Amit Bhaduri – Undergraduate Economist

Arun Bose: An Introduction to His Life and Work

This blog post introduces you to the economist Arun Bose (1919-2003) who made important contributions to Sraffian and Marxian literature. Bose was called a ‘Sraffian Marxist’ alongside Ronald Meek and Ian Steedman by Samir Amin in a 2015 article in the Monthly Review. Despite his substantial corpus of published writings, his work seems to have been largely forgotten within India. Therefore this essay provides an introduction to his life and work and ipso facto is a modest attempt at generating interest in Indian economic thought specifically (and more generally in the history of economic thought). In the past, blog posts which fall into this theme dealt with the economics of Krishna Bharadwaj and VKRV Rao. And what follows is a condensed version of Section II of my article ‘Arun Bose on Sraffa: Value Theory and Demand‘ published in Artha Vijnana as part of a 2018 special issue dedicated to the ‘Indian Reception of Piero Sraffa’s Economic Contributions’.”

Born in Calcutta, Bose had become interested in Marxian political economy by the end of high school. He completed his undergraduate studies (Tripos) at Cambridge University between 1937 and 1940. One of Bose’s recollections of Cambridge is the following: ‘During extra-curricular sessions, both Maurice Dobb and Piero Sraffa discussed economic theory and Marxian political economy, leaving an indelible impression on my mind’. Moreover, Bose was actively involved in student movements there and also joined the Communist Party of Great Britain. In the decade following this, Bose worked as a full-time activist in the Indian communist movement.’

Around 1957, Bose decided to resume his study of economic theory. Under the Commonwealth Universities Interchange scheme, he spent a year at Trinity College, Cambridge in 1960-1. Subsequently, he was asked to join the newly founded Kirori Mal College in Delhi at the behest of the economist B. N. Ganguli and the English professor Sarup Singh. B. N. Ganguli is the author of Indian Economic Thought: Nineteenth Century Perspectives (1977), one of the handful of books dedicated to Indian economic thought. In memoriam, the Economics Department at Kirori Mal has organised public lectures under the auspices of Arun Bose Memorial Lectures.’

Between 1963 and 1965, Bose closely engaged with Sraffa’s Production of Commodities by Means of Commodities (1960). Bose published a comment in Economic Weekly (now Economic & Political Weekly) in response to Krishna Bharadwaj’s review of Sraffa’s book entitled ‘Value through Exogenous Distribution’. Bose also published responses to the reviews of Sraffa’s book by Roy Harrod and David Collard respectively in the Economic Journal, one of the main international vehicles for the dissemination of economic ideas. And in 1965, he published an article on Sraffa’s book in the Economic Journal. And during this period, they corresponded; Bose sent Sraffa five letters to which he received responses to all but one (more details about the correspondence is available at the online archives of Trinity College).’

Bose’s next publication was after six years: an essay on Marx in the 1971 volume of the History of Political Economy; it continues to be an important journal devoted to the history of economic thought. Next year, he published another essay on Marx in Science & Society. After another brief hiatus from publication, he published a book in 1975 titled Marxian and Post-Marxian Political Economy; he gave a series of lectures at the Indian Statistical Institute (ISI), Calcutta with the same title. Bose acknowledges Sukhamoy Chakravarty for reading the book draft and for familiarising him with modern linear economic theory (Chakravarty had also reviewed Sraffa’s book which had appeared in 1961 in Arthaniti, the journal of the Department of Economics, University of Calcutta). I reproduce an excerpt from the book’s preface where Bose describes his reason for being impressed with Sraffa’s work:

‘Piero Sraffa impressed me with his conviction that it was perfectly possible, though difficult, to develop a theory of political economy into an exact science, based on absolute precision of concept ‘ however much we may approximate in empirical work ‘ which would be wielded as effectively as a surgeon’s or a welder’s tools, to dissect or dismantle, and then reassemble the ‘unseen’ interconnections of the economic process, whose cognition is essential for revolutionary political action’ (p. 11; also reproduced in my Artha Vijnana article on p. 29).’

He went on to publish two follow-up books: Political Paradoxes and Puzzles (1977) and Marx on Exploitation and Inequality: An Essay in Marxian Analytical Economics (1980). While a visiting fellow at the Delhi School of Economics (DSE) during 1976-7, Bose delivered lectures on capital theory. (Today, in India, to the best of my knowledge, capital theory is a full course (albeit elective/optional) only at the University of Hyderabad; Bharadwaj had played an important role in designing their MA Economics curriculum along with Amiya Bagchi, Amit Bhaduri, and K. L. Krishna.) A year before his retirement from Kirori Mal College in 1985, Bose published a letter in the Economic & Political Weekly titled ‘Piero Sraffa’; this was in response to P. R. Brahmananda’s obituary of Sraffa in 1983, also in the form of a letter. Brahmananda had himself engaged with Sraffa’s book in a set of three articles in 1963 in the Indian Economic Journal; these were later reproduced in the first volume of the 4-volume Piero Sraffa: Critical Assessments edited by J. C. Wood (1995, Routledge).’

After his retirement, Bose employed his ‘Sraffian Marxist’ approach within a wider social scientific framework to explain India’s socioeconomic condition. In this period, he published the following: an article each in Economic & Political Weekly (1986) and International Review of Sociology Series I (1987); and two books in 1989 titled Theories of Development of Material and Human Resources and Education: Requiem or Rethinking’ and India’s Social Crisis: An Essay on Capitalism, Socialism, Individualism and Indian Civilization. In his Idea of India, Sunil Khilnani identifies India’s Social Crisis as an important contribution to ‘historical sociology’ (p. 218).’

To conclude, there are enough published works by Arun Bose for someone who is interested in writing a dissertation or thesis in the area of Indian economic thought. Moreover, his notes, manuscripts, and correspondence are available for purposes of research at Nehru Memorial Museum & Library (NMML) although I personally found them to suffer from poor penmanship. It is extremely vital that we engage with the ideas of economists such as Arun Bose who provide an alternative way of understanding our economic surroundings.’

What Can Indian Economists Learn From Sismondi’

Although J.-C.-L. Simonde de Sismondi (1773-1842) lived in Geneva and wrote on economics, history and public policy, his concerns about the role of political economy is valid even today, especially for India. Marx considered Sismondi to be the last classical economist. Sismondi engages with the economics of Adam Smith, David Ricardo and J B Say in his 1819 work New Principles of Political Economy: Of Wealth In Its Relation to Population. This work has been translated into English by Richard Hyse in 1991 (available at Google Books). According to Sismondi, the objective of Political Economy is to ensure that majority of the population live a happy life.

Indian realities

Sainath informs us that India has seen over a quarter of a million farmers’ suicides between 1995 and 2010. The total figure according to National Crime Records Bureau (NCRB) is 256,913. And, since 1998, at least 15,000 farmers have committed suicide very year. More unsettling is that fact that the total number of farmers have been declining significantly. In Andhra Pradesh, it is alleged that 90 farmers committed suicide, that too, in rain-fed areas, in the last few weeks.

The inflation of food articles has reached double digits. Food inflation doubly affects the actual cultivators. Since, the prices are fixed by the Government (minimum support prices), the price rise does not benefit the actual cultivators. Secondly, their ability to purchase their usual consumption basket also falls when price rise. It is in this context that M S Swaminathan’s reminders need to be understood. He rightly asserted: ‘If agriculture goes wrong, nothing else can go right for this country.’

Very recently, Dreze and Sen pointed out the nature of the asymmetrical growth that is driving India with a majority of the population living without access to basic amenities. They concluded their article in the Outlook by stating that one of the ways forward is to have a ‘radical broadening of public discussion in India to development-related matters’rather than keeping it confined to simple comparisons of the growth of the gnp, and naive admiration (implicit or explicit) of the high living standards of a relatively small part of the population. An exaggerated concentration on the lives of the minority of the better-off, fed strongly by media interest, gives an unreal picture of the rosiness of what is happening to Indians in general, and stifles public dialogue of other issues.’ In other words, how much has the socio-economic condition of majority of the Indian populace (who happen to be farmers and weavers) improved’

Sismondi

In the hurry to build sophisticated DSGE models and while working out monetary and/or fiscal solutions to inflation and economic growth, it is often forgotten that actual human livelihood is at stake. How can Indian agriculture not be a necessary component of the curriculum in economics’ Within economics, steep walls which cannot be crossed exist between agricultural economics, macroeconomics, monetary economics, labour economics, development economics, etc. The so-called specialization in these fields (to be understood as literature which is not easily accessible or comprehensible to an economist from another field) has reached alarming levels. Sismondi says the following on the nature of economic inquiry:

However, I believe I should protest against the manner, so often superficial, so often false, in which a work on the social sciences is judged in the world. The problem which they offer to resolve is tangled in quite another way than those that arise from the natural sciences; at the same time it appeals to the heart as well as to reason. The observer is called upon to recognize unjust sufferings that come from man, and of which man is the victim. We cannot consider them coldly and pass them over, without seeking some remedy‘(Sismondi 1819: 13).

Maybe, the idea of modern science does not allow investigators to be moved by the ‘object’ under study. Nevertheless, as Sismondi reminds us, economic problems and their solutions affect people (who are not ‘objects’) in a significant manner. The state of Indian farmers and weavers is certainly to be given attention, especially in terms of livelihood building, through providing employment and incomes in a dignified manner.

The following lines from Sismondi echoes what Dreze and Sen recently pointed out as regards Indian growth:

If they find a tremendous accumulation of riches, an improved agriculture, a prosperous business community, manufactures which multiply without end all products of human industry, and a government that disposes of almost inexhaustible coffers, as in England, they call the nation opulent that has all these things, without stopping to inquire whether all those who work with their hands, all those who create this wealth, are not reduced to mere subsistence; whether every tenth member among them must not apply each year to the public welfare; and whether three-fifths of all individuals, in a nation that is called rich, are not exposed to more privation than an equal proportion of individuals in a nation called poor (Sismondi 1819: 22).

In India, the wealth creators, the farmers, are forced to live below even ‘subsistence levels’ as Sainath’s commentary on farmer suicides indicate. Even though we have 53 agricultural universities in India, their contribution to the farming population is circumspect. Three to four decades before, working on agricultural economics and debating issues related to agriculture was fashionable and ‘important’. Today, it is even more important but, perhaps, not very attractive. In fact, the Government admits that the farm sector has been neglected.

Admitting that the government is neglecting research in the farm sector, the agriculture ministry has sought more funds in the next Five Year Plan (2012-2017) for significant jump in food grain production.

But, focussing on aggregate food grain production is clearly insufficient. One needs to look at the ‘production conditions in Indian agriculture’. As Sismondi points out very clearly

Commercial wealth is augmented and distributed by exchange; and even the produce of the ground, so soon as it is gathered in, belongs likewise to commerce. Territorial wealth, on the other hand, is created by means of permanent contracts. With regard to it, the economist’s attention should first be directed to the progress of cultivation; next to the mode in which the produce of the harvest is distributed among those who contribute to its growth; and lastly, to the nature of those rights which belong to the proprietors of land, and to the effects resulting from an alienation of their property (Sismondi 1819: 133).

In 1974, Krishna Bharadwaj published a book Production Conditions in Indian Agriculture. In the same period, economists such as Amit Bhaduri, Ashok Rudra, Amartya Sen, K N Raj, C H Hanumantha Rao, Pranab Bardhan, etc wrote extensively on various aspects of Indian agriculture. The issues Sismondi pointed out were discussed and debated. Bharadwaj points out the significance of examining property relations, technology, local patterns of power, etc. Moreover, she notes that non-economic variables such as tradition, customs, caste and religion determine the economic position of a farmer and thereby determines their income and asset levels. The rise in food inflation has prompted many commentators to hold employment guarantee schemes (NREGA) responsible. If agriculture generated adequate incomes (to maintain a decent and dignified life) employment guarantee would not be necessary. In other words, employment on and off farm cannot be treated as independent of each other. Further, in India, markets are interlocked through both price and non-price links (with the Government playing an ambiguous role). These interlocked markets are exploitative as it denies the following freedoms to the agricultural farmer, who is very much an entrepreneur.

(1)” What to produce’

(2)” How much to produce’

(3)” For whom to produce’

(4)” When to sell the produce’

Conclusion

As Sismondi reminds us, we cannot ignore the majority of the Indian population who do not have access to the basic necessaries of life. Agriculture provides livelihood to more than half the Indian workforce. A farmer is an entrepreneur who produces food, the most basic of all commodities. Although, it might not be academically fashionably and profitable to study Indian agriculture but as Sismondi notes: ‘We cannot consider them coldly and pass them over, without seeking some remedy.’

Employment: The Neglected Variable

Today, the issue of employment receives attention in public discussion mainly because of NREGA. It is economic growth or GDP growth which is given prominence in most policy documents. In economics, employment generation and related aspects form a part of macroeconomics alone. Financial economics, international trade, monetary economics, etc hardly comment on the issue of employment. Increasingly, the question of employment is getting less attention in most academic and policy oriented discussions. This post attempts to revive certain issues pertaining to employment. For this purpose, we revisit the 1943 paper of a neglected macroeconomist ‘ Michal Kalecki. His paper straddles the fields of industrial economics, financial economics, public economics and macroeconomics, and provides insights regarding employment generation.

The generation of more employment, rather full employment, according to Kalecki, is beneficial to both government and capitalists. In addition, it also benefits the class of workers. Employment can be generated by capitalists or by the government. However, the government is restricted from generating employment because apparently government investment crowds out private or capitalist investment. In Kalecki’s words:

‘The economic principles of Government intervention require that public investment should be confined to objects which do not compete with the equipment of private business, e.g. hospitals, schools, highways, etc. Otherwise the profitability of private investment might be impaired and the positive effect of public investment upon employment offset by the negative effect of the decline in private investment.”

It is for this purpose that we have Acts such as the FRBM Act to ensure sound finance. This Act regulates and limits the employment generation capacity of the government. As for the corporate sector, they never support public investment. Hence, the employment generating capacity gets solely determined by the corporate sector/capitalists.

Kalecki questions this stance of the capitalists. For, full employment, as noted above, clearly benefits the capitalists by providing them greater profits. He argues that it is the ‘political realities’ associated with the maintenance of full employment which prevents the government and big business or capitalists from doing so. Given that the Government has to adhere to sound finance, largely, the capitalists determine the volume of employment in an economy. The capitalists tend to increase employment and output if they expect a good economic and political environment to be forthcoming. This environment is a dynamic and complex function of government policies, international events, political outcomes, etc. In economics, we call it state of confidence. Today, one factor which reflects this state of confidence is the bullish trend seen the stock markets. It is for this reason that, in India, SENSEX occupies such an important place in everyday news. Hence, the state of confidence assumes such an important role only in an economy where the government is supposed to maintain sound finance. As Kalecki points out:

‘The social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the ‘state of confidence’.’

Similarly, on the politics involved in capitalists pressing for sound finance, Kalecki powerfully notes that:

‘Under a laisser-faire system the level of employment depends to a great extent on the so-called level of confidence. If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment). This gives to the capitalists a powerful indirect control over Government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.’

Thus, regardless of whether we agree with Kalecki or not, he provides an interesting way to examine the issue of employment creation; especially for the Indian economy where FRBM Act is taken seriously and because of the growing significance of SENSEX. Such an analysis also calls for greater interdependence between macroeconomics, public economics, industrial economics and financial economics on one hand and between economics, political science, sociology and culture studies on the other. The latter sort of interdisciplinary inquiry will provide descriptions of actual processes by which such ‘politics’ take place. This analysis by Kalecki also revives the classical notion of ‘political economy’ which understands that economics cannot be divorced from politics. For practical purposes, it is of utmost importance that we pay more attention to the variable ‘ employment, in our economics curricula and debates, especially in a country like India.

References

Kalecki, Michal (1971), ‘Political Aspects of Full Employment’, in Selected Essays on the Dynamics of the Capitalist Economy 1933-1970, Cambridge: Cambridge University Press. (full text available at Monthly Review)

Further reading

Bhaduri, Amit (2006), ‘The Politics of Sound Finance’, Economic and Political Weekly, 4 November.

The Indian Constitution and Human Dignity: for Economists

The field of law and economics is a glamorous one with economists such as Ronald Coase, Gary Becker and Richard Posner. It was Coase who provided the inspiration to law and economics through his introduction of ‘transaction cost economics.’ And Becker was the one who extended the domain of economics to virtually any social phenomena. Issues such as law, crime, marriage, family, etc came to be studied by economists. Although, the tools used never varied. It was the same old microeconomic baggage of neoclassical economics. Suddenly, neoclassical economics started feeling successful all over again. Their theory of value and pricing started explaining various social and cultural processes in the economy. However, this post is not a commentary on law and economics that is practised. For an excellent commentary on its origins and methodology, see the article by William Davies ‘Economics and the ‘nonsense’ of law: the case of the Chicago antitrust revolution’ in Economy and Society published in 2010.

The content of this post certainly falls under the label of law and economics. However, this post discusses certain aspects of the Constitution of India in the the light of economic policies undertaken-that of liberalization. The quotations in this post are from Dr. Durga Das Basu’s Introduction to the Constitution of India, reprinted in December 2009.

Economic Justice

The banishment of poverty, not by expropriation of those who have, but by the multiplication of the national wealth and resources and an equitable distribution thereof amongst all who contribute towards its production, is the aim of the State envisaged by the Directive Principles. Economic democracy will be installed in our sub-continent to the extent that this goal is reached. In short, economic justice aims at establishing economic democracy and a ‘Welfare State’.

The idea of economic justice is to make equality of status meaningful and life worth living at its best removing inequality of opportunity and of status-social, economic and political.

That is, an increase in growth rate is seen as the way to banish poverty. This principle is certainly based on the idea that growth trickles down. As has been witnessed in India, all that liberalization has achieved is ‘jobless growth’. Hence, the need for policy documents to shout for ‘inclusive growth’.

Now, all those who contribute to wealth by being producers are supposed to be compensated. It is on this class, that the burden of development falls. For, they do not have the adequate social and economic voice to demand for ‘just distribution’.

Can India claim social justice just by making opportunities equal’ Equal opportunities perform their function only in an already just and equitable society, and not in countries where inequality of income and wealth is so skewed. Thus, an active intervention is necessary at the level of production as well as distribution of GDP.

Nehru’s idea of Socialism is that ‘every individual in the State should have equal opportunity for progress.’ However, this idea cannot hold any water until the institutions in the State are examined- judiciary, executive, military, private enterprise, unorganised sector, etc. For instance, some groups of people are exploited as producers, where they are paid less than minimum wages. Therefore, as a consumer, they get exploited as well. This then passes on to their access to health, schooling, sanitation, housing, and so on.

Individual Liberty

The Preamble, therefore, says that the State, in India, will assure the dignity of the Individual. ‘All citizens men and women equally, have the right to an dequate means of livelihood, just and humane conditions of work, and a decent standard of life and full enjoyment of leisure and social and cultural opportunities.’

When economists and policy makers talk of ‘inclusive growth’, it is the dignity of the individual which is at stake. Often, India’s characteristics such as high reliance on agriculture, a large percentage of unorganised sector, immobility of labour and the like are labelled as detrimental to India’s growth and development. One cannot help but ask: Whose growth’ Such perceptions by the academia are largely a result of the manner in which human beings figure in micro and macro economics. If you take a moment to think about it, you will realise that poor people-who are a heterogeneous group- is absent from our theoretical edifice. Why’ Who are we analysing’ And to discuss poverty, we have created a sub-discipline called ‘development economics’.

In any case, human dignity appears to be of lesser importance than the computation of growth rates using yearly and quarterly data. We are satisfied to decipher whether stock market exhibits volatility or not’ Or whether market A is co-integrated with market Z. Does this satisfaction come from the fact that stock market data is easily available’ What about the farmers, the child labourers, the migrant labourers who are forced to leave their place and family, of street vendors, and all the others who actually engage in production’

Until dignity of human life features implicitly or explicitly in economics, it will continue to be a lifeless endeavour. Sadly enough, we are taught economics is the study of choice’ Whose choices’ Those who have the ability to choose’ It is time we discarded such economics and re-visited economists such as Adam Smith, Joan Robinson, Amit Bhaduri, and others whose works show a concern for humans.