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.
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.
and I read a small quote in that that was the inspiration I get into Austrian
economics and then I started reading about it a lot and it was until 2005 when
Pat Shah was an urgent scholar of Mises Institute long ago who organized an Austrian
and Economic Seminar in Delhi, that was the other turning point that I largely tend to
read even more and questioning about who were the Indian-Austrian economist, that was starting
point.
Let me thanking by the Mises Institute for giving this opportunity to present my paper
in this Austrian Economics Conference 2011.
I would also like to thank people who are constantly encouraged me and also help it
in getting financial support for making this trip successful, otherwise it's very difficult
to come from India. It's not that easy to find any Austrians in India in this juncture.
I'd like to make three persons to be mentioned here. Nitin Pai, who is the founder of Takshala
Institute. This institute is a free market institute. It's coming up very fast and he's
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,
who is largely inspired by youngsters in India.
I would like to mention he is a manator of mine.
And after 2005, I was questioning myself after the Austrian Economic Seminar,
who are the Austrian economists in India?
I was also doing a MIM, Master of Philosophy course in an institution named after Ambedkar.
Ambedkar, and it's called MAU, Military Quotas of War in Western India.
And he seems to be a scholar in Austrian economics, but there is no one who has actually recognized
this person to the extent he should have been.
And that's how my inspiration started to reading his works on early part of his writings before
He became famous as a constitution maker in India, he's a guy, he's saying 14, 19, 12,
and these are life and works.
Basically he got a fellowship for his master's program in Columbia, later he got into PhD,
then he goes on to England to get DSE and law.
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.
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,
I am mentioning his other photo, but he was not known to what he actually returned about in economics literature.
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.
as first law minister in the independent Indian government
and he's also known for his argument with MK Gandhi
and his conversion to Buddhism.
He's largely misunderstood and misinterpreted
on the views of socialism, Marxism, centralized planning
against bureaucracy, too much bureaucracy,
Establishment of RBI, Reserve Bank of India, this is a central bank in India.
But otherwise he has actually written large amount of literature on these aspects, free
banking, gold standard, and individual liberty, private property, and he actually vehemently
criticized Keynes' argument against gold standard, and he was in favor of gold exchange
Standard, Keynes, Keynes was a favor of gold exchange standard and is actually tend to
read Carl Menger's works and I don't know because this was, Ambedkar is writing these
things 1920s, 23 and 25, but the English version of the Carl Menger's works came into
exist in 1950, but he was, Ambedkar was in Germany briefly and he was a student of Canon
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.
These are the aspects which are completely ignored, both in India and abroad.
And there is more literature which tracks his views on these aspects.
And these are major works and bold things are very major contributions and it is very relevant to Austrian economics also.
And the last one is very pioneering works on Indian banking and currency.
This was his PhD thesis in Lenin School of Economics under the guidance of Edwin Cannon.
I want to mention here that Cannon was not agreeing in most of the Ambedkar works and
he realizes that later he says that he agrees with him and I would like to quote a few observations
which he made in his foreword, saying that, as he is aware, I disagree with a good deal
of his criticism. In 1993, I was one of the few economists who believed that the rupee
could be kept at a fixed ratio with gold by the method then proposed, and I did not fall
I am far away from the faith when some years elapsed without the desired fruit appearing
in an article which he refers to Economic Review, July 1898.
And I do not share Mr. Ambedkar's hostility to the system, not in our accept most of his
argument against it and its advocates.
But he hits some nails very squarely on the head and even when I have taught him quite
wrong.
I have found a stimulating freshness in his views and reasons and older teacher like myself
learns to tolerate the vagaries of originality even when they resist.
That was his observations and later he said that in his practical conclusion I am inclined
to think that he is right. The single advantage offered to a country by the adoption of the
gold exchange standard instead of the simple gold standard is that it is cheaper in the
sense of requiring a little less value in the shape of metallic currency. Then he goes
on to his argument in the book saying that largely he agreed with him, but I suspect
After reading this book, The Problem of the Rupee, it's not in a way, that's the argument
which goes on the literature.
And what are the major contributions made by Ambedkar is the constitutional liberty.
He actually ensured in the Indian Constitution two important things which are also ignored
by and large, very unfairly, that the private property was ensured as a fundamental rights
in the Indian Constitution in Bramble.
But unfortunately, it was taken away in 1977 through 44th Amendment, and it still continues
now, just like any other rights.
And I wrote a few, one paper in 2006 is what published in a book.
I argue bringing back to that property rights in the constitution because there are a lot
of issues which is in excess with that in India.
And these are the other argument is a critical of Keynes on world exchange standard.
And remember Keynes first book was on Indian currency and finance and he actually says
He says in his free phase that he was a radical in his own view, Ambedkar, but he says that
I would be a moderate instead of saying a radical.
But it seems to be that he was a radical, and he actually tracks the financing system
of Banking from 1800 to 1893 in his book, and he also criticizes many of the commission
and the committees which are here.
I would like to give a sort of few observations which he made that in different course of
the time.
These are during the Constitutional Assembly debate, he was very revolutionized with the
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.
He says that there is no obligations to make the word socialism in the Indian constitution
because people themselves would decide which system they would be in favor of or would be better off
and he leave it to them instead of saying that we should put this word in the Indian Constitution.
Unfortunately, again through 43rd amendment, later Indian government amended
and they now put it the word socialism secular in the constitution which
prohibits creating a free market political party and there is a case is
pending in the Indian in the Bombay High Court last 15 years for taking away
that options otherwise there was a freedom party in India that was a
This is a different case, and this is criticism on Rusell's book, The Principles of Social Reconstruction.
He actually gives, refers to Carl Menger's writings here also on the law of consumption.
He actually tends to be, extends the law of marginal utility, declining marginal utility.
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.
As we are hungry or have overindulged the aptitude, the attitude diminishes as satisfaction increases.
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.
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.
It seems to be quite high again, the use of knowledge in the Society's article.
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.
And this is a large quote I take help for giving a snob's road.
These two quotes give the basic understanding of Indian currency and banking systems in a historical context.
And if you read it, it was unfolding in a way that India was a silver standard country,
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.
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,
There was a bank of Bengal, bank of Bombay and bank of Madras where the bank had freedom
or liberty to print their own currency.
And he says that in his writing that that was not largely used or scaled up in terms
of using the liberty.
But I suspect that because Jadhav worked with the RBI, the Reserve Bank of India for quite
a long time, and we have to be very careful what the central banker says.
And this is the other argument which I have said.
And the other important point which I want to make here is that Ambedkar agreed with
the gold standard.
He actually defined in his writings that I think the gold standard must be accepted as
the only system of currency in which is new proof and full proof.
Here Edwin Cannon writes in his Farrer that, I'll just quote it for two lines, that the
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.
He goes on to state that it's not that near to say that, and he agrees with that it's only foolproof.
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.
And is Ambedkar's criticism on Keynes saying that in a way he was bypassing the whole debate?
A managed currency is to be altogether avoided when the management is to be in the hands
of the government.
When the management is by a bank, there is a less chance of mismanagement.
For the penalty for an included issue or mismanagement is visited by disaster directly upon the property
of the Issuer. But the chance of mismanagement is greater when it is issued by the government
because the issue of government money is authorized and conducted by men who are never under any
present responsibility for private laws in case of bad management or mismanagement.
And this one paragraph summarizes what I want to say in this paper. And basically he argues
Just for these four important points, this is a small contribution which I think is important
to make in coming years to understand the Indian perspective of Austrian economics.
And there are few other economists also, not a per se economist, different personalities
These were actually written about Austrian economics in India, but it's ignored by and large.
These are the bit.