Doughnut Economics- Books Indians Should Read Chapter (Post No.8446)

WRITTEN BY R. NANJAPPA                        

Post No. 8446

Date uploaded in London – – – 3 August 2020   

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Books Indians Should Read Chapter – 2 – Part 1
      Doughnut Economics

R. Nanjappa

Power of ideas

Whatever may be the political system, it is economic ideas that rule the world. Rather, it is the idea of “Growth” that holds sway over the minds of rulers and the ruled alike. Lord John Maynard Keynes, the greatest genuine economist of the last century, wrote towards the end of his magnum opus, The General Theory (1936):

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”

        – Ch. 24 Concluding Notes 

Almost every political leader of every country includes the ideal of ‘growth’ in any vision or formula for the nation. Thus we hear phrases like ‘sustained growth’, ‘balanced growth’. ‘long-term, lasting growth’, ‘smart, sustainable, inclusive, resilient growth’ etc. The World Bank, not to be outdone, talked of ‘inclusive green growth’. Every other purpose or aim has been sacrificed on the altar of growth.

Economics and society

Yet, this is not how economics began its journey as a separate discipline. The Greek philosopher Xenophon mainly thought of ‘Oeconomics’ as the art of household. Aristotle clearly distinguished between economics and ‘chrematistics’, the way of acquiring wealth. They were basically philosophers, and were not writing a manual on making money or wealth.

However, after Newton, writers were fascinated by the idea of ‘science’. Economics as an art would not do! So, in 1767, James Steuart, Scottish lawyer, defined political economy as  “the science of domestic policy in free nations”. He said:

“The principal objects of this science is to secure a certain fund of subsistence for all the inhabitants, to obviate every circumstance which may render it precarious; to provide every thing necessary for supplying the wants of the society, and to employ the inhabitants in such manner as to naturally create reciprocal relations and dependencies between them, so as to make their several interests lead them to supply one another with their reciprocal wants.”

Though considered a science, it had a goal to be fulfilled in society, and it was not narrow.

Adam Smith: moral philosopher

 Adam Smith, considered the father of modern economics was primarily a moral philosopher. He came to economics as part of his engagement with the question of the nature of man and society. He noted that people were generally self-interested, but were also moved  or bound by moral forces such as conscience and sympathy. He noted the paradox of free association: though motivated by self-interest, society was such a place that one could satisfy one’s wants only if he served others’ interests, even if it was not the intended purpose!

He discovered the secret of social or national wealth in the labour of its own people. He began his legendary Wealth of Nations, 1776 with these words:

” The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.” [Introduction]

In the process of thus labouring to improve his own lot, everyone also contributes to the wealth of the nation-

“the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry.”

As everyone engages in labour and employs his capital, to secure his own advantage, he is also promoting the wealth of the society!

“He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”  [Book IV]

Here, the moral tone of Adam Smith is unmistakable. He is not promoting the narrow selfish interests of crooked players of the immoral game of making money. He always has society in mind.

                                                      ***                 to be continued

tags – Doughnut economics-1

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