<b>Shreekant Sambrani:</b> Learning from masters

A critical take on academics

I first came to know of Kenneth Joseph Arrow, easily among the brightest post-Keynesian economists who passed away last Wednesday, in 1966. I had just joined the economics doctoral programme at Cornell University after six straight years of engineering education.  The programme advisor, later my dissertation guide, insisted that I enrol in two advanced graduate seminars, one on history of economic thought and the other on the then emerging field of development economics. This latter introduced me to Professor Arrow through his works.

Economics was part of the undergraduate curriculum at my alma mater Indian Institute of Technology, Bombay, but the courses gave us basic concepts of national income, perfect competition, supply and demand curves and not much else. So these seminars were not exactly easy work, especially since the professors in charge, two of the oldest in the university, lived up to their well-deserved reputation of being tough taskmasters who demanded that the students read original works. Two weekly sessions each of the two seminars often meant reading over 600 pages of mimeographed texts, chapters in books and papers in journals. But that turned out to be an exhilarating and enlightening experience of a lifetime.

We read Aristotle, St Augustine, Adam Smith and the whole line down for the history of thought seminar. The development economics list began with Allyn Young’s celebrated 1928 essay on increasing returns and economic progress which Nicholas Kaldor called the progenitor of growth theory, 50 years ahead of time. We skipped then to Messrs Harrod and Domar, the then high priests of the new field, Ragnar Nurkse, Jan Tinbergen, T C Koopmans, W Arthur Lewis, and the younger generation of Hla Myint (on underdevelopment), Amartya Sen (on choice of technique) Robert Solow (on the golden rule and exogenous growth), James Meade and Jagdish Bhagwati (on international trade) among others. The Nobel Memorial Prize in Economic Sciences was still three years away, so we did not know that virtually all of these scholars would be its recipients soon.

I discovered some substantial areas of convergence between the two streams of study. There was a remarkable overlap between the autarky underlying mercantilism and the infant-industry argument for affording protection to underdeveloped nations (the politically more correct “less-developed countries” or “developing economies” were not current coinages then). I wrote a term paper using the Calico controversy about the import of Indian textiles into the eighteenth century England to highlight this, much to the delight of the two curmudgeons.  Consulting my carefully preserved notes of those days, I find that the Anti-Corn Law League of the early 1800s and Prime Minister Robert Peel were globalisation pioneers two centuries earlier and Donald Trump a true-blue mercantilist.

Mathematical models had already established a beachhead in economic theory then, though they were not de rigueur as they are now. My colleagues struggled through the mathematics while I tried to make economic sense of the mathematics I understood. That was my first source of affinity for Professor Arrow. He was an outlier even in the galaxy of brilliant minds we were daily exposed to. His formulation of the social impossibility theorem was sheer elegance. Without any complex assumptions or mathematical jugglery he proved that in a democratic set-up, it would be impossible to arrive at a social preference that achieves Pareto optimality, that is everybody’s welfare is maximised. That is the essence of his theorem, but it has far-reaching consequences for not just welfare economics (as Professor Sen has elaborated) but also for later theories including gaming solutions for complex choices. Trade-offs of outcomes with compensation for potential losers (as we see in rehabilitation of project-affected people) are now commonplace, but they were not factored in until the articulation of the Impossibility Theorem. Its further validation is streaming in just now, in the form of the Mumbai civic body election results, which may compel the two main rivals to a power-sharing compromise.

My much-thumbed, dated copy of Professor Arrow’s Social Choice and Individual Values occupies a place in my bookshelf adjacent to the equally thumbed and dated Laws of Thermodynamics by Josiah Willard Gibbs (who is infinitely more difficult to understand) and the far more voluminous The General Theory of Employment, Interest and Money by John Maynard Keynes.

I had begun studying economics with an engineering mindset: If a problem is defined, a solution can be determined sooner or later. The bridge across even a deep ravine has definite parameters, so growth of even a poor society can be charted along a defined trajectory. Professor Arrow was the first to shake me (and I suspect many others like me) out of this deterministic approach. The Solow-Swan re-formulation of an equally deterministic Harrod-Domar model taught us how easy it is to fall off the knife’s edge of the golden rule of savings rate.  

Apart from the sobering return to the probabilistic world, my other takeaway from that year of reading deliriously half a century ago is never to accept anything at face value and always to go back to the source for intellectual legitimacy. So if you find me argumentative, blame the masters!

Every week, Eye Culture features writers with an entertaining critical take on art, music, dance, film and sport