bagchi and Prof Ashim Das Gupta who taught me some economics in different periods during 1963-68. ISDK celebrated the Teachers Day by organizing a talk by Prof Bagchi. Seldom does one gets to listen to such absorbing, interesting and refreshing talk. He spoke on Contextual Economists. I am not competent to summarize what he said because my association with academic Economics had ended long time back, probably 37 years ago. But in my own way I have thoroughly enjoyed listening to him. I share my entertainment of Economics of the day by picking some points I perceived from his talk.
1. Dr. Bagchi seemed to have ‘developed an angular view’ since his student days. It tallied with my impression that most economists, especially the Bengali ones, have angular views. Field of vision for economics seldom appears linear: one may start with straight lines (demand/ supply curves), but soon get into U-shaped and other non-linear curves (indifference curves, marginal cost curves, average productivity curves). And, then Rostow’s phases of growth and phase diagram of economic dynamics. Linear programming gives way to non-linear programming. Technological shifts, periods of spurt in innovations, trade/ business cycles – are all non-linearities.. Economists recognize the reality of angularity but often gives up to attraction of simplicity of linear approximations.
2. ‘Economics have shown a secular trend of becoming increasingly irrelevant to the society and economists progressively useless.’ This tallies with my impression that economics and economists as a group are subject to the law of diminishing returns. Dr. Bagchi seems to agree that by now bulk of economics and the bulk of economists yield zero or negative returns to scale.
3. There is no Nobel prize in economics: it is the Bank of Sweden Prize in economics. This of course is well known for its technically correctness. The Bank of Sweden award to economists is announced when Nobel prizes are announced: that is the only connection with late Alfred Noble but no charge of economics on his funds left behind.
4. Surprisingly however the Bank of Sweden prize in economics is awarded to contributors to absurd economics of irrelevant branch of economics like derivation of formula for options pricing. Dr. Bagchi may be right because by his definition mainstream economics is no economics at all.
5. True economics is political economy. And, political economy cannot but be primarily and essentially contextual: without the context of the dynamics of historical process of political organization of the society, there is no economics. The day political historical context was abandoned by academic literature in economics and axiomatic mathematics-ization started colonizing economics, contextual economics – the real discipline of knowledge, vanished. Most of Mathematical economics, it seems, are non-scientific tautologies leaving no scope for empirical testing or where tasting is undertaken, the methods of econometrics deployed are suspicious or erroneous.
We are yet to know however as to the political contextual economic explanation of the death of economics and rise of pseudo-economics. But that real economics and real economists are no more in existence can be easily proved: see the depth and duration of economic crises that has gripped the practically all economies since 2008 with no Adam Smith of Marx coming up with new ideas to set things right. The political leaders have economic advisors and no political economic advisor to help them.
6. Samuelson’s Correspondence Principle is just about a hoax over which generations of economists have wasted their time. So were Debrau’s several proofs concerning general equilibrium of Complete Markets Economy models. I do not know if the advances made in the recent past in the theory of incomplete markets (with incompletely disseminated information and absence of perfect foresight and insurance against all conceivable risks into infinite periods of time) with its high mathematics, have been able to become relevant to the society and capture the political process dynamics context. Maybe, the role of the political State in completing the markets by sharing its foresight and providing for any gap in insurance markets would have to be captured by Debreau’s general equilinrium models to transit to Economics of Complete Markets that could make it relevant to the society and make economists useful once again.
7. The origin of capitalist political economic theory can be traced back to the city states of Italy about one thousand years back. Just as Chanakya (Kuatillya) Arthashastra was a kind of political economics where the State was required to avoid any principles of morality, some of the Italian city states were economies managed with principles of political economy devoid of any morality or human rights. The political economic interests of the city states lied in exploiting the surrounding rural areas through a layer of local village mafia heads whose function was to ensure flow of materials to the city and transfer of wealth to the city (a failure would automatically lead to forced unemployment of the mafia chieftain) : a system closely resembling the permanent settlement system of zamindaries in British India). Such an exploitative political economy meant colonization and imperialism are the next steps to evolve through the historical process. Political economy by its core remains the same even today, as it now appears to me: only new terminologies have been added like democracy, socialism, leadership of the proletariat and other modern forms of Robinhoodisms.
8. In the absence of/ highly restricted use of mathematical and econometric models, how would contextual political economics be applied. Well, it all depends on the application of mind through observing the process of history. Now, I understand why many classics in economics stared with some thing like (An Investigation into the…’. Contextual political economics has to be essentially of the type that the Central Bureau of Investgations or the CAG Audit or other highly specialized Intelligence Bureaus uses. Use various forensic tools and interviews to unearth the linkages, motivations to construct alternative stories of the Truth and choose one that best fits one’s bill of consistency, compatibility, credibility, saleability and imagination.
9. Most critics of Marx have not read Marx at all (or read little). I am a live example of that class. And, I admire the zeal of the larger (manifold) class of Marx-unread millions of Marxist faith
- Dr. Basudev Sen