Prof S.Ambirajan’s Thoughts on Development Economics

I have new article on forgotten Indian economic thoughts. This one explains the forgotten development economics ideas of Professor S Ambirajan. 

"On the growth of population, Prof Ambirajan firmly believed that “Generally a rapid rise in population accompanies rapid economic development” and “economic development alone can be the effective remedy to the threat of overpopulation.” According to him, “Economic development is but one of the many factors that determine a country’s or a community’s prosperity. Without social betterment and general cultural progress, mere economic development can have no meaning for us.” 

S Ambirajan’s forgotten classic `A Grammar of Indian Planning (1959)’

This is my second article on Prof.S.Ambirajan's liberal economic thoughts. His works are largely forgotten and conveniently neglected for decades in India. And the reasons are well known. 

A para from my second piece which was out yesterday in the Spontaneous Order website of Centre for Civil Society, New Delhi.

His observations on Prime Minister Nehru, who became a hero of Independent India, where even Patel and Rajaji were ignored, are perceptive indeed. “In a sense, our, Prime Minister, Jawaharlal Nehru, is our greatest asset, for while he enjoys the prestige and wields the authority of a dictator, he has also the emotional nuances and ready adaptability of a true democrat. Even as he is conscious of the possibilities of planning, he is not unwilling at the same time to acknowledge the limitations of democratic planning. But the Prime Minister is not the whole of the administration, and there is always the danger that circumstances may turn the best asset into a dangerous liability. The Prime Minister should be an example, not a glittering facade for others to hide behind and pursue their respective ends.”

Prof S Ambirajan – the forgotten liberal political economist (1936-2001)

                                      Photo by Dr Prema Nandakumar, sister of Prof S Ambirajan                                                     
This was my piece out few days ago on one of the greatest Indian political economists in the twentieth century.

Prof Ambirajan was a prolific writer for over four decades and published more than two dozen scholarly books and monographs, among other works, which were appreciated among renowned scholars across the world. He wrote hundreds of articles and columns in The Hindu and The Economic Times for several years. Sad to say, but his scholarly works have found more takers abroad than in his own country or state, where his papers have not been accorded the respect they deserve.

Rediscovering Ambedkar, and NOT Nehru!!

Years ago Prof.Ambirajan said in his Ambedkar Memorial Lecture:

• I am somewhat distressed to see that he is portrayed as a leader of the ‘dalit’ community and nothing else. Partly it is the fault of the Indian political leadership in the post-independent era. It succeeded in its effort to marginalise him politically. But equally it is the fault of the community itself for having projected him exclusively as its own leader. This led to the repercussion of other much inferior people propelled as leaders of other communities, and the result was that Ambedkar got equated on a politico-intellectual plane with regional pygmies devoid of any significant national presence.

• It is my conviction that in reality we have had only two major personalities who could be considered the founding fathers of modern India. Vallabhbhai Patel unified and organised whatever bits and pieces left of a brutally partitioned geographical entity into a nation state. Ambedkar provided the cementing framework in the form of a Constitution that gave the newly born state a measure of feasibility and stability. All the remaining leaders were mere bit-players in this great story of the building of our sovereign democratic republic.

According to him Nehru was a “much inferior…. propelled as leaders” as compared to Dr.Ambedkar!!

There is a wrong propaganda even today. Just see what Y K Alagh says’s:

• To Nehru the harnessing of modern technology to economic development was very important. There were two implications of this. The first was an acceptance of the emphasis on heavy industries in the process of industrialisation. While there has been considerable controversy in India on large scale vs small scale industrialisation, Nehru himself had clinched the issue in his own mind even in his early economic thinking. This was perhaps one of the few economic choices he really made. Discussing the issue of the big machine vs cottage industries, he stated emphatically that “it is not a mere question if adjustment of the two forms of production and economy. One must be dominating and paramount, with the other as complementary to it, fitting in where it can. The economy bases on the latest technical achievements of the day must necessarily be the dominating one.” The second, wider implication of this approach was his emphasis on scientific education and research. He seems to have a particular fascination for the idea that under “proper” social conditions, experimentation with the machine would inculcate the “scientific temper” and widen the experience and outlook of men. Formal economics is now accepting this idea in the shape of the productivity implications of “learning theory approach”.
• The economic implication of this to him was the emphasis on basic minimum needs. His earlier emphasis on rural development was argued with this end in view. (Later speeches accept the role of agricultural production as a constraint in the process of economic development). The role of cottage industries, albeit a secondary one, was argued from this objective, as also the long-term employment potential of heavy industrialisation.
• Another basic economic idea for Nehru seems to be a concept of “national self-sufficiency”, with a strong autarchic element in it. Heavy industrialisation and a scientific research policy were argued partly with this end in view. The emphasis was conditioned by early experience. (“We were anxious to avoid being drawn into the whirlpool of economic imperialism.”)
• There was in Nehru a genuine concern about the need for a peaceful transition through consensus in the developmental phase. There is frequent emphasis on the “social” implications of economic ideas and programmes. The late Prime Minister was liable to discuss it sometimes along “wider” national, international or even philosophical lines. The earlier method of “democratic collectivism” remains later in the shape of “democratic socialism” and the “mixed economy”. Equality of opportunity for all remains a basic theme.

All roads led to low level of growth, low level of development, no choice and no freedom.

The State failure harm more than anything else

Dsylexic asked me to comment on the issues raised in the piece on “A Recipe for Famine” by Girish Shahane in the Yahoo! Column published on September 20, 2010. At the outset I would like to confess that it is very easy to rubbish Girish’s article. But what he has understood and what he has not is the different views expressed by mainstream economists and others (like Prof.S Ambirajan). The comparative picture of both the sides needs to be considered first and understood.

It is not surprising to me that when Girish quotes or take references persons like Amartya Sen, Ajit Kumar Ghose, Jayati Ghosh etc. All these people are socialists without doubt. In the hurry to write his piece he has completely misunderstood what the free market system is and the history of famine in pre-independent India and it further seems to be that he has paid no attention to what other side of the coin was and how that had been described.

I have no doubt as I have read the marvelous book (Classical Political Economy and British Policy in India) more eloquently written by Professor S. Ambirajan. I am sure by all means that if Mr Girish reads only the Chapter Two of this book I would come to know how foolish it is to conclude that “The free market solution, however, would be considerably more damaging than even the Supreme Court's order.”

In fact I don’t think Girish understood anything from the Prof. Basu’s recent paper on The Economics of Foodgrain Management in India (pdf).

If I wanted to quote from Prof. Ambirajan’s book it would be the whole portion of Chapter Two and it is extremely interesting to read the chapter and ponder over it how the famine polices were debated, understood and practiced with regard to free trade, intervention, free market system etc. Even more interesting is the unfolding of famine polices in different Presidencies. There was no 'one size fits all' policy for the country as a whole as Girish understood one size actually fits all over the country.

Also read:

1. Famines in India and free market

Teachings of Prof. S. Ambirajan: From statistics to truth

Excerpts from “From statistics to truth” By S. Ambirajan

• “Indians are usually credited with possessing extraordinary capacity for dealing with numbers, and rightly so because from the early days of our civilisation, when the unknown Indian discovered zero, to our own times, which produced the genius of Ramanujan, we have had countless mathematicians and statisticians. In spite of all this, our official statistics have nothing much to celebrate about. It has caused much harm and not a little confusion. At least one of the reasons for the downfall of national economic planning in our country is the faulty data base with which our planners and bureaucrats had to work. In recent times, much confusion has arisen as a result of our inability to statistically demonstrate the impact of the reform programme in many areas. Quite contrary conclusions have been squeezed out to suit the particular preferences of the analysts. The unreliable statistics may prove a boon to academic economists/ statisticians to make prosperous careers out of correcting and interpreting the available data but official statistics are far too serious a business.
• This was brought home when a semi-literate process worker told me, in reply to the usual defence of increased bus fares by comparing them to statistics from other States, ``Sir, the politicians can prove anything with numbers. Can we believe them?''
• ``You academics take these figures at their face value. It is all fudged as always and I am trying to figure it out''. Perhaps this is nothing unusual as a judge admonished a young civil servant during the hey day of the British Raj when the latter referred to some official statistics: ``When you are a bit older, you will not quote Indian statistics with that assurance. The Governments are very keen on amassing statistics - they collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But what you must never forget is that every one of these figures comes in the first instance from the village chowkydar who just puts down what he damn pleases.''
• The fact that the Government has the power over all these stages of data gathering, gives it plenty of opportunities to use statistics to its own advantage. An extreme example of this was provided by the Director of the Chinese State Statistical Bureau, Chia Chi-Yun, during the Cultural Revolution: ``If statistical material does not express a clear political idea but merely reflects real conditions, then obviously it will be used by the enemy... Our statistical reports must reflect... the Party's general line... Statistical work must be something which when the party is using it does not cause embarrassment... Victory is nine fingers, defeat is only the tenth... This tenth is also part of the reality, but.. The question is from what standpoint this one finger is presented and to whom it is presented.'' even if our Governments during the last half a century have not been so blatantly partisan, they have used data to suit their convenience.
• One very clear case of partisanship is withholding of publication due to what the Government considers `sensitive' or making access to it impossible for individual researchers. Apart from the problem of inadequate professional competence and individual idiosyncracies of statistical personnel from top to bottom, there is the question of political bias in the collection of information. Thus the decision not to collect statistics relating to caste during the population censuses since 1951 was essentially political.
• All this means that the Indian statistical system is seriously flawed.”

Teachings of Prof. S. Ambirajan: Happiness, Ethics, and Economic Values

The second paper which I was talking about here and here is from the paper on “The Concepts of Happiness, Ethics, and Economic Values in Ancient Economic Thought” this paper was published in the edited book Ancient Economic Thought by B.B. Price, in 1997. This book is available in Google book.

Some of interesting paragraphs:

• “During the early epochs (circa 3000 BC to AD 500), both in the East and the West, the production and exchange of material goods were uncomplicated affairs. The economy was basically composed of selfsustaining autarchic units. As custom determined most of the activities (including economic), there was hardly any scope for individual initiative.
• why individuals everywhere in the past and present have preferred happiness, and think of it as the ideal to aspire to. It is, simply stated, a preferred mental state by definition, for even a masochist is “enjoying” pain, since that to him is happiness!
• The Indian philosophers seemed to have made a distinction between happiness in relation to the body and to the soul, in other words, happiness secured through material goods and services, and happiness as a result of non-material spiritual endeavours. The question to be asked is: which is the preferable and according to what standard of “better”? The thinkers of ancient India drew a distinction between the Good and the Pleasant, as the Kathopanishad says:
• One thing is the good and quite another thing is the pleasant, and both seize upon a man with different meanings. Of these whosoever takes the good, it is well with him; he falls from the aim of life who chooses the pleasant.
• The good and the pleasant come to a man and the thoughtful mind turns all around them and distinguishes. The wise chooses out the good from the pleasant, but the dull soul chooses the pleasant rather than getting of his good and its having.
• When Hiuen Tsang, the seventh century AD Chinese pilgrim visited India, he found that even Kshatriyas and Brahmins were clean-handed, unostentatious, simple and frugal in their lives. People lower in the socio-economic scale would not have been any different.

Swami Vivekananda also had similar view like the Tsang one which I will post soon separately.

• There is a vast body of writing—both in the West and the East—to show how human beings should lead a purposeful life. Whereas in ancient Greece it was in the form of philosophical texts, in India it was in the form of epics, hymns and sacred literature, all with one unique purpose—to make the individual realise his duties, potential and role in the society. In short, their aim was to tell man how to live out his life.
• In India, during the early period when States had not yet come about, the dissemination of good ideas through preceptors was prevalent. In the later period (circa post 300 BC), systematic law codes were prepared to say what should be and what should not be done.
• The couplets of Thiruvalluvar (circa 50 BC to AD 50), for example, were described by a contemporary poetess Avvaiar as an achievement similar to boring a hole in the atom to make it a receptacle to hold the seven seas.
• Many of the classical Indian writings on ethics, economics, law or philosophy are somewhat like mathematical theorems whose proofs have not been written out. Hence we have to work out how and why these terse statements came about either in the form of poetry or sutras. This is not easy, partly because of the inherent difficulties of fathoming the minds that considered these issues millenia ago, but also because of the numerous interpolations that have taken place since their original composition.
• Learning in the classical Indian style meant learning to memorize texts. This was not a mechanical process, because in the process of the rote learning, the meaning and context of the portions were explained with detailed crossreferencing. Everything was done from the teacher’s memory.
• The lawgivers did not recommend an ascetic mode of life for everyone regardless of the individual’s circumstances because every human being, according to the four-stage prescription of life, has to take Sanyasa (the ascetic mode) in his old age anyway.
• Any deliberate cultivation of poverty, except by a class of holy persons seeking the ultimate transcendent truth, was considered sinful. Thus the Mahabharata: “Poverty is a state of sinfulness…. From wealth springs all religious acts, all pleasures, and heaven itself, O, King! Without wealth, a man cannot find the very means of sustaining life.”

Prof F A Hayek, Dr.B R Ambedkar and Prof. S Ambirajan

As I wrote here I have read two interesting articles by Prof. S Ambirajan one was on ‘Ambedkar’s contribution to Indian Economics’ this article was published in the EPW in 1999 based his Ambedkar Memorial Lecture.

First I will take you to some of interesting paragraphs from this lecture.

I was shock when I read Ambedka’s writings saying:

• “a managed currency is to be altogether avoided when the management is to be in the hands of the government”
• While there is less risk with monetary management by a private bank because “the penalty for imprudent issue, or mismanagement is visited by disaster directly upon the property of the issuer”.

Read for more………

• “Before I proceed, I wish to remark on one aspect of Ambedkar’s present status with which many of you may not agree. I am somewhat distressed to see that he is portrayed as a leader of the ‘dalit’ community and nothing else. Partly it is the fault of the Indian political leadership in the post-independent era. It succeeded in its effort to marginalise him politically. But equally it is the fault of the community itself for having projected him exclusively as its own leader. This led to the repercussion of other much inferior people propelled as leaders of other communities, and the result was that Ambedkar got equated on a politico-intellectual plane with regional pygmies devoid of any significant national presence. It is my conviction that in reality we have had only two major personalities who could be considered the founding fathers of modern India. Vallabhbhai Patel unified and organised whatever bits and pieces left of a brutally partitioned geographical entity into a nation state. Ambedkar provided the cementing framework in the form of a Constitution that gave the newly born state a measure of feasibility and stability.

I ‘m not surprised to see his exclusion of Nehru name from the above list because his writings shows quite clearly that he was not at all happy with what Nehru did!

• All the remaining leaders were mere bit-players in this great story of the building of our sovereign democratic republic. I may be wrong, but there is enough ground for suspicion that the present Indian political class which seeks to honour Ambedkar by awarding posthumous titles, instituting fellowships and other memorials, is doing all this, not for genuinely honouring the departed leader but with the very utilitarian-selfish motive of securing the votes of those in whom he tried to instill a sense of self-respect. I must also make another melancholy reflection that in these days when the minority communities are claiming affinity with dalits – no doubt with the intention of strengthening their electoral clout – it would be worthwhile to remember that they treated dalits as no better than the caste Hindus. Ambedkar wrote of his experiences: Although on conversion to Christianity, the husband had become liberal in thought “the wife had remained orthodox in her ways and would not have consented to harbour an untouchable in her house…I learnt that a person who is an untouchable to a Hindu is also an untouchable to a Parsi…a person who is an untouchable to a Hindu is also an untouchable to a Mohammedan” (XII, 677, 678, 685). There must be something in the Indian soil and ethos that despite the lofty ideals of all religions, in the social and human sphere, much barbarism prevails.
• Those who studied economics and wrote economic treatises were not strictly speaking professional economists. They used economics as a political tool.
• Ambedkar’s major writings are easily listed because after the late 1920s, he seems to have written almost nothing, though he has made some extremely insightful comments here and there one of which I shall elaborate at the end. The major economics publications are The Problem of the Rupee: Its Origin and Its Solution (P S King and Son Ltd, London 1923), and The Evolution of Provincial Finance in British India – A Study in the Provincial Decentralisation of Imperial Finance (P S King and Son Ltd, London 1925).
• It is a matter of some regret that while much devotion and dedication has gone into the production of this edition, adequate attention to proper editing and scholarly annotating has not been tendered.
• The basic Indian currency unit, the rupee, has had a long history. Until 1893, it was based on a silver standard which means that the Indian rupee was based on the value of the silver content in it. From 1841 onwards gold coins also became legal tender at one mohur as equal to 15 silver rupees. Owing to vast gold discoveries in Australia and US, gold value fell, and from 1853 onwards gold coins ceased to be legal tender. Though many suggestions were made to introduce gold coinage especially after 1872, these were not heeded despite from 1873 onwards, due to enormous silver discoveries, the price of silver fell and hence the price of rupee slipped in terms of gold. From 1872 to 1893, this acted as a continued devaluation of the Indian currency which while was good for Indian exports, was not good for the Indian economy, it had to produce more rupees to remit expenses undertaken in England by India which were in sterling (i e, gold) terms. In 1893, the government stopped coining silver rupees though agreed to coin rupees in exchange of gold at a ratio of one pound four pence per rupee. It became managed currency with the government reserving the right to coin rupees whenever it was found necessary. The idea was to introduce eventually a gold standard with gold currency replacing the existing (managed) silver standard. In 1899, at the suggestion of the currency committee headed by H H Fowler, Indian mints were thrown open to issue gold coins.
• Gold was sought to be used widely, but it also recommended the silver rupee to remain unlimited legal tender. This was mistaken because under gold currency, rupee should have been token coin. From now on, many events took place till the gold exchange standard came to be established in 1906. According to this system, silver rupee was guaranteed convertibility into sterling pounds (based on gold value) at a fixed price, and make it available without any limit. The accumulated gold in India, instead of supporting a gold standard with gold currency in India, was kept in London to maintain the stability of the rate of exchange. However the system broke down in 1916 with the enormous rise in the value of the silver. Silver rupee more or less ceased to be merely token, and the system effectively became silver standard. Ambedkar’s writings took all this and argued stridently for a proper gold standard with gold currency as he was highly critical of the gold exchange standard though the latter received powerful theoretical support from all the then leading authorities including John Maynard Keynes.
• Low exchange rate increases exports and boosts internal prices. This benefits the trading classes at the expense of the poorer people at home.
• Ambedkar’s commitment was internal stability, and he was convinced that only an automatic system based on gold standard with gold currency could achieve this desirable end. Like every economist of his generation, he was a believer in the quantity theory of money and was afraid that governments will tend to artificially increase money in circulation. In his memorandum given to the Hilton Young Commission in 1925 he pointed out: “a managed currency is to be altogether avoided when the management is to be in the hands of the government”. While there is less risk with monetary management by a private bank because “the penalty for imprudent issue, or mismanagement is visited by disaster directly upon the property of the issuer”.
• In the case of the government “the chance of mismanagement is greater” because the issue of money “is authorised and conducted by men who are never under any present responsibility for private loss in case of bad judgment or mismanagement” (VI, p 627). In short, Ambedkar’s conclusion is clearly towards price stability through conservative and automatic monetary management. This is of such current relevance that in these days of burgeoning budget deficits and their automatic monetisation, it would appear that we could do with an effective restraint on liquidity creation through an automatic mechanism.
• This will automatically “lessen and destroy the premium that at present weighs heavily on land in India” and large “economic holding will force itself upon us as a pure gain”. He concludes that “Industrialisation of India is the soundest remedy for the agricultural problems of India”.
• He brings the heavy artillery of neo-classical theory of marginal utility developed by as he says “Cournot, Gossen, Walras, Menger and Jevons” to counter Russell’s position that it is all due to individual preference, and that people will give up things as soon as they have too much of anything.
• But more importantly he believed in material progress, constitutional approach to solving problems, rule of law, right to property, civil liberties, democracy based on the liberty, equality and fraternity principles enunciated by the French Revolution. His extensive critique of the caste system is also based on enlightenment principles of economic efficiency through private initiative, individual liberties and human equality.”

I will take separate post for another article on “The Concepts of Happiness, Ethics, and Economic Values in Ancient Economic Thought”.

Teachings of Prof S. Ambirajan: Indian economic policies

According to V. R. Muraleedharan Prof S. Ambirajan “was constantly posing a question (often stated explicitly, sometimes implicitly): How do public policies (economic policies in particular) evolve? For example, in his book Classical Political Economy, he examined how the writings of classical economists shaped the economic policies of the British government in India during the late 18th and 19th Centuries.”

Teachings of Prof Ambirajan: academic economics

Some excerpts from his article published in The Hindu in 2000.

• “…groups such as large farmers, Government servants, trade unions, employers associations, college and university teachers and so on with their day-to-day worries too find the `academic economist' bearing bad tidings or suggesting bitter medicines to be an ignoramus not understanding the real world.
• There is always a need for someone to examine the welfare of the whole as opposed to the exclusive interests of the constituent parts. The science of economics emerged to do this task systematically using both empirical information and rigorous logic. This does not mean that economists can be totally objective like a soulless weighing machine as they too are human, capable of harbouring bias, subject to ignorance and prone to misjudgment. While not being infallible, their location in the social matrix puts them in a unique position.
• As Prof. Jagdish Bhagwati once said: ``Politicians must play to their constituencies. Bureaucrats cannot forget the politicians. Think- tanks must seek funds to survive. All must mind their manners, trim their sails, and bend to the wind. Only professors have tenure, protecting them from the retribution that the indulgence of independence may bring. Indeed, that alone makes it an obligation, not just a luxury, for the academic scholars to break ranks, to cut through the fog of obfuscations that attends the politics of policy- making ... to propose policies and advance agendas that reflection and analysis lead one to believe to be good and beneficial, even when they appear outlandish now and will bring one neglect, at best, and opprobrium, at worst''.
• If they take advantage of the freedom and training, their advice can provide valuable insights to the policy-maker. Different economists may see different things in the same phenomena but that is no reason to discount the economists' approach to view things holistically. In any case there are some aspects of economic thinking that are absolutely correct and no amount of verbal or numerical legerdemain can counter their inexorable logic.
• Economics is all about scarcity, efficiency and welfare which it demonstrates by relating causes to consequences. It yields conditional propositions of the type: ``If A, then B''. This is embedded in certain ruthless truths of economics. Let us see three of them. First, there is no such thing as a free lunch. The cost is borne either by yourself or by someone else. Second, there is no escaping from trade-offs. You have to choose between different desired alternatives. And third, no amount of rearrangement of your resources can increase welfare or growth without increasing the efficiency of their utilisation. No politician, however powerful he is, can get over these fundamental truths.
• ..reason is that the impact of fundamental economic laws usually manifest themselves only incrementally. The existing institutional structure often masks the consequences, and this homeostatic process lulls the victims into thinking that no harm will come their way until disaster strikes with all its malignance. Again, in the short run, such policies - though violative of economic logic - may bring all round substantial benefit. Once hooked, it becomes impossible to give up as the system becomes dependent on such policies even though they have outlived their utility.”

Teachings of Prof S Ambirajan: “Clout intact by pandering”

When I was a student of undergraduate in Economics at Gurunanak College, in Chennai I heard Prof S Ambirajan’s writings but never gave thought, after all we were students! Infact one of my teacher who taught me was PhD student under the Supervision of Prof Ambirajan when he was the head of Economics Department in University of Madras.

But over a period of time he has been a forgotten man within me, though often I use to search who are all counted as liberals in India.

Many thanks to Sauvik for giving me Prof Ambirajan’s book “Classical Political Economy And British Policy In India” this book was published as Series of Cambridge South Asian Studies.

I’m enjoying reading, it has great ideas infact the following excerpts will help you to imagine some extant on his understanding.

Excerpts from his article published in The Hindu in 2001:

• “India attained freedom: ``since the Indianisation of the Viceroy's Council, the once prized efficiency of the ICS and the Government, at any rate of the administrative side, has largely disappeared……. there is adequate evidence of the steady decline in the efficiency of governance now when the entire administrative system is unquestionably Indian.
• Public expenditure by itself is not harmful and is actually necessary. However it has damaging consequences depending on what is spent and how, and where the revenue is generated. The ripple effect of public expenditure can affect the economy's performance by destroying the productive and encouraging the wasteful elements of the governing system.
• The remedy should rest in leaving as little as possible of the nation's resources in the hands of our ruling class.
• Take for example the Human Resources Development Ministry which is one of the most bloated spending Ministries of the Central Government. The work of the Ministry of Education since its beginning has been incredibly dismal. In spite of the goal set by our founding fathers in our Constitution that all children will be provided free and compulsory education till the age of 14, after more than five decades, India has more illiterates than the total Indian population in 1947. In every area where the Ministry's footprints are seen - secondary education, higher education, scientific research, technical education, distant education, and so one can only notice colossal failure. It can be safely concluded that in its main job of widening the knowledge base in the country, the Ministry has achieved little.
• If the vast monies poured into the Ministry did nothing to create a well educated India, what has it achieved? The agenda of the Ministry of Education (later christened Ministry of Human Resource Development) seems to be purely decorative, and it has always exerted itself to build a powerful empire to dispense favours. In the name of preserving culture and encouraging higher scholarship, numerous departments, centres, commissions, academies, councils, and institutes have been created to accommodate ideological positions and favoured individuals not to mention developing personality cults. Most of these institutions have evolved into self-perpetuating parasitical bodies, and the Ministry itself by ruthlessly acquiring control over educational funding has erected a highly centralised system. The Ministry's function is like the Mughal Mansabdari system where fiefs were created for favoured courtiers. The history of the Ministry seems nothing but a history of the constant struggle among coteries and groups to capture positions of power. And the Ministers who preside over this vast incubus have always played the game of favourites. It was religion as in the case of the first Minister, Abul Kalam Azad, who packed the Ministry with Muslims provoking a commentator in the irreverent Shankar's Weekly to define the Ministry as ``Pan-Islamic Brotherhood''! Narasimha Rao and Bommai preferred people from their regions for key appointments. The two professor Ministers, Nurul Hasan and M. M. Joshi, stuck to ideological soul mates for heading fiefdoms under their control, Marxists and Hindutvawadis respectively. Mr. Geethakrishnan, the Ministry of HRD is ready for your attention!”

Indeed, I am very much excited to say that I have got another great paper of Prof Ambirajan which he wrote in 1997 this paper was in B.B. Price edited book “Ancient Economic Thought”.

Actually I have collected a bunch of papers/article by Prof Ambirajan.

All I can say is thanks to Sauvik for his giving me Prof Ambirajan book.

Globalisation: sound and fury in Seattle

From Prof S Ambirajan article published in The Hindu, 2000:

• “To make some sense of this process of globalisation which seems to have received the imprimatur from almost everyone, one must try to understand on what philosophical basis the edifice stands. Looking at the big names in economics supporting globalisation, the unlettered layman could easily believe that it is all based on esoteric but sound theories which lead us to the ultimate truth.
• At its core is the orthodox economic reasoning of the neo- classical variety which believes in the following fundamental principles: (a) the way economies behave is solely dependent on the actions of individual economic agents who take decisions independently; (b) the individual is a rational actor taking all decisions carefully with self-interest in mind and (c) the actions and reactions of individual economic agents tend towards an equilibrium which brings benefits to everyone.
• The institution of unfettered market enables the achievement of this desirable outcome because it is where uncoordinated but fully informed individuals - who though individually by themselves lack any power to influence - lead the economy to adjust at a desirable level.
• Individuals cannot always take decisions solely in their own interest because of informational barriers and institutional compulsions. More often than not, key decisions are taken to suit not individuals but groups defined by criteria as varied as religion, caste, community, locality and gender. Freedom to take decisions is not evenly distributed but is determined by those who have the levers of political power. Often individuals and even groups become helpless spectators when key decisions that involve them are taken willy-nilly. Markets embedded as they are in a social milieu are seldom unfettered. Despite all the brouhaha about vanishing national boundaries, they are guarded zealously because the nation-states have not shown any intention to give up their power over their citizens.
• Globalisation is a process of rearrangement of the world's resources between people and countries. In this process, there are winners and losers. While some countries as a whole may lose out and others gain, in general the losers and the winners are individuals and groups. Let us take two examples. In a study of foreign entry in the domestic banking market worldwide during 1988-95, three World Bank economists, Claessens, Demirguc-Kunt and Huizinga, have shown that in developing countries foreign banks as a rule have greater profits, higher interest margins and higher tax payments than do domestic banks. On the contrary, in industrial countries, it is the domestic banks which have the upper hand in terms of profits, interest margins and tax payments. Does this mean foreign entry in the domestic banking market is altogether harmful? They argue that it need not be so because the entry of foreign banks can make national banking markets more efficient by compelling the domestic banks to meet the competitive challenges with vigour. Take import of second- hand cars. How should we judge this policy? The beneficiaries in the short-run are the consumers and in the long-run, the second- hand exporting countries. The losers are the local manufacturers in the short-run and the importing countries in the long-run because the ultimate environmental effects of the disposal of old cars are borne by the importing countries.
• Sad to say, we are not living in an ideal world because those who are powerful will always try to dominate the weak. What should be done? As the economist Albert Hirschman said in a different context: ``Do we exit or do we voice?''

Recently Niranjan Rajadhyaksha has written a piece on this ‘exit’ and ‘voice’ matters.

Illiteracy is of what?

That was the title of one of my paper which I had presented at a national seminar at BANISS!

That is what Prof S. Ambirajan also said while writing a book review that “A person who may not be able to sign his name in paper will nevertheless have a thorough grip over interest rates, profitability ratios, geometrical proportions and other such mathematical knowledge needed for both his economic relationships and constructional activities.”

Techno-economic nobels

Prof S Ambirajan on 2001 Nobel Prize winners in Economics:

• “It is not easy to summarise the work of even one of them because of the vast range of subjects they have traversed, but it is almost impossible to give a flavour of their combined work especially to a largely non-economist readership. Yet what they have done in the field of technical economics has considerable significance for everyone. Broadly speaking their work exhibits the following characteristics. First, their analysis is highly sophisticated and technical unlike an earlier generation of economists who while retaining the high level of technicality and sophistication, nevertheless tried to communicate to the non- specialists both within and outside the profession. The language of Mr. Heckman and Mr. McFadden is of a very specialist variety couched in advanced mathematics addressed specifically to fellow specialist practitioners taking for granted considerable prior knowledge.
• Our academic tsars need to ponder why the quality and quantity of research output in India is so abysmally low and infinitely inferior to what comes out of American universities.”

In an article Mr S. Muthiah said:

• Ambirajan says, 'Did a poor schoolmaster's son from a small town in Saurashtra, with hardly Rs. 25,000 with him in l958, have any chance against a combination of the powerful Parsi business families...and Marwari merchants, not to mention the avaricious political class controlling the levers of a permit-licence-quota raj...? Dhirubhai Ambani could have led the virtuous life of an ethical yarn dealer in the backyards of Bombay and lived in a spartan chawl.

Ambirajanomics!

Dr. S. Ambirajan was eminent historian in political economy. He was the son of Dr K.R. Srinivasa Iyengar a distinguished professor at Andhra University. “Ambirajan was a true liberal” died on 4 February 2001.

“Particular skills….benefit both the parties to the transaction”- Dr. S. Ambirajan

The following are some excerpts from his article published in the Hindu:

• “The economists' questions are even more important because they address themselves to the implications of policies for the long run interest of the economy and the totality of the socio-economic system. Politicians' policy agenda invariably focus on the very short term results and/or aim at vociferous sectional interests. The pervasive issue for the economist is the relationship of costs to be incurred and the expected benefits of any suggested action. He is interested both in the open and the hidden costs to society, and more particularly as to who will suffer the losses of bad decisions because all policies involve transfer of resources with losers and gainers. He will also factor in some of the most fundamental traits of human behaviour when examining different ways of achieving the same economic ends. The economist knows that choosing one thing in a world where everything is scarce means giving up another. This will naturally involve studying alternative policies to achieve the same objectives. Politicians then, if they are genuine about the welfare of the totality, must pay heed to economists who may often bring unpleasant tidings about their pet projects.
• There is a charming naivete about a demonology where the trader who buys and sells is considered an unwanted ogre. We need to remember that as long ago as 1776, Adam Smith underlined how human prosperity is derived from specialisation which is a consequence of the propensity to ``truck, barter and exchange''. No system of economic organisation has been able to buck this innate nature of human beings. A trader who stands between the producer and the consumer is a specialist in his own job, and brings particular skills to benefit both the parties to the transaction.
• Trading is a spontaneous institution that emerged to reduce transaction costs which are inevitable in any exchange situation that goes beyond the most rudimentary barter mechanism prevalent in very poor unsophisticated economies. If a trading chain develops snags, policy should try to identify the sources of the increases in transaction costs to remedy it. Instead the ``farmers' fair'' actually adds to transaction costs, the only difference being to shift the cost burden from the farmers and the consumers to the general tax payer. This does not make any economic sense.

Other readings

• Economist scholar
• 'Uzhavar Santhais' - fact and fiction
• Economist extraordinaire

S. Ambirajan Memorial lectures:

• C. Rangarajan (Newsreport)
• M. S. Swaminathan (Newsreport)
• P.V. Indiresan (Newsreport)
• Raja J. Chelliah(Full paper)
• Dr U. Sankar (Newsreport-8)

Books:

1 2