[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

REIMAGINING INDIA
of globalization, for media gurus to triumphantly
embrace the market as the
panacea for all our ills. But it requires
some humility to recognize that economic
policy making, doing economics and
shaping public policy in the context of
poor and developing societies as ours,
requires also a deep sense of humanity.
A central issue in discussing the role of
the state and economic growth is the issue
about balanced growth, to avoid
growing disparities between states, between
regions and between different sectors
of the population. For example, one
of the major points of criticism by market
friendly economic reformers’ is that
policy and theoretical approaches, based
on ‘balanced growth’, has been the bane
of earlier economic policy making. Sukhamoy
Chakravarty one of our foremost
economists and who engaged in policy
with that deep sense of humanity, in dismissing
the debate about ‘balanced and
unbalanced growth’ as semantic, refers
ence to discussions of trade as a major
engine for growth and like Amartya Sen,
he recognizes “cycles of optimism and
pessimism in trade led growth”. As Sukhamoy
Chakravarty says, “the point I
am driving at is that it was not much due
to the alleged doctrine of ‘market failures’
in the sense indicated by fundamental
theorems of welfare economics that
policy-makers in both developed and developing
countries agreed to a theory of
state-directed industrialization, but from
a growth perspective based on data on
massive agrarian overpopulation in
South and Eastern Europe. Obviously
the extension of this argument to deal
The need to forge the new consensus that Sukhamoy
Chakravorty made a plea for in the 1980s is ironically
even more relevant now in the end of the first decade of
the new millennium
to the problem of surplus labour as a
more serious conceptual and policy issue
to deal with, especially in rural areas.
Economist of the intellectual caliber of
Sukhamoy Chakravarty, in addressing
such critical issues as that of surplus labour
also dealt with the problem of the
state. With regard to debate about the
state he points to the compatibility or
otherwise between the planning principle
and the principle of comparative advantage.
A dichotomy which he says has
been misleadingly drawn. This has refer-
with countries like India was done later,
although it was present in a general way
from the beginning”. So much for the arguments
about socialist inspired penchant
for state involvement in economic
planning and growth. In connection with
the extension of the argument on surplus
labour to underdeveloped areas, he refers
to the UN Expert Group Report of
1951 on 'Measures for the Economic Development
of Underdeveloped Areas.
'Chakravarty says, “this report reflected
the emergence of a ‘development consensus’
which lasted for nearly twenty five
years”. He then refers to the breakdown
of the consensus – “more prominently in
the 1980s, based on criticisms which were
first voiced by a resurgent neo-classicism
on the one hand, and a ‘radical critique’
of the left on the other”. This he says
does not imply a demise of the sub-discipline
of ‘development economics’, but,
“the need to forge a new consensus” (emphasis
added). The need to forge the new
consensus that Sukhamoy Chakravorty
made a plea for in the 1980s is ironically
even more relevant now in the end of the
first decade of the new millennium.
We must consider ourselves very fortunate,
that our nation has been blessed
with a whole number of good, intellectually
honest economists. In the context of
looking at the perspectives of economic
theory and policy, there is much that we
can glean from the insightful writings of
economists like the late Sukhamoy
Chakravarty, (who along with Amartya
Sen) belongs to that unique class of intellectually
honest economists who have not
done their economics only to pander to
the tunes of the times. Economists who
always did their theoretical and practical
policy work, not only standing above
vested interest pulls and pushes but also
with a deep sense of humanity unconcerned
whether that got them applause
from the galleries or not. Sukhamoy
Chakravarty’s contributions in the context
of the discussion on state and markets
are several and relate to the role of
knowledge, the significance of coordination
failure and surplus labour, the need
to go beyond ‘the market failure’ or stages
of growth argument, the impact of
economic organizations from the viewpoint
of “ensuring creativity, growth and
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