Economist Mark Blaug passes away, 1927-2011

I had better feeling of my own interest in doing research in the area of history of economic thoughts. But some how that feeling was broken when I heard the news that one of the greatest economists of history of economic thought Mark Blaug passed away. Though I differ on many of his views in methodology of economics applications. I learned a lot from Mark's articles on the pathetic situation which is still prevailing in the development of history of economic thoughts.


See here for brief bio of professor Blaug.

The New Menace of Gandhism by Murray Rothbard

A friend of mine sent me the following excerpts from 1983 essay (PDF) by Professor Murray Rothbard on M K Gandhi:

• "Gandhi's India, which led t o Mrs. Gandhi's dictatorship and the horrifying experiment in compulsory sterilization" ...... AND ........."The comparative record of non-violent revolutions is, then, worse than that of violent ones, for the violence of the American Revolution after all brought forth a pretty good result, while non-violence has accomplished nothing fruitful at all.

• ‎"Let us not mince words: Mahatma Gandhi was an economic crazy. For Gandhi , not only modern technology but almost any technology was sinful and evil. Railroads were evil, the industrial revolution was evil, cotton textiles were evil, modern medicine was evil, education was evil."

• "It should be clear that the life of Mahatma Gandhi was essentially a scam, from start to finish. Making a big show of his allegedly deeply-held principles, claiming t o make his life and thought a seamless web, he always ended up betraying those principles. H e rode on railways, he fell back repeatedly on Western medicine and surgery, and he continued to "test" his chastity with various females until the end of his life".

• Thus, after the first nationwide  pogrom  against  the  Jews  in Germany,  in December  1938, Gandhi counselled the Jews t o  react in a non- violent  manner:  "if  the  Jews can  summon t o  their aid  soul-power  that   comes only  from  non-violence,  Herr  Hitler  will bow  before  the  courage  which  he  will  own  is  infinitely superior to that shown by  his best storm troopers." And after the news  of the Holocaust  became  known,  Gandhi, in 1946, counselled retroactively. 

• The  Jews  should have offered themselves to the butcher's knife. They  should  have  thrown  themselves into the sea  from cliffs  . . . It  would have roused  the world  and  the people of  Germany.  (Geoffrey  Ashe, Gandhi: A  Study  in  Revolution,  London,  1968, p.  341.) Perhaps what the Jews lacked  was little Bapu  to  give them their "training."

20 years since India’s economic reforms

Here is our latest piece on Indian economy published by The Cobden Centre, UK. This piece is co-authored with my friend Vipin. French version of this article was also published here.

Blinking links

• Manish Sabharwal writes "...the most articulate non-economic case for urbanisation was made by Nandan Nilekani in his book Imagining India: “It has been fashionable in our cultural commentary to refer to India’s cities as places of vice, corruption and loss of innocence. But cities are, and have historically been, a powerful catalyst for political reform. Leaders such as B.R. Ambedkar recognised this and found the Indian city liberating after the sink of localism and den of inequity that was the village. Upward mobility for the backward castes is therefore most tangible in our cities because it becomes difficult to enforce silly notions of caste purity and pollution in the forced proximity of our city buses and trains.”

• Niranjan reviews a new book Grant Pursuit..."The Industrial Revolution had shown glimpses of a better future, though there was little historical reason to believe that societies could escape the poverty trap. Karl Marx and Friedrich Engelspredicted that capitalism would inevitably push workers into penury and the entire economic system would collapse in a heap. Engels comes across better than Marx in Nasar’s book. Marx, it seems, wrote about the horrors of industrial life without even once seeing the inside of a factory. He lived in London not too far away from two outstanding thinkers: Charles Darwin and George Eliot. He never bothered to either meet or correspond with them."

Break for better governance, rule of law and economic freedom II

There are interesting confrontation on breaking larger states into smaller one in India. I am not taking about the current confrontation which is surely at the misplaced one, I am referring the confrontations prevailed between and among the founding fathers of this nation. Some excerpts from the B R Ambedkar's views on Rajaji.


From Linguism trap by A G Noorani.

• The other disclosure is far more startling. C. Rajagopalachari, better known as Rajaji, had, in a press statement issued on November 26, 1955, said, “If it is impossible to put the States Reorganisation Schemes in cold storage for the next 15 years, the only alternative is for the Centre to govern India as a unitary State and deal with district officers and district boards directly, with regional Commissioner’s supervision. It would be utterly wrong to fritter away national energy in dispute over boundaries and divisions conceived in the drawing room and not on the background of conditions that have resulted historically.

• “Apart from the general convictions of mine, I feel that a large southern State is absolutely essential for preserving the political significance of that part of the country. To cut the South up into Tamil, Malayalam, and other small States will result only in complete insignificance of everybody and, in the net result, India as a whole will be the power.”

• Commenting on this, Ambedkar wrote “Mr. Rajagopalachari has not expressed himself fully. He did so fully and openly to me when he was the Head of the State and I was the Law Minister in charge of drafting the Constitution. I went to Mr. Rajagopalachari for my usual interview which was the practice of the day. At one such interview Mr. Rajagopalachari, referring to the sort of constitution which the Constituent Assembly was making, said to me, ‘You are committing a great mistake. One federation for the whole of India with equal representation for all areas will not work. In such a federation the Prime Minister and President of India will always be from the Hindi speaking area. You should have two Federations, one Federation of the North and one Federation of the South and a Confederation of the North and the South with three subjects for the Confederation to legislate upon and equal representation for both the federations.’

• “These are the real thoughts of Mr. Rajagopalachari. They came to me as a revelation coming as they did from the innermost heart of a Congressman. I now regard Mr. Rajagopalachari as a prophet predicting the break-up of India into the North and the South. We must do everything to falsify Mr. Rajagopalachari’s prophecy.” That has been accomplished by Indian nationalism.

Also read "why is everyone one scared of small states?"

Break for better governance, rule of law and economic freedom

From Niranjan Rajadhyaksha column published on November 17:

• B.R. Ambedkar set down certain principles about state formation with his characteristic clarity inThoughts on LinguisticStates, a book published in 1955, soon after a states reorganization commission was set up by the Jawaharlal Nehru government in response to the snowballing demands for states based on linguistic groups. In that book, Ambedkar had suggested that Uttar Pradesh should be divided into three states. He had also suggested the bifurcation of Bihar and Madhya Pradesh, a plan that was eventually carried out by the Atal Bihari Vajpayee government in 2000.

• Ambedkar proposed a fundamental principle: every state should be unilingual to protect the unique linguistic cultures of India. He argued against mixed-language states. However, Ambedkar also added that this does not mean that every linguistic group must necessarily be clubbed into one state. There could be two or more states with the same language.

• A lot of what Ambedkar wrote seems politically incorrect, but he was never one to let such niceties come in the way of logical thinking. His core arguments continue to be of contemporary interest, though the bigger issue today would perhaps be the consolidation of the Union government in New Delhi and the Balkanization of the states.

Also read Ajit Ranade's "Small is manageable":

• Smaller states, therefore, make more sense on the following grounds: (a) administrative ease and manageability; (b) correcting historic skews in federal finances of India through downsizing the problem; (c) greater possibility of inserting appropriate centrifugal mechanisms to thwart the GST juggernaut; and (d) reduced distance between the governed and government. Many naysayers will cite reasons of history, culture and dislocation. People will also cite how the creation of smaller states leads to loss of economies of scale in governance, law and order and “expertise” capital. All this talk is just a proxy for the centralising force. The Uttar Pradesh Cabinet’s decision is bold, whatever its timing and motivation. It should be welcomed and other states should draw inspiration.

What I have been reading?

Ever since I came to the availability of original writings (and some other rare book on his life and works) of the great Rajaji in my office library I immediately collected them and took time to read one by one. And its time to share with you!

I was surprised to know two facts which may be least important! One was that in his 94 year life time only once he visited abroad! Secondly, he was never made as president of Indian National Congress!

It is always pleasure to read his works which is original and thought provoking. The following are the books I  read. Some of them I am going to reread.

I meet Rajaji by Monica Felton: This is a great book to know about Rajaji's strong convictions and ethics of life and liberty. This book is also not any usual format which you might think and ignore it. This book contains the conversation about his life and works until he formed the new political party with like minded people.

C.Rajagopalachari His Life and Mind by K T Narasimhn Char

Rescue Democracy From Money Power by C.Rajagopalachari

The Question of English by C.Rajagopalachari

Satyam Eva Jayate (Vol I) by C.Rajagopalachari

The voice of the uninvolved: Speeches and statements on atomic warfare and test explosions by C Rajagopalachari

Rajaji's books are collection of articles published in different newspapers, journals etc.

Biased human life

Read this four part articles by Nobel prize winner in economics. He says "the people who have the greatest influence on the lives of others are likely to be optimistic and overconfident, and to take more risks than they realize."

Journal of Quest-India

Here is a great story in the Livemint, which gives you the death of a journal called Quest which was published for 20 years soon after India's Independence (political Independence as I often say!). Just one point:

• Masani became one of the country’s most vocal advocates for a liberal economy. Culturally, the ICCF’s members had always found themselves closer to Ambedkar than to Gandhi. While some of them remained sceptical of Jawaharlal Nehru’s politics, others thought him a worthy counterweight to the advancing global influence of Mao Zedong.

Go and read the full story nicely narrated.

Rajaji on Prof F A Hayek!

Those you have read a bit of Rajaji's views on political economy of India would not have surprised to know what he wrote in connection to professor F A Hayek's wisdom, read it yourself:

• Rajaji was one of the earliest thinkers in India who were profoundly influenced by the writings of Prof. F. A. Hayek _ ``The Road to Serfdom'' _ who later won the Nobel in Economics in 1974. Rajaji distilled Prof. Hayek's critique of planning in a cryptic statement: ``The Socialist philosophy of controlled economy is based on the two false assumptions of the omniscience of Government and the stupidity of the people.'' In advocating competitive private enterprise based on ``responsible individualism'' or the extended concept of corporate social responsibility, Rajaji was clearly distancing himself away from the law of the jungle or the phenomenon of unethical competition.
• He did not consider the controlled economy as the barrier for monopoly. ``It is not good certainly to let men with money become powerful. But as Hayek has written, it would be worse if only men politically powerful can make money. ..... The oxygen of competition has been displaced by the foul air of monopolies.....''
• It was not surprising that Rajaji considered the controlled economy as a bane for its wasteful centralisation of the national economy in the hands of the ministers and the bureaucrats.

Read the full article "Rajaji — the forefather of liberalisation ethos" By S. Swaminathan

Population, the resource from problem

Here is my piece on "Population in the 21st Century — TheUltimate Resource, If only they are skilled". I did not posted this piece earlier as it was not available in online.

As the reader will note that this piece is entirely different from my deep interested area of history of Indian economic thoughts.

This piece is essentially to remind the population wallas in India who keep telling us that the population is a problem rather than resource for the wealth creation. By telling population is a problem they stubbornly ignores what needs to be done to improve the skills of people by using their own common senses!

Hope you will find the piece useful.

Blinking links

Interesting reading:


From What G-20 Achieved at Cannes by T.C.A. Srinivasaraghavan

• Or, if you like, Keynes, by being instrumental in providing the intellectual basis for removing a metallic anchor for paper currency, got it horribly wrong.
• That is, as long as the amount of currency that a country could issue was tied to its gold reserves by some multiple, there was an automatic limit on how much could be issued.
• The moment this tethering was eliminated by the US in 1971, and it began to finance its war in Vietnam by printing even more notes than it had done in the 1960s, the balloon floated off and, like all balloons, became subject to random gusts of wind blown by speculators.
• That produced volatility in the commodity markets, which was a private problem. But the freedom to print notes without restraint soon became a public problem.

From Time to Rock the Vote by Prem Shankar Jha 

• She did this because her purpose was not, as her party claimed, to reduce the influence of big business on policy-making. The second Industrial Policy Resolution of 1956 had already done this. It was to cripple a rising threat from the right by depriving it of funds. In 1967, the pro-market Swatantra Party, formed by C Rajagopalachari in 1961, and the Bharatiya Jana Sangh (BJS) had fought the elections jointly and become a serious threat to the Congress in three states. These were Madhya Pradesh, where the BJS won 78 out of the 296 seats, Gujarat, where the Swatantra Party won 66 out of 168 seats, and Rajasthan, where, by winning 72 seats, they succeeded in reducing the Congress to a minority.
• The Swatantra, being the most dependent on funds from the corporate sector, simply threw in the towel: most of its members merged with the Jana Sangh. The two socialist parties, the Praja Socialist Party (PSP) and the Samyukta Socialist Party (SSP), weakened rapidly, merged, then joined the Janata Party in 1977 and finally, disappeared altogether. Their place was taken by a host of caste and ethnicity-based political parties that we are familiar with today.

From Nationalised family, privatised state by S. Gurumurthy

• Milton Friedman, regarded as the most influential economist of the second half of the 20{+t}{+h} Century and a Nobel Laureate, denounced social security as creating entitlement for all based on merely age, not an economic or poverty index. It is therefore not an anti-poverty measure. And what started off as support to families slowly expanded to supplant the families themselves.
• The result: by such welfare schemes, the US government gradually took over the responsibilities and burdens of US families, and rendered them duty-free and functionless. By taking over normal functions of almost half the US households, the state has virtually replaced the household — that is, nationalised the families. While the next part of this article will be on the causes and consequences of this fundamental shift in the state-society relation, here is a brief on how this shift seems set to dynamite the US economy itself.

From Economics of Bahuka and Greenspan by S. Gurumurthy

• Milton Friedman declared that ‘as children stopped contributing voluntarily to the support of their parents and began contributing through a system of government fiat, a serious erosion of family values became inevitable' and saw ‘social security system as a detrimental influence on social patterns'. The NBER work also pointed out how ‘family functions such as production of food, clothing and fuel and some other staple items were taken over by business firms, and responsibilities such as education, childcare, and social insurance have been assumed by the state.' What the NBER meant here is that business firms and the state had, together, robbed the families of their functions, leaving them functionless, therefore, dysfunctional.
• Conceding that ‘the market system is the most efficient, and most conducive to individual freedom yet devised', NBER pointed out that the market itself ‘doesn't provide for the organisation of the society' but its ‘success during the last 200 years is attributable in good part to the existence of strong non-market institutions such as the family; also adding that the ‘decline of the family and the growth of the government will jeopardise the market system and associated social, political and cultural freedoms.'

Biggest RBI's deregulation move!

In my previous assignment I use to attend the review meeting of RBI, and kept on pointing out the silliness of not REFORMING the interest rate from savings in bank, RBI regional director (Chandigarh) use to ask me more questions and clarifications why we should do and how!! later many others joined with me!!!! the good news is finally the RBI has done this in the last Tuesday review. See here for the full statement.

The goodness of RTI Act

Do Government School Teachers in Tamil Nadu educate their own children in Government schools or Private Schools?

what good stories after death!

"A true life story of Veerappan that shows him to be a person different from the one most of us are familiar with."


It is still worth to read sauvik's 2004 piece "Veerappan as a respectable businessman" published in the Indian Express!!