Whence the Social Sciences ? - 3 : Economics.

Finally got a decent amount of time off from work and studies and all that to write some more.
Last time was some comments on method of the early social scientists, and now something more about economists in particular.

Economics, in the early stages as is now, was a means to understand the patterns in the varied economic transactions conducted by people, how some things came to be valuable, and some worthless. The times of the early economists was during when the feudal systems were slowly going out of fashion, and a new phenomenon called the market was being observed. Here, the market is not some place you go and buy your vegetables, which is but a manifestation of it, but rather in a more general sense where the three important goods, Land, Capital and Labour were to be freely sold and bought. Neither Land nor Labour were previously freely exchangeable under the feudal system.

The transition from a conservative feudal society to an upstart, sanguine capitalist society was not a smooth one, and the varied angles are described well here. The first few attempts to explain economic behaviour came from the Physiocrats and the Mercantilists. Mercantilism was taken apart later, and Physiocracy was never fully accepted. The watershed that occured was, as everyone knows, the publication of the Wealth of Nations by Adam Smith. The book is massive, at times boring, at others highly insightful, at others hugely frustrating, but awe inspiring if you consider the amount of work that would have had to go into making a work like this. Though most of his theoritical contributions to economics are no longer accepted as they were presented by him, there is no questioning his influence on present day thinkers, a famous example being Amartya Sen. His normative doctrine about allowing people free to do things as they choose to, and removal of barriers are definitely still applicable in modern society. It is a shameful thing that many industrialists in the years following Smith used laissez-faire as an excuse to exploit people rather than working for the upbringing of society as a whole which Smith hoped for.

The notable economists who followed him were witnesses of the devastation of the poor that the factory system brought about, and were definitely of a more gloomy and less optimistic outlook.
Malthus, Marx are definitely good examples. There were also some not slightly mad personalities who dreamed of a perfect society which could be brought about, people like Saint-Simon and Fourier (not the scientist!).

Though all of these were prone to seeing grand visions of a perfect world, (except Malthus, of course, who thought people would breed faster than the earth could supply food for them, and therefore mankind would implode upon itself), there was one thing common about all of them : They were deeply concerned about the lot of the common man, and tried to find methods which would help ameliorate the plight of the masses.

Then came another watershed : Edgeworth. The man tried to mathematically study economic processes and his method became quite popular, since it dealt with numbers which don't complain, talk back or revolt. The previous problem of studying man's monetary associations with another was linked to solving linear algebraic systems or differential equations. The philosophy which made this possible is known as utilitarianism, and was popularised by Jeremy Bentham, a social reformer from England. It is said of Bentham, the amount good that he did in practice, was counterbalanced by his cloudy philosophising about the innate nature and urges of man. His normative doctrine goes something like this : Man has two masters, pain and pleasure. He always tries to reduce pain as much as possible, and increase pleasure as much as possible. If a man goes after anything but pleasure, he is obviously irrational, and therefore does not count. Even people dying in war, sado-masochists are after pleasure. We choose things purely because they give us pleasure. If we get x units of pleasure by acquiring one thing, and y units acquiring another, we get something like the sum of pleasures if we acquire both. Thus, what is morally right is that which gives us pleasure, and whatever causes pain is morally wrong. However, since people can have opposing desires, moral correctness for the society is that which gives maximum amount of pleasure for the maximum amount of people. He went on to give a felicific calculus that helped one calculate the sum of the pleasures of individuals to calculate the total pleasure for the society.

This philosophy, in a highly refined and sophisticated package is what is presented to us as economics. Once the trivial parts about how to add pleasures and pains and knowing the nature of man are settled, one can go about building a superstructure which will help us understand economic behavior. Now, since one accepts that pleasure is subjective, we go about converting it to an objective measure which can be measured. Veblen goes about showing how economic behavior is related to the current culture and institutions, and cannot be seen as a static process in his Limitations of Marginal Utility. Though it has had its detractors, Utilitarianism has been spectacularly successful and tenacious and survives to this day, not least because of the fact that modern economics was built on it.

Thus, we see how economics evolved from an attempt to understand economic behavior by empirical studies to modelling empirical data to form a mathematical expression which claims to explain away human uniqueness. May be there is a model for that too, who knows.

Review : Ecology and Equity

Ecology and Equity is a book by renowned non-fiction writer Ramachandra Guha and even more renowned ecologist Madhav Gadgil. This was written in the early 90's, when liberalization was just setting in, and the faults of centralized planning were beginning to be glaringly obvious. Thus, it is but natural that this book has certain 'Bash the Babus' overtones, but even these are quite justified in retrospect.

Both authors are capable of writing this on their own steam, with Guha involved in ecological history of India from quite a long time before the book was written, and Gadgil's resume need not even be mentioned. The extremely readable writing style was no doubt Guha's contribution to the most part, and the empirical grounding of the book, the numerous case studies on which the argument of the book is based is mostly Gadgil, IMO. Overall, this a highly readable (and short!) book, but one which captures the overall ecological state of India at that juncture well. Some of the concerns raised by the authors have been addressed as of now, albeit in a lukewarm fashion, but there are many others which are still hurting India, like a thorn in the flesh.

The authors present a new analytic framework from which to interpret the state of present India, one which is based on an ecological perspective. They argue that this better explains the troubles of the Indian people better than the notions of class and caste. The three categories that they divide contemporary Indian society into are :

• Omnivores, those that have the money to get resources from any possible part of the planet, and in fact, do so. Most people reading this blog would therefore fall in this category.
  
• Ecosystem people, those that depend on the surrounding forests, lakes, rivers, flora, fauna to meet their subsistence need.
• Ecological refugees, those ecosystem people who have been uprooted from their natural ecosystem due to exploitative behaviour of the omnivores and thus have to live on the fringes of the omnivore habitat to eke out a living.

Analytical frameworks and fancy labels apart, these three categories do in fact help in a good interpretation from an ecological perspective. That they are better than class and caste is something that could be debatable, but if supplemented with caste and class analysis, it could lead to a more rounded picture.

The book has two main divisions : The India that was and The India that might be. One discusses the present state of conflict and tensions, and the myriad reasons for the same. The other proposes practical(?) policy alternatives to the present ways of the Government. The alternatives are neither the 'Get back to the village, let's all till the land' kind, nor 'let's go out there and make some serious money, fellas' kind. It balances both and though the authors themselves never mention it, internalizes frugality, which being a subjective norm, is really really difficult to imbibe into practical policies.

The authors have an understandably serious grouse against the centralized, planned Government of the yesteryears, and show with a large number of case studies show how this socialist kind of Government which was adopted by the creators of the modern Indian State, has failed miserably in its objectives of equity, and went on to commit wholesale destruction of the ecology as well. Any centrally planned Government needs a strong 'centre', and after Nehru, there has been no politician worth mention who has been able to provide such a strong centre. Almost all the other Governments have been shaky, (except for the Indira Gandhi regime), and the present state of politics is known to all. Centralized planning, as in Soviet Russia and China work because of the lack of political democracy in these places, which cause very strong Governments that do not fear public opinion while doing what they think is right. Whether such a Government is justifiable is highly doubtful, but it has become clear that it does not work in an open democracy like India.

Chocolates from Switzerland, beer from Germany, wine from France, music players from Korea, apples from Spain. This is what one would see if one entered an omnivore household. However, this in itself is not a bad thing, but the authors show the many ways how omnivores have been given resources, heavily subsidized by the Government, at the cost of ecosystem people. Good examples are :

• Big dams, which have displaced as many people as the entire population of Australia since Independence.
• Deforestation and monoculture forests to supply cheap raw material to paper, rayon and other industries.
• Untreated industrial effluents, which destroy the means of subsistence of people downstream.
• Diverting water for many many kilometers to supply in urban areas, at the cost of local inhabitants, who have no gain from them.

The list can go on. 14 Sep, Economic Times reports that oil marketing companies make a loss of more than 50,000 crore for selling oil products at lower than cost price, which is then subsidised by the Government. We get electricity at a pittance compared to what it costs the Government to produce and distribute. Water is pumped up almost 1000 feet to Bangalore city at tens of crores per month, and most of it goes unaccounted for anyways. Chamalapura threatens to destroy the local ecosystem to produce huge amount of power, for which there is no demand nearby, but only in distant urban centres. Thus, villagers become ecological refugees. The beneficiaries ? You and I, of course. Forests are increasingly becoming recreational areas for the urban population while the people who have lived for ages there are being thrown out saying that they are degrading the forests. But one can pose the question as to how those who have being living sustainably with the forests for centuries suddenly become poachers, smugglers and so on. The book tries to give a solid answer.

After a survey of the India that is, they propose a future India that might be, based on decentralization of power (difficult, but happening), community based resource control (very difficult, delicate) and removal of subsidies for those who can afford to pay (won't happen, since these are also the ones that control the Government).

One can give this book a decent read, small as it is, and understand why the things that we take for granted are exactly the things that keep backward people backward, and not their laziness or ignorance, which plays a part, but not as significant as the Government would have us believe.