The rebel economist (October 10, 2006)

By Swapan Dasgupta

Not being a betting man, it is impossible to judge the track record of the US-based Thompson Scientific in predicting Nobel Prize winners. In anticipation of the Swedish Academy’s, the organisation has suggested that the Indian-born Professor Jagdish Bhagwati is, among others, being seriously considered for this year’s Nobel Prize for economics.

If the past is any guide, the prize for economics is not automatically awarded to individuals who have made seminal academic contributions. While scholars who have facilitated understanding of, among other things, risk and prices through complex mathematical models have naturally been honoured, others have been rewarded for what can best be called lifetime contributions. It all depends on the global environment and the priorities of the jury. Purist economists, for example, don’t seem to rate Amartya Sen’s academic contributions too highly. At the same time, everyone acknowledges that Sen’s writings and interventions have been influential in shaping government policy and in reaffirming the status of economics as a human rather than mathematical endeavour.

I leave it to specialists to evaluate the category of Bhagwati’s contributions. However, the jurors in Stockholm may find it reassuring that there will be considerable satisfaction in all right-thinking circles in India if Bhagwati’s name features in the final list. If Bhagwati’s contribution is acknowledged by the trustees of Alfred Nobel’s legacy, it will be an important step in rectifying the intellectual imbalance created by the award to Sen.

Last week, for example, a beleaguered UPA Government announced plans to resurrect the 35-year-old garibi hatao slogan of Indira Gandhi, as the preface for another 20-point populist package. A Nobel Prize for Bhagwati at such a juncture will be a strong indictment of this handouts culture.

To the generation of Indians which came into its own in the period roughly coinciding with the socialist heydays of Jawaharlal Nehru’s daughter, the name of Jagdish Bhagwati had a special significance. At a time when a planned economy based on draconian government controls, reckless nationalisation, crippling shortages and heady welfarism was the rage in Coffee House circles, Bhagwati was the dissident. His relentless critique of Indian planning and socialism were akin to heretical tracts. They were quietly appreciated, but out of the earshot of the socialist stalwarts who dominated the university faculties. My friends who studied economics used to say that reading Bhagwati was essential for understanding the grim realities of India but irrelevant if your focus was on high marks—the examiners were invariably leftists or worse. The words of one Communist charlatan “If you want marks, you must read Marx” rankled in the minds of the ambitious.

It was this stifling environment that made Bhagwati pack up his bags and depart for the US where he was more appreciated. He was, in many ways, an intellectual exile from socialist India. In A Stream of Windows, Bhagwati wrote about this oppressive climate: “What led India down this road? Some of the ideas came … from the politics of Harold Laski … and from the economics of Joan Robinson et al… But it must also be said that, if the seeds were planted in England, much pruning was done in India itself. There was substantial, homegrown culpability on the part of India’s economists… Faced by the mounting evidence of the bankruptcy of India’s policies, the economists generally dug in their heels, often exercising their theoretical talents to rationalise what was nonsensical. It has been well said that any elementary mistake in economics can turned into a profound truth by ingeniously making the right assumptions to deduce what you want. So India suffered the tyranny of anticipated consequences from the wrong premises.”

Bhagwati was never mealy-mouthed in his polemical engagements. He wielded his pen to devastating effect—an attribute that didn’t endear him to the socialist time-servers. He even named Sen as one of the main perpetrators of this intellectual deceit.

At Columbia, Bhagwati was primarily preoccupied with issues of world trade. However, when Manmohan Singh began dismantling the inefficient control economy in 1991, Bhagwati was enthused. In a scathing attack, he described the alternative welfarism propagated by Sen and Jean Dreze as a “throwback to the obscurantism that shielded the inefficient policies from the brunt of early criticisms.”

As productive India trembles at the thought of any reincarnation of Indira’s socialism, an honour for Bhagwati will be comforting to all those have despaired of India settling for the Third World when it should have been reaching for the sky.

(Published in DNA, Mumbai, October 10, 2006)