During early November, while addressing a huge rally at the national capital attended by several hundreds of small farmers, labourers and the ordinary sections of the society, the economist- Prime Minister of the country reiterated that the foreign direct investment in retail trade would bring huge benefits to all of them. Believing that the Prime Minister and his elite group of policy makers know much better economics than the roti-kapda issues that confront them every day, the crowd cheered him. Later when some curious reporters asked a few of the participants from the enthusiastic crowd as to what was the meaning of the foreign direct investment, they replied that they had no idea about it.
They are ordinary people from the lower strata of the economic system. They are honest, as they do not need to pretend. In fact most of the people, including the educated sections, believe the economic theories and the economists who explain them. Hence the economic policy making is left to the economists and the administrators thinking that they would be able to plan for the country better, as they have more knowledge of economics than others.
In turn, most of our economists believe that the western economic ideas and approaches would help us guide us our nation. The colonial mindset that dominates the thought process refuses to allow our economists to look at the realities. They do not comprehend the economic history of India, the country that dominated the global economic arena for most of the time during the past two millennia and earlier. They also fail to realize that the contemporary Indian progress has been possible in spite of the unsuitable frame work of the policy makers after independence.
The noted economic historian Andre Gunder Frank has shown as to how the economic history of the world became ‘Euro-centric’ during the nineteenth century, after Europe promoted its own historians and made use of them for selfish interests. The decline of the Asian economies and the rise of the west during the subsequent periods have helped them to place their ideas and approaches as superior to that of the others in the world. The introduction of the new education system alienated the natives from their roots and made them look at India from the western perspectives.
The end of colonialism signaled the decline of the European domination. Subsequently the US emerged as the dominant power during the twentieth century. As a result even after sixty five years of independence, the policy making in India continues to be influenced by the west. This is really disturbing as the western ideologies and approaches have been continuously failing one after another during the last four hundred years.
From the feudalism of the seventeenth century to market fundamentalism of the twenty first century, none of their ideologies rest on stronger foundations. All of them suffer from serious flaws, as their economics look only at the material aspects, failing to visualize life in totality. As a result their economists put forth ideas that are not suitable, knowing well that they are not in the overall interests of the society.
The noted British economist John Manyard Keynes has been recognised as the most influential economist of the twentieth century and one of the founders of modern macro-economics. His ideas command a large influence on policy making even now. Note what Keynes had said during the 1930s: “For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still.” The economic theories of the subsequent years primarily rested on self- interest as the major objective.
After many years of experiments, their own economists have begun to realise that their theories have failed to provide results. As a result they are questioning the very foundations of their models. Harvard economist Stephen Marglin notes: “The assumptions of economics are only half-truths about people, even in the culture that gave birth to economics. …. Modernity- economics- contends with the pre- or non-modern in all of us, which is why the conclusions of economics are contestable even within the modern west.”
The incomplete assumptions of the modern approaches lead even the learned economists to make wrong conclusions. Alan Greenspan is an economist who led the Federal Reserve Bank of the United States of America as its Chairman for 18 years between 1987 and 2006. He is a doctorate in economics from the New York University and was regarded as the top economist-administrator in the world. He was given several high awards for his performance. During his stewardship, he advocated that savings were not necessary and reduced the interest rates for bank deposits.
Later during 2008, he was charged with failing to prevent the financial crises. Time magazine blamed twenty five persons as responsible for the crisis, placing Greenspan third in the list. He was asked to appear before the Senate Committee appointed to enquire into the crisis and present his views. For the first time, he openly admitted that market ideology contains flaws and his understanding of the system has been proved wrong.
The global crisis of the recent years is only the latest symptom of the large scale failure of the western approaches. Besides being a failure at the economic level, the western theories disturb the foundations of the social and community systems necessary for life. Marglin notes: “But over the past 400 years, the ideology of economics has fostered both the self-interested individual and the market system, and has undermined and continues to undermine the community.” Thus the western theories have alienated the basic relationships necessary for life among human beings.
The continued crisis in the west has now pushed them into confusion. They are not clear as to what should be the suitable approach, as their economic understanding remains inadequate. In this situation, we have to understand that their ideas and approaches would not help us. It is time that we realised the need for India-centric approaches based on our own strengths and priorities, so that the country could move forward taking all the different sections together. It is possible for us to make new approaches as we have strong foundations and functioning systems that are unique to the country.
But the approach of our economists and policy makers continue to remain tuned to the west, in spite of all the evidences against copying them blindly. It is not just the fault of our economists alone, but also the economic theories that they ardently admire.