WEBVTT NOTE Bhimrao Ramji Ambedkar and Indian Economic Thought 1 00:00:00.000 --> 00:00:14.000 My paper is on V. R. R. Ambedkar, a free market economist. Actually, it's titled in the program schedule as V. R. R. Ambedkar and Indian Economic Thought. 2 00:00:14.000 --> 00:00:29.000 Before I begin to my presentation, I'd like to make a few observations. A few years ago, I was reading up, I heard actually about Austrian economics through the Road to Serfdom book by Hayek. 3 00:00:29.000 --> 00:00:35.600 and I read a small quote in that that was the inspiration I get into Austrian 4 00:00:35.600 --> 00:00:45.720 economics and then I started reading about it a lot and it was until 2005 when 5 00:00:45.720 --> 00:00:52.960 Pat Shah was an urgent scholar of Mises Institute long ago who organized an Austrian 6 00:00:52.960 --> 00:01:01.000 and Economic Seminar in Delhi, that was the other turning point that I largely tend to 7 00:01:01.000 --> 00:01:07.760 read even more and questioning about who were the Indian-Austrian economist, that was starting 8 00:01:07.760 --> 00:01:08.760 point. 9 00:01:08.760 --> 00:01:13.040 Let me thanking by the Mises Institute for giving this opportunity to present my paper 10 00:01:13.040 --> 00:01:17.040 in this Austrian Economics Conference 2011. 11 00:01:17.040 --> 00:01:22.840 I would also like to thank people who are constantly encouraged me and also help it 12 00:01:22.840 --> 00:01:28.600 in getting financial support for making this trip successful, otherwise it's very difficult 13 00:01:28.600 --> 00:01:34.600 to come from India. It's not that easy to find any Austrians in India in this juncture. 14 00:01:34.600 --> 00:01:40.680 I'd like to make three persons to be mentioned here. Nitin Pai, who is the founder of Takshala 15 00:01:40.680 --> 00:01:47.240 Institute. This institute is a free market institute. It's coming up very fast and he's 16 00:01:47.240 --> 00:02:17.240 He is the editor of Prakriti, the Indian National Interest Review, and Athan Udhen who is a liberal economist, and he writes a blog called Disha, and last but not least Parcha, who is the founder of Center for Civil Society, and I would also like to mention that the only one economist who writes the letter and sprit of the Misesians is Sovik Chakravarthy, 17 00:02:17.240 --> 00:02:21.240 who is largely inspired by youngsters in India. 18 00:02:21.240 --> 00:02:25.240 I would like to mention he is a manator of mine. 19 00:02:25.240 --> 00:02:36.240 And after 2005, I was questioning myself after the Austrian Economic Seminar, 20 00:02:36.240 --> 00:02:40.240 who are the Austrian economists in India? 21 00:02:40.240 --> 00:02:46.240 I was also doing a MIM, Master of Philosophy course in an institution named after Ambedkar. 22 00:02:46.240 --> 00:02:52.640 Ambedkar, and it's called MAU, Military Quotas of War in Western India. 23 00:02:52.640 --> 00:03:01.680 And he seems to be a scholar in Austrian economics, but there is no one who has actually recognized 24 00:03:01.680 --> 00:03:05.800 this person to the extent he should have been. 25 00:03:05.800 --> 00:03:14.160 And that's how my inspiration started to reading his works on early part of his writings before 26 00:03:14.160 --> 00:03:23.560 He became famous as a constitution maker in India, he's a guy, he's saying 14, 19, 12, 27 00:03:23.560 --> 00:03:27.640 and these are life and works. 28 00:03:27.640 --> 00:03:35.360 Basically he got a fellowship for his master's program in Columbia, later he got into PhD, 29 00:03:35.360 --> 00:03:42.360 then he goes on to England to get DSE and law. 30 00:03:42.360 --> 00:03:56.360 He was a student of Sir Lickman, Edwin Cannon, John Dewey, and he was a professor of political economy in the western part of India, very brief period, and later also. 31 00:03:56.360 --> 00:04:11.360 And these are very few career options I'm mentioning here, otherwise he was a multi-personality person who had written a large amount of literature in comparative religion, economics, finance, 32 00:04:11.360 --> 00:04:27.360 I am mentioning his other photo, but he was not known to what he actually returned about in economics literature. 33 00:04:27.360 --> 00:04:39.360 He is now widely known as a father of the Indian Constitution, as an icon of a certain community, that's a Dalit, as a former untouchable. 34 00:04:39.360 --> 00:04:43.800 as first law minister in the independent Indian government 35 00:04:43.800 --> 00:04:48.840 and he's also known for his argument with MK Gandhi 36 00:04:48.840 --> 00:04:52.040 and his conversion to Buddhism. 37 00:04:52.040 --> 00:04:59.320 He's largely misunderstood and misinterpreted 38 00:04:59.320 --> 00:05:04.600 on the views of socialism, Marxism, centralized planning 39 00:05:04.600 --> 00:05:07.480 against bureaucracy, too much bureaucracy, 40 00:05:07.480 --> 00:05:12.160 Establishment of RBI, Reserve Bank of India, this is a central bank in India. 41 00:05:12.160 --> 00:05:17.000 But otherwise he has actually written large amount of literature on these aspects, free 42 00:05:17.000 --> 00:05:23.920 banking, gold standard, and individual liberty, private property, and he actually vehemently 43 00:05:23.920 --> 00:05:30.840 criticized Keynes' argument against gold standard, and he was in favor of gold exchange 44 00:05:30.840 --> 00:05:38.400 Standard, Keynes, Keynes was a favor of gold exchange standard and is actually tend to 45 00:05:38.400 --> 00:05:45.560 read Carl Menger's works and I don't know because this was, Ambedkar is writing these 46 00:05:45.560 --> 00:05:52.160 things 1920s, 23 and 25, but the English version of the Carl Menger's works came into 47 00:05:52.160 --> 00:06:00.520 exist in 1950, but he was, Ambedkar was in Germany briefly and he was a student of Canon 48 00:06:00.520 --> 00:06:10.520 And that goes on, and there are two other contributions he also made, but he tends to always forget it, and it's a decentralized planning and knowledge problems. 49 00:06:10.520 --> 00:06:20.520 These are the aspects which are completely ignored, both in India and abroad. 50 00:06:20.520 --> 00:06:25.520 And there is more literature which tracks his views on these aspects. 51 00:06:25.520 --> 00:06:38.520 And these are major works and bold things are very major contributions and it is very relevant to Austrian economics also. 52 00:06:38.520 --> 00:06:47.520 And the last one is very pioneering works on Indian banking and currency. 53 00:06:47.520 --> 00:06:54.520 This was his PhD thesis in Lenin School of Economics under the guidance of Edwin Cannon. 54 00:06:54.520 --> 00:07:05.640 I want to mention here that Cannon was not agreeing in most of the Ambedkar works and 55 00:07:05.640 --> 00:07:18.000 he realizes that later he says that he agrees with him and I would like to quote a few observations 56 00:07:18.000 --> 00:07:26.840 which he made in his foreword, saying that, as he is aware, I disagree with a good deal 57 00:07:26.840 --> 00:07:35.000 of his criticism. In 1993, I was one of the few economists who believed that the rupee 58 00:07:35.000 --> 00:07:43.000 could be kept at a fixed ratio with gold by the method then proposed, and I did not fall 59 00:07:43.000 --> 00:07:49.560 I am far away from the faith when some years elapsed without the desired fruit appearing 60 00:07:49.560 --> 00:07:55.720 in an article which he refers to Economic Review, July 1898. 61 00:07:55.720 --> 00:08:01.720 And I do not share Mr. Ambedkar's hostility to the system, not in our accept most of his 62 00:08:01.720 --> 00:08:06.520 argument against it and its advocates. 63 00:08:06.520 --> 00:08:13.760 But he hits some nails very squarely on the head and even when I have taught him quite 64 00:08:13.760 --> 00:08:14.760 wrong. 65 00:08:14.760 --> 00:08:23.120 I have found a stimulating freshness in his views and reasons and older teacher like myself 66 00:08:23.120 --> 00:08:28.920 learns to tolerate the vagaries of originality even when they resist. 67 00:08:28.920 --> 00:08:35.520 That was his observations and later he said that in his practical conclusion I am inclined 68 00:08:35.520 --> 00:08:42.400 to think that he is right. The single advantage offered to a country by the adoption of the 69 00:08:42.400 --> 00:08:47.120 gold exchange standard instead of the simple gold standard is that it is cheaper in the 70 00:08:47.120 --> 00:08:54.320 sense of requiring a little less value in the shape of metallic currency. Then he goes 71 00:08:54.320 --> 00:09:02.920 on to his argument in the book saying that largely he agreed with him, but I suspect 72 00:09:02.920 --> 00:09:10.560 After reading this book, The Problem of the Rupee, it's not in a way, that's the argument 73 00:09:10.560 --> 00:09:14.000 which goes on the literature. 74 00:09:14.000 --> 00:09:20.640 And what are the major contributions made by Ambedkar is the constitutional liberty. 75 00:09:20.640 --> 00:09:25.920 He actually ensured in the Indian Constitution two important things which are also ignored 76 00:09:25.920 --> 00:09:35.760 by and large, very unfairly, that the private property was ensured as a fundamental rights 77 00:09:35.760 --> 00:09:39.520 in the Indian Constitution in Bramble. 78 00:09:39.520 --> 00:09:47.960 But unfortunately, it was taken away in 1977 through 44th Amendment, and it still continues 79 00:09:47.960 --> 00:09:50.600 now, just like any other rights. 80 00:09:50.600 --> 00:09:54.600 And I wrote a few, one paper in 2006 is what published in a book. 81 00:09:54.600 --> 00:10:00.480 I argue bringing back to that property rights in the constitution because there are a lot 82 00:10:00.480 --> 00:10:04.680 of issues which is in excess with that in India. 83 00:10:04.680 --> 00:10:11.240 And these are the other argument is a critical of Keynes on world exchange standard. 84 00:10:11.240 --> 00:10:18.800 And remember Keynes first book was on Indian currency and finance and he actually says 85 00:10:18.800 --> 00:10:26.240 He says in his free phase that he was a radical in his own view, Ambedkar, but he says that 86 00:10:26.240 --> 00:10:31.280 I would be a moderate instead of saying a radical. 87 00:10:31.280 --> 00:10:42.040 But it seems to be that he was a radical, and he actually tracks the financing system 88 00:10:42.040 --> 00:10:52.120 of Banking from 1800 to 1893 in his book, and he also criticizes many of the commission 89 00:10:52.120 --> 00:10:55.800 and the committees which are here. 90 00:10:55.800 --> 00:11:03.120 I would like to give a sort of few observations which he made that in different course of 91 00:11:03.120 --> 00:11:04.120 the time. 92 00:11:04.120 --> 00:11:10.720 These are during the Constitutional Assembly debate, he was very revolutionized with the 93 00:11:10.720 --> 00:11:25.720 The three words, liberty, fraternity and equality in the French traditions and this was his talks in the parliament during the Indian draft constitution making. 94 00:11:25.720 --> 00:11:33.720 He says that there is no obligations to make the word socialism in the Indian constitution 95 00:11:33.720 --> 00:11:43.720 because people themselves would decide which system they would be in favor of or would be better off 96 00:11:43.720 --> 00:11:48.720 and he leave it to them instead of saying that we should put this word in the Indian Constitution. 97 00:11:48.720 --> 00:11:55.720 Unfortunately, again through 43rd amendment, later Indian government amended 98 00:11:55.720 --> 00:12:02.620 and they now put it the word socialism secular in the constitution which 99 00:12:02.620 --> 00:12:09.720 prohibits creating a free market political party and there is a case is 100 00:12:09.720 --> 00:12:15.520 pending in the Indian in the Bombay High Court last 15 years for taking away 101 00:12:15.520 --> 00:12:20.040 that options otherwise there was a freedom party in India that was a 102 00:12:20.040 --> 00:12:30.040 This is a different case, and this is criticism on Rusell's book, The Principles of Social Reconstruction. 103 00:12:30.040 --> 00:12:36.040 He actually gives, refers to Carl Menger's writings here also on the law of consumption. 104 00:12:36.040 --> 00:12:44.040 He actually tends to be, extends the law of marginal utility, declining marginal utility. 105 00:12:44.040 --> 00:13:12.040 If you read these, it seems to be very fascinating that in other words, if you just, yeah, if you read, this being so that the utility of an object varies according to the varying conditions of the organism needing satisfaction, even an object of our strongest desire like food may please or digest, according, according, as we are hungry or hungry for food. 106 00:13:12.040 --> 00:13:22.840 As we are hungry or have overindulged the aptitude, the attitude diminishes as satisfaction increases. 107 00:13:22.840 --> 00:13:36.840 This he goes on to say with the help of Giddings' observations, and this two point seems to be extending the law of consumptions stages. 108 00:13:36.840 --> 00:13:59.840 And this is a knowledge problem which he cites that in his writings in the Provincial Finance, saying that the centralized planning cannot have all knowledges, even planning commissions cannot have all knowledges to plan for the whole country. 109 00:13:59.840 --> 00:14:05.840 It seems to be quite high again, the use of knowledge in the Society's article. 110 00:14:05.840 --> 00:14:18.840 And there are only two persons who have actually read and wrote about Ambedkar Vox in India is the Professor Ambirajan and the later Mr. Jadhav. 111 00:14:18.840 --> 00:14:25.840 And this is a large quote I take help for giving a snob's road. 112 00:14:25.840 --> 00:14:35.840 These two quotes give the basic understanding of Indian currency and banking systems in a historical context. 113 00:14:35.840 --> 00:14:49.840 And if you read it, it was unfolding in a way that India was a silver standard country, 114 00:14:49.840 --> 00:15:06.840 and England, the British rule is the gold standard and I actually tend to give you a view about what he has actually written instead of analyzing what he said about it and wrote about it in this paper. 115 00:15:06.840 --> 00:15:35.840 and he also say, quite, he actually, Professor Ambirajan agree with Ambedkar saying that the state should not have a power to print monopoly money, paper money and he criticizes misunderstanding of currency systems and the discretion power with the government and he is a other author, 116 00:15:36.840 --> 00:15:49.560 There was a bank of Bengal, bank of Bombay and bank of Madras where the bank had freedom 117 00:15:49.560 --> 00:15:53.680 or liberty to print their own currency. 118 00:15:53.680 --> 00:16:00.880 And he says that in his writing that that was not largely used or scaled up in terms 119 00:16:00.880 --> 00:16:03.160 of using the liberty. 120 00:16:03.160 --> 00:16:10.360 But I suspect that because Jadhav worked with the RBI, the Reserve Bank of India for quite 121 00:16:10.360 --> 00:16:18.320 a long time, and we have to be very careful what the central banker says. 122 00:16:18.320 --> 00:16:25.880 And this is the other argument which I have said. 123 00:16:25.880 --> 00:16:29.480 And the other important point which I want to make here is that Ambedkar agreed with 124 00:16:29.480 --> 00:16:30.480 the gold standard. 125 00:16:30.480 --> 00:16:37.000 He actually defined in his writings that I think the gold standard must be accepted as 126 00:16:37.000 --> 00:16:41.920 the only system of currency in which is new proof and full proof. 127 00:16:41.920 --> 00:16:59.400 Here Edwin Cannon writes in his Farrer that, I'll just quote it for two lines, that the 128 00:16:59.400 --> 00:17:14.400 As we understood it before the war, it's not foolproof, but it is far nearer being foolproof and Navy proof than the gold exchange standard. 129 00:17:14.400 --> 00:17:23.400 He goes on to state that it's not that near to say that, and he agrees with that it's only foolproof. 130 00:17:23.400 --> 00:17:37.400 And Ambedkar tend to argue that the price rise in India was due to the supply of currency and not due to any other factors majorly. 131 00:17:37.400 --> 00:17:48.400 And is Ambedkar's criticism on Keynes saying that in a way he was bypassing the whole debate? 132 00:17:48.400 --> 00:18:05.840 A managed currency is to be altogether avoided when the management is to be in the hands 133 00:18:05.840 --> 00:18:06.840 of the government. 134 00:18:06.840 --> 00:18:11.440 When the management is by a bank, there is a less chance of mismanagement. 135 00:18:11.440 --> 00:18:17.840 For the penalty for an included issue or mismanagement is visited by disaster directly upon the property 136 00:18:17.840 --> 00:18:23.240 of the Issuer. But the chance of mismanagement is greater when it is issued by the government 137 00:18:23.240 --> 00:18:29.240 because the issue of government money is authorized and conducted by men who are never under any 138 00:18:29.240 --> 00:18:36.400 present responsibility for private laws in case of bad management or mismanagement. 139 00:18:36.400 --> 00:18:46.360 And this one paragraph summarizes what I want to say in this paper. And basically he argues 140 00:18:46.360 --> 00:18:59.400 Just for these four important points, this is a small contribution which I think is important 141 00:18:59.400 --> 00:19:05.800 to make in coming years to understand the Indian perspective of Austrian economics. 142 00:19:05.800 --> 00:19:11.160 And there are few other economists also, not a per se economist, different personalities 143 00:19:11.160 --> 00:19:18.060 These were actually written about Austrian economics in India, but it's ignored by and large. 144 00:19:19.060 --> 00:19:19.080 These are the bit.