In spite of Professor D. P. Mukherji’s ‘Lament for Economics’,1 economics is prospering. And it is prospering, not as a handmaid to sociology but in its own right. Economists have no doubt been social thinkers and some of them have made important contributions to social philosophy in a broad sense.
But their contributions have been enriched by the fact that they had economic tools in their possession which they could use for the sharpening of their understanding of social phenomena. And these tools were devised with reference to a particular type of relationship between man and man the type of relationship, that is, that finds expression in the market for goods and factors.
Professor Mukherji complains that Indian economists are Keyn-esians and wants them to be Marxians, if not ‘Embryologists’. I happen to be an Indian and, if anything, an economist. I must confess that I am neither a Keynesian nor a Marxian. I am an eclectic. And I suppose most of the Indian economists are that. The Indian economist, I suppose, will agree to take the basic question that Keynes asks as the starting point of his enquiry. Living in an economy which has for years been stagnant and where unemployment is chronic, he cannot just escape the question why resources remain less than fully employed. He will perhaps agree also to take a few tools from Keynes’s tool-box.
But the answer that he will get and the ‘social philosophy’ that he will be led on to will be anything but Keynesian. In spite of the support that Indian economists have often given to the policy of deficit-financing in the context of economic planning, let it be understood very clearly that they are aware that they live in a non-Keynesian world where, on the economic plane, it is ‘shortage of capital’ and not ‘deficiency of effective demand’ that is responsible for stagnation and unemployment and where, to use Harrod’s apt expressions, the ‘warranted rate of growth’ is below and not above the ‘natural rate of growth’. To secure full employment we must invest more, but the process must be accompanied by an increase in the ‘propensity to save’. This certainly is not Keynesian.
At this point the Indian economists will perhaps turn to Marx or further back to Adam Smith. He may utilize the Marxian concept of ‘economic surplus’ or the Smithian concept of ‘productive labour’ to know what in his economic environment limits the possibilities of growth. This does not, however, compel him to go all the way with either Marx or Smith; the Indian economist, if anything, is an idealist and also a believer in interventionism.
Does Schumpeter help us? Schumpeter for whom Professor Mukherji shows such great enthusiasm? I suppose, not. Our society is not entrepreneur-orientated.
If it were, we would have seen our growth level bumping against the wall of the ‘natural rate’ (a la Harrod) and making for chronic inflation. Our experience till recently has been just the other way round. The inflationary pressures that we have had in recent years are exogenous.