What are the most pertinent and current 21st-century challenges in economics? What are the options available to policy-makers today as they struggle to revive the global economy from a persistent slump? Why are teachers paid less than bank peons? Does socialism have a future? How does the Nobel Prize in economics affect the discipline and, in turn, our lives? What is Gandhian economics? Is it even relevant today? Is there an alternative to the Anglo-American economic model of market-based societies?
The Wisdom of Ants: A Short History of Economics, by Shankar Jaganathan. Westland Books, 386 pages, Rs.295. Published: November 2012.
Academic as most of these may appear, one or all of these questions have nevertheless surfaced in our minds at some point of time or another. Fortunately, there is now a treatise that looks at these issues and seeks to offer insights and answers for the non-economist in a manner unclouded by the esotericism of erudition or complexity of hard-core technical analysis.
In his second book, The Wisdom of Ants: A Short History of Economics, corporate accountant-turned teacher-turned author Shankar Jaganathan provides a fascinating canvas detailing the evolution of the discipline that can help the common reader understand not only the prominent schools of economic thought but also, more significantly, how they touch our everyday lives, decisions as well as current socio-economic realities.
With panoramic sweep, nuanced by the recounting of numerous revealing historical arguments and anecdotes, Jaganathan traces how economics emerged from being a relatively obscure and abstract field to a structured discipline that may be used to explain the basis for every aspect of human life and society - even issues such as marriage, child-bearing and human happiness.
As the author himself writes in his introduction to the volume, "Given (the) increased importance accorded to the economic lens in viewing human life, it is worth examining the factors that have led to this situation." That precisely sums up the motivation behind this conceptually vivid and lucidly narrated account of the history and philosophy of economics - a field replete with its inherent contradictions, resolutions and alternative approaches to addressing a particular problem.
Jaganathan begins at the beginning with insights into the earliest seeds of economic thought as evidenced in the writings and teachings of leading thinkers across four prominent world civilizations - Greek, Chinese, Indian and Islamic. While the discourse of Aristotle and Ibn Khaldun focused largely on personal ethics and the individuals way of life, Kautilya and Lord Shang brought to the fore timeless rules of public administration. Interestingly, we find that even as these lacked the structural form and tangibility of present-day economic theory, they were far more sensitive to considerations of equity, wealth distribution and social safety nets - problems that the world continues to grapple with to this day, despite the sophistication of economics as a field.
The book presents an intriguing and vivid sketch of the transition from this phase, where promoting personal wealth conceded priority to religious and ethical mandates, to one where enhancement of private property and economic issues earned social sanction and ultimate dominance over all other considerations. Following this train, it becomes easier to discern how and why arguments for pursuit of self- interest culminated in increased trade and exchange across Europe and later North America, and consequently propelled markets to the centre stage of almost all economic discourse.
Jaganathan also devotes considerable thought and space to the exposition of the role that the Nobel Prize in economics has played in the emergence of the market economy. The fact that the award consistently recognised and honoured theories advocating free markets over a period of four decades lent gravity and force to the arguments in favour of Lasseiz-faire. In a November 2012 interview with Tranquebar Times, the author goes so far as to raise the questions: "In a discipline like Economics that lacks the empirical evidence found in physical sciences like physics, chemistry and medicine, did Nobel Prize act as the substitute? Could liberalization and globalization have become the buzz words of the last two decades in the absence of Nobel Prize?"
The Wisdom of Ants would have filled a critical gap in popular economic literature at any juncture, but is especially relevant today as economies around the world struggle to figure a way out of the doggedly persistent slowdown that affects them since the great financial meltdown of 2008. It also puts into perspective for the present generation the continuous yet unresolved debate between demand-side and supply-side economists on the merits of a free market-driven economy versus one with active government intervention to resolve challenges related to inequality and social safety guarantees.
Almost as a corollary, it turns the spotlight on finding that very critical balance between growth and equality, between individual and social good and consequently, arriving at a more holistic measure of economic progress. The debate on the limitations of Gross Domestic Product as an indicator of economic well-being and its dominance in macroeconomic decision-making is traced from the earliest origins through various evolutions; many unique, easily-comprehensible analogies and examples bring out the layered dimensions of this persistent riddle.
Tracing the various contours and dimensions of economic inequality, the author highlights attempts across global economies to evolve satisfactory measures of welfare and integrate markets with such well-being. This opens up several interesting insights such as the experience of Nordic economies that have met with a relatively high degree of success in fostering an environment that promotes private wealth creation while maintaining state machinery to enable effective distribution. Significantly in todays world, this could form the basis of implementable solutions in countries where the benefits of high growth are dwarfed by immense challenges stemming from skewed wealth distribution.
Does the book provide any new or definite answers for the reader? Not really. But by holding up the historical evolution of these debates shorn of jargon, by elucidating the circumstances that led to their creation and the efforts so far to arrive at some form of consensus, it empowers the reader to distil certain fundamental realities and form his or her own opinion on the key economic questions of the day.