PROF--C T KURIEN

Economics of Real-Life: A New Exposition by C.T. Kurien; Published by Academic Foundation; Pages 249 ; Price Rs.995/-.

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“Age does not wither nor custom stale her infinite variety" sang the Bard of Avon about Cleopatra. The same can be said of Prof.C.T.Kurien who at the ripe old age of 90 has produced this delightful book. He is an eminent Professor of Economics. His students are legion and are found in every region, a number of them in exalted positions. He was Professor in Madras Christian College ;Director Madras Institute of Development Studies. He was one of the six economists invited by the Secretary General of United Nations to make an independent evaluation of the Global Food Situation.

The framework of the volume is one that permits  multidisciplinary analysis and throws the searchlight on the drawbacks  mainstream economics perspective. To name these, they  are emphasis on equilibrium, reliance on the  concept of a utopian economy, the artificial distinction between a market economy and the political system and public sector. He deviates from the mainstream division of the economy into households and firms, identifying instead  different units and the links between them.

To begin at the beginning, Kurien began with a study of Economics  fondly believing  that “through a study of Economics, (he) would be able to understand the causes of poverty and contribute towards its eradication.”

He  became a teacher and was blessed with brilliant students. He expended considerable time on  issues connected with poverty. He discovered his enemies were his own brethren in his profession—the neo-classical economists . He was distressed with role of government in alleviating poverty. He declared that  a ‘high growth’ rate means little unless it leads to reduction in poverty.

Kurien’s next stop was the Temple of neo-classicism --Stanford  ruled by  the Arch-priest  Kenneth Arrow who wore a crown in the guise of the  Nobel Prize. Kurien failed to be enchanted with the new-fangled  mathematical models and accompanying . He was convinced  that these exotica  distanced itself from  reality. He believed that for countries like India with “surplus labour” and prevalence of dual economies the models could hardly explain the factual position. His long discussions with  Arrow  did not take him anywhere near solution.  Kurien wrote bluntly  “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!”

Kurien ploughed a lone furrow and resorted to  an independent course of research based on economic issues rooted in real life. Wrote Kurien,” I have used ‘Production’ and ‘Transaction’, the two basic activities, to probe into the working of the most rudimentary economy to the most complicated economy of our times”. Kurien strongly backed eminent  development economists  like Rosenstein-Rodan, Ragnar Nurkse and Arthur Lewis. He assigned  a value to labour, not merely  as a factor of growth but also as a necessity to lift people from poverty. While many economists embraced Marxism  Kurien kept a distance . He opted for  the empirical method and published several books including Theoretical Approach to the Indian Economy , Rethinking Economics: Reflections Based on a Study of the Indian Economy and Wealth and Illfare . The present book is another step in Kurien’s journey.

According to him “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 book is a successful attempt to delineate his ideas in a simple and straight-forward manner.

Kurien has no faith in Adam Smith’s theory that the market is led by an ‘Invisible’ hand’. “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 inter-mediation of the producer-trader combine in pursuit of profits.” The book traces the emergence of the complex market of today from the beginning with to today’s sophisticated instruments of  money and banking.

Kurien highlights the invaluable  role of intermediaries, traders or agents who intervene between the producer and consumer.They lead to  “commoditisation” of markets where the producer (farmer) is far removed from the process. 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.” Kurien offers brief  accounts of the rationale of economic policies .  He proves how  economic policies are part and parcel of  society and politics. The  intervention by the State ,in fact, saved the markets on a number of occasions.

Kurien  analyses  the Indian economy and the policies of the government over the years . He believes only in growth resulting in abatement of poverty. According to him, “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 pooh-poohs  talk of  “high growth” in India since  it serves only the interests of the state, capital and a the richer segments of the economy.

Study of institutions forms an important part of economics. A nuanced view of society and its economic dimension can be developed through a focus on ownership, authority, inter-mediation and asymmetry of information. As intermediaries and knowledge asymmetries are important, social structures evolve, resulting from and enhancing differences.

 Kurien  presents a clear description of his analytical structure of the economy . It can be seen as a network of participants and activities, units and links. These result in nine different types . There are not only various types of households and economic units such as firms and banks, but also traders are separately identified. “If multilateral exchange is one of the main links in a modern economy drawing in practically all its different units into interaction, the role of the trader cannot be minimised” . In addition, he expressly states that the economy is “always in a state of flux”, challenging the perspectives that focus on equilibrium.

As a further step away from economics based on perfect competition and closer to reality, “most markets are controlled by a few producer-trader combines that can easily fix prices” .

One chapter is dedicated to  the emergence of MNCs and provides  a broad sweep of global world economic events since 1945.

 Central to the book is the view that economies are always changing, and so economics must adapt also to be relevant to the country and time under consideration. Consequently there is a need for ‘substantive logic’ based on the nature of the problem under consideration, rather than internally logically consistent axiomatic approaches.

Kurien’s book contributes in a big way to solving the problems faced by a Society with burgeoning needs and demands.His book is compulsory reading  for all students of economics and those who evolve policies.

P.P.Ramachandran.

18/11/2018.