C T Kurien and real life economics
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By Stuart Birks
Kurien may not be well known outside India, but his highly readable work over many decades highlights limitations in mainstream economics. The publisher of his recent book, Wealth and Illfare: An Expedition into Real Life Economics (Kurien, 2012), has provided a pdf of the book for wider circulation. It is available free for download from the World Economics Association website here.
On the face of it, the book is an introduction to economics. In reality it is an accessible outline and critique that incorporates aspects of alternative approaches to economics.1
It does not present these alternatives as competing schools of thought. Instead, Kurien indicates how the framing of mainstream economics overlooks important factors which are addressed elsewhere. Pluralists are likely to appreciate this perspective and it may lead some mainstream economists to reassess their interpretation of the dominant theories.
The book is in four parts, plus a conclusion, but I see it as having three sections. The first includes Parts I to III and develops a picture of economic activity by means of ‘thought experiments’. The result is a story outlining the evolution of economic relations as primitive pastoral communities develop into more complex, interconnected societies with division of labour and differences in income and wealth. The context is India, but that has its own advantages. Readers from elsewhere are drawn into a representation of social evolution uncluttered by their views of their own history. Presumably this was not Kurien’s intention. Nevertheless, it can be effective. Such detachment has been deliberately used in political writing for centuries in literature such as Bunyan’s Pilgrim’s Progress and Swift’s Gulliver’s Travels, not to mention Voltaire’s Candide.
The motivation for his approach is clear when contrasted with mainstream theory and its emphasis on a supposedly ideal system of markets in perfect competition. This latter is highly abstract. In 1966 Kurien critically assessed the nature of this approach relating it to Koopmans’ (1957) ‘postulational method’. In a series of lectures he presented it using a line of reasoning:
“…that theories are propositions derived from a model, and that a model is an ordered set of classes defined by the postulates. It is in this ‘universe’ and only in this universe, set up by the postulates, that theory, even in its purest state, has unconditional generality.” (Kurien, 1970, p. 24)
He describes theory as having two distinct aspects, the syntactical which uses logic to draw conclusions from propositions, and the semantic where the theory is related to the real world. We could conclude that Kurien has reservations about the semantic stage in mainstream economics. He would contend that the syntactical findings are being applied widely to real world problems without considering their applicability in specific instances.
Kurien’s thought experiment considers aspects of mainstream thinking, but his narrative clearly indicates the role of ownership, intermediation and asymmetric information. In a farming-based society some people have surplus land and are in a strong bargaining position. Some are at the other extreme, having no land and little bargaining power. This can lead, in time, to increased inequality. Similarly, when surpluses are taken to town to be traded, one farmer may take the surplus on behalf of a group of farmers. This person may gradually assume the role of sole buyer from the other farmers and gain more knowledge of the market where the produce is sold. Such specialisation can result in increased power and wealth for this person. Also, when farmers need loans to carry them through to harvest, those with funds are in a strong bargaining position and can set the terms of the loans. Structures and hierarchies develop benefiting some and penalising others.
Kurien’s narrative is of evolving social and institutional arrangements. The purely economic dimension is just one aspect of the whole. As such, Kurien not only gives a context for mainstream economics, but also highlights its limitations.
The second, shorter, section of the book is contained in Part IV. It describes the Indian economy as a whole, stressing that “Real Life Economics is unavoidably political economy”. Kurien looks at some of the data and challenges the perception of high growth in recent years. A breakdown by sector indicates that, while GDP has been increasing rapidly, the benefits have been concentrated in a small part of the economy, in particular the high-tech area. Meanwhile, much of the population has faced significant disruption and is actually worse off than in the past. Moreover, Kurien argues, growth should not be seen simply in terms of numbers, but rather as a ‘societal process’. It “impacts different sections of people differently apart from having tremendous ecological implications”.
Mainstream economics, by narrowing down the parameters of the analysis, fails to consider wider, dynamic, social and other implications such as these. In particular, the atomistic treatment of individuals conceals the importance of interactions and people’s place in society. I was recently at a symposium on neoliberalism in which it was asked why neoliberal ideas had become so dominant. One reason might be the dominance of a small number of core textbooks which comprise, for many students, their only exposure to economics. They are given ever shorter courses giving a narrow perspective with little or no recognition of limitations and alternative viewpoints.
The third section is the conclusion. It is shortest and might come as a surprise to some. It is where Kurien looks forward while also being at his most critical. He contends, with some justification, that dominant economic theories justify the capitalist economic order while failing to recognise the role of intermediation. This failing in the theory, along with capitalism’s characteristic of ‘dehumanisation’, lead him to look for alternatives. His recommendations are not as radical as some might expect. He has drawn attention to several phenomena, such as those that lead to increasing inequality and to lack of regard for social dimensions of society. He sees greater emphasis on these as a way to ensure that economic activity benefits many, rather than only a few.
Any framing emphasises some aspects and excludes others. Alternative framings can be useful for broadening our understanding. Inevitably, some will wish to challenge some of Kurien’s specific points and perhaps even the whole approach. However, his work highlights limitations of mainstream thought in a stimulating and accessible way. He also introduces readers to heterodox economics without overtly naming the alternatives. The uninitiated may be more receptive to such an approach in that it avoids the risk of preconceived judgements. Kurien is one of a large number of writers who present alternatives to the mainstream. It would be good to see such reading incorporated into the standard curriculum.
Hare, P. (2012). Vodka and pickled cabbage: Eastern European travels of a professional economist [Kindle edition] Retrieved from http://www.amazon.com/Vodka-Pickled-Cabbage-Professional-ebook/dp/B008IGP6RK
Koopmans, T. C. (1957). Three essays on the state of economic science. New York: McGraw-Hill.
Kurien, C. T. (1970). A theoretical approach to the Indian economy. London: Asia Publishing House.
Kurien, C. T. (2012). Wealth and illfare: An expedition into real life economics. Bangalore: Books for Change.
1 A similarly accessible book that questions the direct application of mainstream economics is Hare (2012).
From: pp.6-7 of World Economics Association Newsletter 4(4), August 2014 http://www.worldeconomicsassociation.org/files/newsletter/Issue4-4.pdf
As the author of the book I appreciate Stuart’s review bringing the book to the notice of a larger community of concerned economists outside India. I would however point out that the three concepts I have used to understand real life economics are Ownership (not Power as Stuart states) Intermediation and Asymmetry of Information, all of which are overlooked in the traditional approach to economics. Power is important, but in the economic realm it arises from ownership of resources and the ability to manipulate information.
Thanks CT. I acknowledge the error and have altered the text. Your book makes the point very clearly.
Dr Kurien has spent a lifetime trying to bring out these inadequacies of mainstream economics – and all of us indeed need to be grateful to him for that.
I would like to use this occasion to bring readers’ attention to what according to me is his real masterpiece – a book that goes by the name of ‘The Economy: An Interpretative Introduction’.
Thought the book is a 1990 publication, the material of that book is fundamental – and shall hence stay relevant for many decades to come. It is in that book that Prof Kurien has dealt with this approach of actually looking at economies (rather than abstract economic models that exist only in economics textbooks!) in great detail. I think anyone who is interested in a meaningful alternate approach to looking at economies and economics must go through that book.
The book is also a very useful contribution to Economic History – both of the world and India.
It is definitely a more serious book, and thicker as well:) But it is certainly not difficult to read or understand.
Interestingly, India embarked on a different economic path post 1990, and the book was written just at that juncture – so the second part of the book gives a good idea of this first phase of the Indian economic journey (1950-1990); also, it applies the approach discussed in the first section to the Indian context.
To all serious people who are trying to make sense on Economics (and are aghast at mainstream economics, i would urge and plead you to read this book. Trust me – it would be time very, very well spent. And you would be writing similar emails to all your keen friends after going through that book.