Indian economists, particularly of the older generation, have been somewhat allergic to theory. It is about half a century that Economics has been functioning as a separate subject in our universities the Economics Department of the University of Calcutta had its Golden Jubilee the other day, and the other older universities may perhaps follow suit soon.
Economic Theory has also been a compulsory subject in the postgraduate course in all the universities in the country. And yet till recently very little work of any importance has been done in this field. Interesting factual and historical studies have been done in our universities, not unoften with a little mixture of politics and policy formulations. But economic theory as such, which is supposed to give direction to factual studies and to form the basis of policy prescriptions, has remained altogether a neglected branch of study in the country.
Isolated cases can no doubt be cited of individual workers attempting to fill in small gaps here or there in the structure of economic theory. But substantial contribution to the advancement of the science which is what theoretical research should aim at there has been hardly any. So theoretical economics is important for a country.
This is surprising. The Indian mind is traditionally speculative and is supposed to lend itself more to abstraction than to crude reality. Are not our ancestors builders of philosophical systems which provide sustenance to thinking minds even today?
And have not our scholars made notable contributions to other sciences even in the modern age? Considering the general intellectual tradition of the country one would surely expect Theory rather than Organization to have been more congenial to the Indian economist. And yet this is just what has not happened. If one looks at the history of economic studies in India, one is impressed by a certain lack of direction and system in them; useful as they are in their own way as ‘description’ of the Indian economy, there is little attempt in them at generalization. It is remarkable how indifferent we have been to economic theory all these years. So theoretical economics is important for a country.
Why this ? It would be wrong to say that there was no provocation. Stagnation itself ought to have been enough provocation to the economic theorist. The properties of the so-called subsistence economy, trade nexus between the agricultural sector and the urban sector, the character of primitive accumulation all these provided substantial piles on which to build a structure of economic theory. Ingredients of such a theory had indeed been already there in Smith and Marx. Yet little attempt was made to put them together and to evolve a theory in adaptation to our economy. Nor was any creative interest shown in the contemporary marginalist theory. We shunned the so-called ‘western economies’, but the endeavour to replace it was lacking.
Lamenting the failure in America, despite Carey’s brilliant intuition, to produce a theory of economic progress alternative to classical political economy, Schumpeter has said: ‘Well, opportunity is only a necessary and not a sufficient condition for a great performance. It does not itself produce the man capable of using it. And the brains that could have done the job were producing boots.’1 Now the charge that our brains also were producing boots would surely be gratuitous. Yet the fact remains that Economics did not attract the man capable of building a theoretical system. The pioneers of Indian economic thinking, great as they were in many respects, were not economic theorists.
In their impatience with the liberal tenets of classical political economy which were obviously at variance with the requirements of our economy, they repudiated even the tools of analysis that it provided. This was damaging to the progress of economic theory in the country. For even when economics came to be adopted as a subject for academic study, the influence of the early pioneers persisted, and there grew a distrust concerning Theory as such. The fact that contemporary economic thought was dominated by the marginalist theory of value which was far too remote from the needs of our economy added to this distrust.
These old inhibitions are disappearing. The post-war development of economic theory is too close to our problems not to have evoked response from our economists. And some of them, mostly of the post-war generation, have made notable contributions to it in recent years. So theoretical economics is most important for a country.