When India gained Independence in 1947 and the national attention was “to gain economic freedom,” C.T. Kurien was starting college and he chose to study economics. As he explained in an interview to the World Economics Association in October 2012, he hoped that “through a study of Economics, (he) would be able to understand the causes of poverty and contribute towards its eradication.” Later, he became a teacher and inspired generations of students. Alongside, his research on poverty-related issues continued. He was indeed dissatisfied with the government over its policies towards the poor. To his dismay, he found that he had to do more battles with his own colleagues in the profession — neo-classical economists.
Solving the riddle
For doctoral studies, he went to Stanford which was then a noted neo-classical centre. Kenneth Arrow adorned the faculty and was awarded the Nobel in 1972. Even in those heady days of neo-classical economics, Kurien was not enamoured with the mathematical models or algorithms its practitioners used. Kurien felt that the more elegant and sophisticated the theories, the farther removed they were from reality. In particular, he found that the models could not adequately explain the real-life situations in developing countries like India with “surplus labour” and prevalence of dual economies. His long exchanges with Arrow could not resolve the conundrum. As Kurien explained, “The problem with neo-classical economic theory is that through its abstractions it has set up an economic universe almost completely removed from the real world and then claims it to be the ‘ideal world’ to be established on earth!”
He did not allow himself to be trapped into it; but continued to pursue an independent course of research based on economic issues rooted in real life. He was determined to treat “labour” as a resource which was not inanimate “like sands in the Sahara.” Agreeing with reputed development theorists like Rosenstein-Rodan, Ragnar Nurkse and Arthur Lewis, he was keen to assign a value to labour, not only as a factor of growth but also as a necessity to lift them from poverty. Many economists disenchanted with neo-classical economics turned Marxian. Not so Kurien. He chose the empirical method and published several books including Theoretical Approach to the Indian Economy (1970), Rethinking Economics: Reflections Based on a Study of the Indian Economy (1996) and Wealth and Illfare (2012). The book under review maintains the same stream of thought organically.
Kurien has always held the view that “the real challenge in economics is to identify the field of enquiry for which it is necessary to have a satisfactory notion of what the ‘economy’ is and to view it as an “Evolving Complex System.” It is necessary to have both conceptual and empirical approaches. This was his answer to neo-classical theorists who sought to strait-jacket them with abstractions. This book succeeds in elaborating his concepts with extraordinary skill, totally free of jargon.
Complex market
The book traces the emergence of the complex market of today from the beginning with households, barters, national and international economics and the role of money and banking. By this narration, he is able to dismiss the myth that the market is led by an ‘invisible’ hand. As he says, “The capitalist market is, thus, not the mysterious ‘invisible hand’ that steers the economy; nor is it a smooth flowing stream. It is a choppy river expanding through the visible intermediation of the producer-trader combine in pursuit of profits.”
The most valuable contribution of the author is to set aside convincingly the neo-classical premise that the “market” consists of producers and consumers who react directly at the atomised or individual level and set the price through the operation of supply and demand curves. They ignore the role of intermediaries, traders or agents who intervene between the producer and consumer.
The role of intermediaries has several dimensions and also creates distortions. It creates “commoditisation” of markets where the producer (farmer) is far removed from the process. “Production” of goods has been replaced by “transactions.” With trading and finance having a dominant role, trading and/or arbitraging in “transactions” become an end in themselves. Financialisation, again, is seen as “the pattern of accumulation achieved through transactions in the financial sphere rather than through production of commodities or through trade.” Newer instruments of finance were devised to promote markets for them. They lost touch with the real economy and created the great economic crisis in 2008.
In several sections, the author offers what he calls “historical snapshots.” They are economic historiography or lessons given in capsules! This is possible for a scholar who has closely followed global economic developments for over six decades. In short, summarised accounts he explains how economic policies came to be adopted. They also vindicate his view that economic policies are embedded in society and politics. More importantly, they suggest how, at critical junctions in history, the market was saved by state intervention.
The India context
Part III reviews the Indian economy and the policies of the government over the years in a synoptic way. Kurien has no love for growth per se unless it leads to reduction in poverty. He takes the view that, “for the vast majority of people, livelihood remains a precarious issue after approximately five decades of ‘planned development’ and two-and-a-half decades of high growth.” He holds a dim view of the nature of “high growth” in India as it serves only the interests of the state, capital and a minority segment (the rich) of the economy.
Prof. Kurien says that he wrote the book from memory since he had gifted away all his books to research institutions in Chennai when he retired to Bengaluru. The outcome shows the subject he chose in college is in his DNA. The book is a must for students of economics — and policymakers.
Economics of Real-Life: A New Exposition ; C.T. Kurien, Academic Foundation, ₹995.
