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A History of Indian Economic Thought Review

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India has a rich history of religion, ethics, and philosophy, but economics is a domain of thought which in current forms is extremely modern and often difficult to compartmentalize in ancient societies. In these societies, economics was woven into the social structure: one can see this with Aristotle, whose work Economics dealt not with some abstract principle of homo economicus, but rather with the running and functioning of a household. The same goes with other civilizations, where economics was an embedded, to use Polanyi’s phrasing, function of society. Ajit K.Dasgupta in his book A History of Indian Economic Thought does his best to nevertheless look at what were the debates and views on economic principles throughout history in his book A history of Indian Economic Thought, which admirably shows what were the major discussions at different times - but is still somewhat disappointing due to the limitations of the material preventing a better look at pre-colonial India.

Perhaps when it was written was a vital part of it, since the book is from the early 1990s, which seems to have been a rather unsettled time of India economically, at the end of its period of Nehru’s socialism and when the economic reforms of the Washington Consensus were just being applied in the country. Its look back on the development of Indian thought is rather blase, constantly celebrating the middle road, and it lacks for much inspiration and style in its writing. It is heavily technocratic and little concerned with flair or dash.

This being said, it does do a good job of showing what were crucial economic debates in the modern period of India. Famine relief under the Raj when the question was to what degree state intervention was justified and how it should be done, with supply vs demand sides (such as simply sending more food to affected provinces or work-relief programs), and the question of how much food should be given in the form of rations to the hungry. Or the extensive role of the “drain theory,” among Indian nationalists and reformers, who believed that the remittances of British Indian personnel back to Britain and the charges on investments and services represented a constant drain on the Indian economy. Although the economic debate becomes more esoteric recently, it also looks at critical questions under Nehruian socialism, such as debates over the role of trade in the economy and the questions raised as to why the economy started to stagnate from the 1960s onwards. While it’s hardly exhaustive, it gives a good feel for what were economic questions in certain time periods that gripped the Indian economic thinkers.

As this indicates however, perhaps due to lack of sources available, it is little able to penetrate the veil of time and look into what were some of the debates or questions in the past. Rather its collection of Hindu texts, Mughal governance practices, and some discussion of rationality and whether religions like Hinduism or Buddhism were capable of rational economic thinking (it opts for the “yes” response), mostly show a state-oriented, top-down look at Indian economics. It does best if anything in its introduction, discussing foreign views on Indian economics such as Max Weber and the arguments about whether protestant/calvinist thinking really is the only rational way to approach economics, or if these two can even be viewed in their original form as rational at all. After this, it struggles to really lay out a societal wide perspective of Indian economics or to consider what relevance the texts it considered had for actual practice in society.

It’s still a useful book for modern periods, but unfortunate that it couldn’t dig up more information and debate for ancient and medieval times in India. It shows the contours of Indian economic thinkers in the last several centuries, the alternatives - such as Gandhian economics, a very good chapter which lays out the relationships between ethics and economic rationality that Gandhi espoused - and what were the questions in Indian society.


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