Dr. Manmohan Singh, J M Keynes and Politicians

Radhika Ramaseshan’s introduction is necessary for this post. Radhika writes in The Telegraph:

• Prime Minister Manmohan Singh today quoted John Maynard Keynes to suggest that “practical politicians” should not become enslaved to “defunct economics”.

• The quote didn’t figure in a speech Singh delivered as part of a series of “thought” lectures organised annually by the Khazanah Nasional, whose past speakers have included Grameen Bank founder Mohammed Yunus and American economist Joseph Stiglitz.

• It was part of an answer he gave a young student this morning. She asked: “To what extent are you guided by theoretical reasoning as against gut instinct?

• Singh said: “I have no definitive answers to this. But I do know that Lord Keynes had said that the most practical politicians are slaves to some defunct economics. Everybody who is in politics and who seeks to influence the course of economic policy and history has some notion about what is workable and feasible. He must have some theoretical proposition while formulating (his) views.”

‘Can’t remain slaves of defunct economics’ said Prime Minister Singh recently but P. Vaidyanathan Iyer writing in the IE ask is it a “THEORY vs GUT FEEL” and Singh answer:

“I have no definite answer, but I do know Lord (J M) Keynes once said that most practical politicians are slaves to some defunct economics... Real challenge is not to remain slaves of defunct economics.”

Veteran of industry urges that:

• Old theories cannot show the way. Economists have begun to speculate about the ‘new normal’ into which the world is moving . They know that the world must not revert to the old normal in which dilemmas remained unaddressed and crises brewed. There is a tension in their minds between the need for a new capitalism , founded on different principles than the gung-ho casino capitalism that has driven big economies to the brink, and the need for a new socialism as well, to include masses of people who are insufficiently included in the benefits of economic growth, that does not require large state hand-outs and large governments . What will be the architecture of this new economy?