Economic adviser

Economic adviserThe Economic Adviser is a recent institution. It is just in the post-war period that economists have been coming out in increasing numbers in the role of professional and paid advisers to governments. Not that the older economists did not ‘advise’; they did.

In fact the entire system of what is known as ‘classical political economy’ grew around practical issues, and the generalizations that it carried were specially designed to offer prescriptions of policy. Adam Smith was an advocate of free trade, Ricardo of monetary discipline and Malthus of population control. However, to ‘advise’ was with them a sort of passion, not profession. They deduced economic generalizations and in the light of these generalizations examined the pressing problems of the day. They also saw to it that the generalizations suggested criteria for the behaviour of the State in relation to society.

Gradually with the emergence of the Neo-classical School, economic theory was shorn of its political bias and it took on the character of a science. Economic theory became just an instrument of explanation and ceased to be an engine for the designing of policy. Political Economy was buried and we got Economics instead. By and large economists became disinterested analysts, bound by the self-imposed restriction arising from their acceptance of the philosophy of neutrality towards ends.1 Comparative stability in the economy of the West and a spirit of complacence born out of political impotence in the East encouraged this attitude of economists.

Circumstances have changed. The great fluctuations of trade and industry that characterized the economies of the West during the inter-war period, the total war and its economic implications, the post-war dislocations, political independence in the post-war period of a number of countries in the East, a growing awareness in these countries that poverty and economic stagnation are not a necessary evil all these have brought the economists and the public again closer together.While economists are becoming more alive to their responsibilities to the society, the society is also paying increasing attention to what the economist has to say on matters of policy. In the process economic theory itself is becoming more operational in character, and the economist is assuming more and more the role of a technician.

The Economic Adviser is an indispensable appendage to State administration nowadays, thanks particularly to the rapid expansion of economic activities in the public sector. In our own country, we have an Economic Adviser with a fairly big staff attached to most of the more important Ministries of the Union Government, besides a whole directorate of economic research associated with the Reserve Bank of India.

The result is that whereas previously the economist, even when urged on to prescribe policy, would fix their eyes on broad problems of the society, today our official Economic Adviser is called upon to attend to details; you never know what sort of question your Minister will ask you to answer Questions may range from whether a particular industry should be in the public sector or the private sector to what, in a given set of circumstances, should be the quantitative relation between the deposit rate and the loan rate of interest of banks, or perhaps to even more minute aspects of the economy.

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