An African American Economist in Nehru's India

 Not all economists are shit. Punjabis and African Americans can do useful work- provided they come from proper farming families. An example of the latter was Andrew Brimmer whom LBJ appointed to the Fed. His first published work, back in the early Fifties, was on Indian business organization.

He had got a Fulbright scholarship and spent a month at the Delhi School of Econ under the supposed supervision of VKRV Rao and Raj Krishna. Brimmer quickly understood that he could learn nothing in Delhi and transferred to Bombay to study how the big Business corporations functioned. What he has to say (in an oral history project) is interesting even now 70 years later.

So I shifted to Bombay. And I shifted from a focus on national income to industrial organization and finance. I started devoting my time to the study of Indian business organization. India had a system of joint stock companies, using the British term, the counterpart of our corporation. I was focusing on the emergence and modernization of industry and looking at the structure and the emergence of modern industry. I was looking at handbooks, newspapers, stories, et cetera. What I noticed was that the typical joint stock company in India had a board of directors, the chairman of which invariably was “Sir Somebody,” “Maharajah Somebody”— Indians of great prestige. But then I noticed that there was a board of managing agents. These were the people who ran the place. They were invariably British. And it struck me, who are these people? Typically, they were formerly in the Indian Civil Service or in the army. They were either engineers or financial managers in some way. I decided that these were the people who provided the funds. These were the attractors of foreign direct investment in India. The British savers were not going to invest their funds directly with Indians, so the managing agents were the firm. Later, as a graduate student, I wrote this up in an article, my first published article, in the Quarterly Journal of Economics in November 1955.4 As a Fulbright student, I received $65 a month. The exchange rate was eight rupees to the dollar, so I was rich. I didn’t need my entire stipend for living expenses, so I used my surplus. First, I hired undergraduate students to be my research assistants. They collected data on each company. I had a big sample, with 5x8 cards, and I had a questionnaire that they used. When I came back to the United States, I had data on 300 companies. I came back with two footlockers. That data were the basis of that paper in the Quarterly Journal of Economics.

There you have it. The Indian economists tried to fit Indian reality into a Keynesian straight jacket in between jetting off to Conferences or as part of delegations. The African American uses his own money to do empirical research.  Suppose Rao and Raj and so forth had done what Brimmer (who had grown up literally picking cotton) did. They wouldn't have had 'export pessimism'. They wouldn't have thought the Capital goods sector represented a binding constraint. They'd have seen that making the job of the managing agent easier, not harder, and encouraging competition between firms, would have led to rapid export growth to finance capital deepening and widening. Brimmer had grown up in Jim Crow Louisiana. He saw that big corporations weren't the enemy. It was agricultural involution and what Ambedkar called 'localism' that created the 'nightmare' of caste or race based discrimination.