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Wednesday, 28 March 2018

Haldane and the Goodwin 'class struggle' model

Few Indians have a kind word for the Planning Commission which Modi finally scrapped in favour of a 'Niti Aayog' (Policy Commission) which is just as stupid but which has no power.

Yet, in its heyday, the Planning Commission attracted some of the finest minds in Economics- Ragnar Frisch, Jan Tinbergen, Oskar Lange, Charles Bettelheim, Richard Stone, Simon Kuznets, N. Georgescu-Roegen, Branko Horvat, Paul Baran, Ian Little, MichaƂ Kalecki, Nicholas Kaldor, Gunnar Myrdal and Joan Robinson.

J.B.S Haldane actually took Indian citizenship, while Richard Goodwin, as I learned from this paper by Vela Velupillai, made annual trips.

It seems Haldane gave Goodwin the idea for his 'predator- prey' model of Capitalism, where workers are predators continually pushing for higher wages till their prey collapses.
the genesis of the model of 'A Growth Cycle' was a fortuitous after-dinner conversation with J. B. S. Haldane, in the library of the Indian Statistical Institute (ISI), which was located in the home of P.C. Mahalanobis, in 19559 . During this conversation Haldane had suggested to Goodwin that the ‘best way to model the contradictions of capitalism was to consider it a partly complementary-partly hostile system  along the line of the Lotka-Volterra Prey-Predator dynamics.’ 
Why did two white leftists, meeting in a country where real wages were stagnating, think that, in the Class struggle, the workers are the wolves and the Capitalists are the sheep?
Did they really not understand that the wholly worthless Planning Commission was creating risk-free profits for people like, Goodwin's friends, the Sarabhais? How could they have been so stupid?

Milton Friedman, on his brief visit, had noticed the chronic under-employment that characterised every sphere of Indian economic life. Goodwin himself could see that most of the clerks and peons milling around were utterly useless. Why? What was their purpose? The answer is that they served to demoralise their entire class. When people see that most people doing the same job are contributing nothing, they revert to a child like state of dependency.

Friedman praised the industry and enterprise he saw in Ludhiana, not the Corporate gigantism of Jamshedpur. He understood that it was the second tier metros, not Lutyens' Delhi, which could raise  India out of poverty. On the other hand, he wasn't much of a mathematician. So India ignored him and wasted three decades. The wolf of mathematical economics grew fat upon the carcass of Indian Enterprise. Then, it quietly packed its bags and migrated to the Ivory Towers of Europe and America.

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