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Not economists’ fault

This refers to the article “A Nobel Prize for Political Science” (Nov. 14). The author’s claim for a Nobel Prize for the subject is much appreciated, but not his criticism of Economics, especially on the ground that the current economic crisis was not predicted by economists. The question on economists’ failure to predict the crisis has been raised all across the world. There were economists like Minsky, whose theories were able to visualise the crisis that obtains today. We are doing a post-mortem analysis of the crisis with the help of Minsky’s theory.

Economists, probably by nature of their personality, confine themselves to university departments and journals, rather than creating public awareness. Markets today are driven by finance professionals, who are trained to find ways to maximise returns. Neither does their curriculum provide in-depth inputs from economics, nor does the industry listen to economists. To quote an example, if the RBI does not reduce interest rates, the usual (and probably knee-jerk) reaction of the stock index is to fall. Is it practically possible to fulfil the market’s expectation and go on reducing interest rates? If so, what will be its effect on the overall economy?

N. Prasanna Venkatesan,

Chennai

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