A NEW DEFINITION OF ECONOMIC SCIENCES.
Prefatory: A tribute to my peers and my mentors. Nothing is wholly new in human affairs; we stand on the shoulders of the past; even Indian Economics was as much the making of Europeans like Prof Gilbert Slater as it is by Justice M G Ranade. This address in a tribute to Professor Lionel Robbins whose famous book: An Essay on the Nature and Significance of Economic Science(1932) gave the well known for the definition of Economics, with emphasis on allocation of scarce resources capable of alternative uses between many and numerous ends. This is a product of his entry into the Professorial Chair (1929-61) in the London School of Economics and Political Science. Having known him in person and as my teacher, I venture to think he would like a new definition of Economic Science. He was among the youngest to hold this post in the prestigious LSE, where he was a class mate of my teacher Prof C. D. Rajeswaran (CDR) the Pachaiyappa’s College, Chetput, Chennai. And when I joined the LSE in September 1963, he continued to teach Economic Thought though he was then appointed Chairman of the Committee on Higher Education by British Government. I had joined his classes and heard his sonorous voice and clear exposition of the evolution of economic thinking in the western world. Dr Vera Anstey another LSE Professor continued to guide till 1965, students who registered for research degrees in Indian Economics My research guide in the University of Madras Dr R Balakrishna, was her student three decades back and she was happy to recall his research work on Industrial Development of Mysore (Bangalore Press,1940) which had her preface. Generations of students of economics between 1930s and 1960s were brought up on the Scarcity Definition of Robbins and the classic work on Economic Development of India by Vera Anstey. A few days back, on 3 April 2013,at India International Centre, New Delhi, Dr T N Chaturvedi, Home Secretary in the regime of Prime Minister Mrs Gandhi, ex-Comptroller and Auditor General of India, Director/Chair of the Indian Institute of Public Administration recalled what a powerful impact Dr Anstey’ book, had in his student days, six decades back, in Allahabad University. What an enduring impact !!! Having read many works of these veterans, this New Definition, let us hope will make Economics relevant to the changed times and state of the art as it prevails in the wider knowledge society in which humans inhabit not only the earth and the moon.settle in space stations, but also know to break the atom, and work on nano sub particles. We look far into the universe of stars and galaxies.
Definitions of Economics – a selective survey. Adam Smith took nearly ten years to complete his treatise An Inquiry into the Nature and Causes of the Wealth of Nations ( 1776). This gospel of free enterprise, gives the doctrine of “ freedom from government interference and economic liberalism.” It was new for his times to advocate pursuit of self-interest, division of labour, and free trade. This work is massive. Excluding Prof Edwin Cannan’s Introduction in 60 pages, the text is in 900 pages, as set in small types in the famous Modern Library (New York,1937) edition. The division of labour increases the productive powers, the allocation of the produce depends on opulence of different nations and many systems of political economy and the revenue extracted by the sovereign. Adam Smith’s work, reached five editions in his life time. The first edition carried his designation “Formerly Professor of Political Economy in the University of Glasgow”, because at the time of the publication, he had chosen to spend the rest of his life as Commissioner of Customs in Edinburgh, surprisingly holding the firm view that all “past and present regulations were for the most part purely mischievous.” (Cannan, p.xxx) Division of labour increases the output and exchange is therefore necessary to trade the surplus. This maximizes the wealth of nations. Surprisingly in the same year 1776, the American War of Independence broke out, rather than increase of wealth by trade. Laissez Faire was the assumption of Adam Smith’s for creation of wealth by free trade among all nations.
Alfred Marshall (1842-1924) A C Pigou(1877-1959), J M Keynes(1883-1946), K J Arrow(B.1921,Nobel Laureate 1972 with Sir John Hicks) et al. Not many have taken to in depth study of all that Adam Smith wrote. The Cambridge tradition was to rely on Principles of Economics of Alfred Marshall. He defined Economics as a study of mankind ( not nations) in ordinary pursuits. His successor Prof A. C. Pigou added a new dimension of welfare in his famous book Economics of Welfare, (London, 1920) reprinted thirteen times in five editions by him, till 1952. This book laid the foundation for Welfare Economics of J R Hicks and K J Arrow, J K Mehta, and many of us. Human beings are end in themselves, not merely agents of production is the underlying thread of reasoning of Pigou’s work, which in bulk is nearly 900 pages in small types, matching Adam Smith. Economic Welfare is defined as that which can be measured by the rod of money. Experience, since Britain abandoned Gold Standard, made money rod not standard but as elastic as the Central Bank of a country fancied.
Freedom of Human Beings and State Machinery. In the growing monetized economy of the world, free trade advocated by Adam Smith is conditioned by not by one invisible force of market but also by the secret codes of the monetary authorities and the dictates of the government which appoints it. within nations, and after the emergence of the International Monetary Fund, the directions of the countries which control it- often the big powers in the United Nations. A defender of created money, to increase effective demand in times of depression, J M Keynes moved away from the content of definition of Economics and focused on the methodology of it. Economics provides an apparatus of the mind which enables the possessor to come correct conclusions. But tools of economics are but as effective as our knowledge of the institutions which make the economy. The General Theory…(1936) of Keynes, is not widely applicable to all situations and all categories of non-monetary activities. It is a special theory of recovery from depression and structural unemployment. The public works policy, may be helpful to revive the economy. Pushed further this causes inflation and inequality.
Positive and Welfare definitions of Economics. Shorn of ethics, economics is a subject of efficiency and productivity – irrespective of the well being or ethical mores governing economic activity. Wars efficiently organized or peace won efficiently are equally the central subject according to positive economists. It does not matter if colonies are plundered and impoverished, so long as this is done efficiently. Efficiency is the goal. This is positive economics. Milton Friedman in Positive Economics follows the path of Robbins. Welfare Economics adds the normative, ethical character. That act is ethical a la Kant, which an individual can do, all others could do as well, and still everybody will be happy in the whole society. Robbery, plunder, use of chemical fertilizer to maximize output and profit, forged currency, etc., corruption in small or large scale, visible or invisible, may benefit an individual but if many do the same, the society will be miserable. Efficiency is essential; goodness is no less important.
Human Needs Use of Human Resources in Harmony with Nature shall balance the maximization of individual and societal happiness. This is the New Definition of Economic Science. This combines the use of the state of the art in both life and material sciences. The survival of humanity means balance of individual and societal life sustaining needs besides protection of flora and fauna on earth and living beings in the sea and clean air across nations and space. Self interest of individuals and nations alike is subject to global peace and harmony in the present and future alike. Ensuring health is both in individual efforts and larger societal and environmental practices, to avert epidemics. Income per se without balance of income, savings and proper individual and societal investment cannot ensure the safety of mankind in Nuclear and Space Age. Though India may be considered largely an illiterate country, the oral tradition of moral precepts from sacred works in Indian languages, epics and Panchathandra stories by oral tradition, have instilled moral values and wise conduct in societal life. The betterment of India is attributable to the wisdom in fables and legends. The life is Mioram and Nagaland, amazed me while I served on the Executive Council of North Eastern Hill University in late 1980s. Most of the houses do not have doors. They do not need the Police Station because theft is unknown. This is Plato’s Communism in practice. This is what Karl Marx dreamt of the impossible ideal of the withering away of the state. Unfortunately, under the seeming dictatorships of the proletariat, in the USSR and China, the inequality and hoardings reached unheard of proportions and far in excess under modern capitalism with guarded state intervention to restore order and equity, growth with inclusive components.
The call of Welfare Economists and promising place of the Ethiraj College and its collaborative institutions of India to save the Study of Economic sciences. India Today has taken note of very few institutions in India as leaders in Higher Education. Currently, among the nearly ten thousand arts and science colleges of India. Lady Sri Ram College in New Delhi and the Ethiraj College in Chennai often find their place among the top twenty in India. In Chennai, Loyola College with vast land and enormous international expertise has a major place in contemporary excellence in Higher Education. The Pachaiyappa and Presidency Colleges founded in 1840s are older than the University of Madras founded in 1857. World famous Oxford and Cambridge dons were teachers in those colleges till 1960s and their alumni provided the Who is Who of India, with Nobel Laureates before and after independence. The Ethiraj Economics Faculty in earlier phases had Prof K Vasanthi Devi (KVD) taught by Prof CDR from LSE, and Prof Yasodha Shanmugasundaram taught in the Presidency by Prof S.Velayutham a direct student of Nobel Laureate J E Meade at LSE. The founding decades saw the introduction of Welfare Economics, Health Economics, and Fiscal Federalism, Legal Economics,
Business Economics as innovative and first time areas of study in the Ethiraj. In professional associations of Tamil Nadu and Indian Economic Associations , Madras Economics Students Conventions of 1950s, Professors KVD and YSS trained and encouraged a body of researches.Ethiraj now gives a tally of 30 research oriented professorial teachers currently on rolls for Economics, and a record of 208 M.Phils and 17 Ph.Ds guided. The only college which gave woman President of the Indian Economic Association (YSS) from around 9000 arts and science colleges is from Ethiraj College. What a landmark in Gender History of IEA. And now we are launching of ETHIECON, with Nobel Laureates of current year Dr Lloyd S Shapley and Alvin E Roth for their contributions to Theory of Stable Allocations and The Practice in Market Design. This is commendable under the guidance Dr V Reneuka Devi and Mrs Rebecca Devaprasad, and Dr M. Gowhar Jhan, who are seen as much in the Presidency Alumni Awards as in national gathering of IEA. All this augurs well for the historic collaborative efforts by the Ethiraj economics fraternity in the future. This is history which can be improved to put the University of Madras and its constituent and autonomous colleges in the world map. Tamil Nadu is the only state in India which recognizes English as one of the Official languages in addition to Tamil. And English is the language of science and technology, to which it adds thousands of terms every day. Words are building blocks of scientific reasoning to learn the secrets of nature and mankind. The expertise in this language can enrich the knowledge available in Indian languages. From 1948 soon after independence, Economics was among the early subjects taught. That I have been associated with many memorable economics studies and conferences from 1952 in the Pachaiyapas, from 1964 in Sir Theagaraya, and from 1958 to the present from the University of Madras as Professor and Head now as Emeritus Professors of the Madras University Department of Economics. During the entire span Ethiraj has marched fast, and earned the title of Excellence. My congratulations
The urgent call of duty by Ethiraj Economists. At this time the Chairman of the Ethiraj Trust is Dr A M. Swaminathan. I have a special word of admiration and hope. He is an economist in his own right, a reputed officer of the Indian Administrative Services, not only an expert in Indian Finance but also a role model in financial and educational accountability. It augurs well for the Ethiraj to scale new heights in global excellence – the call of his hour when the time of India has arrived in world history. Shortly a National Conference on Quality of Higher Education for Economic Development will be held in Dwaraka Doss Goverdhan Doss Vaishnav College on 12th and 13th Apirl 2013. Like the Ethiraj, DDGD Vaishnav College is funded by educational philanthropists a team of principled educational and developmental administrators. It will be inaugurated by Dr C Rangarajan, the Chairman of the Economic Advisory Council of the Prime Minister, also Ex Governor of Tamil Nadu and Ex-Chancellor of the University of Madras. He is joined by the Member in Charge of Tamil Nadu Planning and eminent IMF expert Dr Narendra Jadhav, brilliant Oxford Cambridge Economist Dr Abijit Sen. Both are Members of the Union Planning Commission. Dr G. Viswanathan, Founder Chancellor of VIT University is a much decorated Educationist who gave up Ministership to found world famous VIT University, also in the path of V.L.Ethiraj of Vellore. Dr K.C.Reddy former Chairman of the Andhra Pradesh Council of Higher Education, now AP Government leader of employment programmes, Dr. J B J Tilak of the University for educational studies in New Delhi, Dr C.Chandra Mohan, the Senior Advisor for Education, Youth Affairs and Culture in the Union Planning Commission, New Delhi are in this conference. I appreciate the massive participation of the faculty and research scholars from the Ethiraj in this conference, and wish them continued long long innings in national and global stage, as indeed they have already marked their presence in sports, culture, music, army parades and host of all events to remember and admire. The Economics of the Philanthropy of Barrister V L Ethiraj is visible and creative world wide and worthy of record in letters of gold.
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