Seven years ago, PBM wrote in the Indian Express-
As the Left parties in India stare at political oblivion, they might draw some consolation from the fact that, in economic terms, genuine rightwing parties don’t even get off the ground in India.
It is no consolation to know that the guy who gets the cushy job will be doing pretty much what you would be doing if you had been selected.
The truth is, both the Marxist Left and the 'Libertarian' Right are irrelevant in India. They both cash out as saying 'first India must be turned into either China or America. Then our policies must be implemented because they worked in China or America'.
Many supporters are finding that Prime Minister Narendra Modi is not quite the libertarian economic reformer they had hoped he would be.
This is like saying 'Modi's real name isn't Nicholas Maugham. I suspect he may be some dusky sort of native. Boy, do I feel swindled!'
That is a good thing, too. Left and right, as pure ideological forms, have little prospect for success.
Which is why the subject PBM teaches is useless.
Creating broad majority coalitions requires eschewing extreme positions.
No it doesn't. You can be as extreme as you like. What matters to Coalition stability is if the pie is carved up according to 'Shapley values'- i.e. relative bargaining power. Outcomes matter. Attitudes don't.
Your ability to get people to go along with you is inverse to your doctrinal purity.
Nonsense! It wasn't lack of 'doctrinal purity' that brought down the Left Front in West Bengal. Nor was it just thuggery. Incompetent thuggery is what proves fatal.
But it also has something to do with an intellectual style that leads them to repeatedly misdiagnose the tasks of the time.
Why not simply say they are as stupid as shit and leave it at that? But stupid people can show a shrewd appreciation of 'Shapley values' and contribute to a stable coalition in a self-interested manner.
Both political tendencies are more at home with abstractions than with diagnosing the actual complexities of economic life.
Abstractions can be way more complex than reality. By contrast, coalition stability can be ensured by using simple heuristics re. 'Shapley values'.
Their respective progenitors, Adam Smith and Karl Marx, were acute at historical diagnosis; even when mistaken, they were instructive.
No. Both described a more advanced economy in a manner which convinced officials in less developed countries that there was a 'shortcut' to growing strong and secure. Smith was a God to the 'beamtenliberalismus'- i.e. bureaucratic liberals- of Germany. Marx's silliness was attractive to the Russians who thought that the proto-Socialist 'Mir', or village commune, could be the germ of 'Soviets' which would bypass capitalist industrialization so as to get to the Socialist utopia more quickly.
Neither Smith nor Marx were instructive. However they did provide fodder for instructors in worthless University Departments.
Their self-proclaimed disciples merely want simple formulas.
This is a simple formula. This guy is a self-proclaimed instructor in a self-proclaimed discipline.
In a strange way,
Strange? No. Commonplace. This sort of thing can be found in the Old Testament.
both have fetishised the market: the left in constructing an abstract enemy called neo-liberalism; the right in not understanding how so many sectors of the economy cannot operate on conventional market principles.
There are no 'conventional market principles'. That's why, as Coase pointed out, enterprises exist. Economics is ideographic. The correct economic theory prevents nomothetic theories creating hysteresis effects. Thus 'rational expectations' does away with the type of 'cobwebs' deducible from 'Economic Principles'.
Land, education, health, finance, infrastructure, insurance, knowledge-based industries and energy require very complex forms of regulation.
No. They require a very simple form of contract enforcement. Regulations can make this cheaper and more effective. It is not the case that something very very complex can be regulated by something more complex yet. Why? The time class of the solution concept is exponentially higher. It can't be computed. The body is very very complex. But regulations pertaining to contagious diseases contained in it have to be very very simple- if they are to be effective.
Environmental concerns can no longer be ignored.
They have never been ignored. But they are less and less relevant for more and more of the high value adding things people do.
As Keynes suggested, abstract economic calculation made “the whole conduct of life… into a sort of parody of an accountant’s nightmare… We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend.”
Keynes was babbling nonsense. We are not capable of shutting off the sun just because it is a Monopolist.
They may not pay dividends but the negative externalities their demise might impose can no longer be ignored.
Hilarious! Mehta says 'if the Sun disappeared we wouldn't be able to ignore the negative externalities that would arise'. He is wrong. We'd be dead. Corpses can ignore anything they like.
These are now the mainstays of the economy, both in terms of their relative size and their importance for future growth.
No. The environment is less important now than ever before- though, very poor people living in backward shitholes remain as vulnerable as ever.
Economists can be reviled for their abstraction and compromised economic advice. But the bulk of serious work, from Joseph Stiglitz’s early technical work
which says if the Government is really good, everybody will join the Government and so there will be no private sector. But this would also be true of a knitting circle which was really good. The Government and the Opposition and everybody else would join the knitting circle. It alone would 'internalize all externalities' and allocate all resources. But why stop there? Suppose the neighbor's cat's miaows can be decoded as the optimal solution to Society's transportation problem. Then the Neighbor's Cat would be the Messiah!
Greenwald-Stiglitz and Sappington-Stiglitz assume transaction costs are all that matters and that no problems of computability arise as the data set expands and aggregation problems arise.
They forget that that the Government faces a different type of concurrency or race-hazard problem. Stakeholders in a private company know that only the bottom line matters. This determines what is 'mission critical' and thus gets priority attention. This is not the case with a Government. Should it first tackle gender discrimination or just concentrate on the bottom line?
Essentially Stiglitz throws away information relating to 'uncorrelated asymmetries' and simply assumes that the same correlated equilibria is available for tinkering with. This is obviously fucked in the head.
Incidentally, Stiglitz thought Suharto should have been propped up by the IMF. He was wrong. Indonesia preferred to take some fiscal pain in return for getting shot of that gangster.
to Jean Tirole’s contributions on regulation,
is more in line with common sense. Tirole and Hart haven't yet, in obedience to Rothbard's Law, turned into gobshites vomiting up stupid Op Eds in Stiglitz's manner. Give them time.
is driving home one simple point: we have to think more carefully about conditions under which markets are effective.
We? Mehta is too stupid. The rest us have enough common sense to see that we need to be thinking more carefully about how we invest our meager savings. We shouldn't be worrying about the higher mathematics of complexity and concurrency and computability and so forth.
In principle, the Indian left could have grasped this point.
Because saying 'Boo to Modi! He is a Fascist!' requires an advanced mathematical knowledge of 'the ten martini problem'.
But grasping it requires nuance.
Mehta hasn't grasped shit. Why is he pretending his Maths is good enough to understand nuances in Tirole's research program? Few people do and those that do aint in Politics or Government.
And regulation also requires understanding state failure.
No. Recognizing how and why State actions fail is a check on mindlessly regulating the shit out of everything.
The left has been far more comfortable with
paranoid bollocks
totalising logic than discontinuous realities. It proposed an abstract conception of the state, unmindful of realities, as an abstract answer to an abstract entity called neo-liberalism.
No. The Indian Left proposed a concrete, Kalecki type, class analysis of the State in terms of an 'intermediate class'. But, caste based leaders were already using this model to shift the balance of power towards the OBCs. This was already happening when Mehta was a little baby.
As Marx would have said, it confused its idea of the state with reality.
No. The Left may be paranoid, but its paranoia is based on things like the occult power of Brahmins and the evil effect of people saying 'Jai Shri Ram'. The Indian Left has not bothered with a purely economic theory of the State. This is because if those evil Brahmins or Jai Shri Ram chanting OBCs get their tushies on kursis, then we will all be fucked coz then India might start growing rapidly and, as Sen said more than 60 years ago, this would mean Fascism would be upon us!
The right, on the other hand, was so obsessed with state failure that it forgot to ask the question: where was the state needed and how important it was for development?
The Indian right says that the State should kick the ass of Pakis and Chinkis and Naxals and terrorists and gangsters and so forth. It should tell foreign NGOs to fuck off because, as Edwin Lim of the World Bank discovered when he tried to reduplicate China's miracle in India, it pays better to block development using foreign money, than to let this country grow and prosper. Manmohan was on side with this view. It was he who started kicking NGO ass and promising to get the Naxals out of the extortion business. Shame he couldn't punch Pakistan in the snoot. Had he done so, the dynasty would have feared he could get re-elected on his own. So they chopped him off at the knees. But Rahul did not step forward. Hence Modi was elected unopposed in 2014.
The right also substituted abstract logic for historical judgement. The simple fact of the matter is that no economy has been successful purely on the basis of property rights and the night-watchman state.
Except Britain and America and every other successful state which had no mimetic target and which faced no existential external threat.
All successful post-war economies,
had to do Reconstruction under a Bretton Woods straitjacket. Thus the external Balance had to be carefully watched over and Exchange Controls and 'Indicative Planning' etc were needful.
from Germany to Taiwan, have relied on developmental states.
But shitholes like Burma, too, were 'developmental states'. What matters is whether the State is a good night-watchman.
And all successful states have been welfare states of some kind.
But so have very unsuccessful states like Venezuela and Libya.
The post-war success of the United States is unimaginable without the New Deal,
Nonsense! What Americans realized was that re-armament was better at getting the economy going than forbidding people to own gold and getting farmers to burn their crops and forming cartels and trade unions all over the place.
On the other hand, fucking over Commies was a grand idea. It made everybody better off.
It was McCarthyism which launched the careers of Nixon, Kennedy and Reagan. Earl Warren, before presiding over the most Liberal Court in American History, made his bones as a Red-baiter.
which had all the elements the right decries: industrial policy, public education, business regulation, labour protection, curbs on finance and so forth.
But the New Deal failed! Unemployment rose back to 19 % in 1938- just 5 % below its peak. It only started falling after the draft was introduced and then Pearl Harbor happened.
The truth is many New Deal projects had zero, or even negative, multiplier effects because of 'class war' fears. By contrast fucking over the Japs and the Krauts was something the nation could get behind.
There are some areas where liberalisation is necessary. But what India needs more is a New Deal state, attuned to contemporary realities.
This cretin means a 'Great Society' state- like LBJs. The New Deal failed.
Both the left and right also had an equally abstract conception of geopolitics. The left had a point in suggesting caution about the exercise of American power, not always benign. But it then fetishised its distaste for America to the point where it could not think of how to leverage American power for India’s gain. The right, on the other hand, in its zeal to emulate the nonexistent laissez faire utopia of the US, was not just prepared to hitch its star to everything American, it was happy to outsource all thinking.
Mehta has a point about the Left- which did try to hold up the 123 agreement till Manmohan put his foot down. But the pro-American 'right' has no traction on Raisina Hill. We all know the Americans will suddenly demand we turn Christian or stop eating paratha and start eating bagels. America is a dangerous friend but a reliable enemy.
Both also operated with abstract conceptions of historical agency. The left has always had this problem. It had assumed that the proletariat was the natural subject of history, and it then replaced it with other categories like peasants and so forth.
The Left believes there is some anti-Brahmin coalition of OBCs, Muslims and Dalits which is just waiting in the wings. Ultimately, Mehta too would subscribe to this view. He ended up demanding that Hindus stop saying 'Jai Sri Ram'. You are belittling God, innit? Kindly stop this nonsense!
But it could not quite deal with the fundamental reality that political agency is almost never an automatic function of the category a theorist slots you into.
Almost? Why not say 'Voodoo almost never works'?
Politics requires managing overlapping identities, commitments and often contradictory interests that run through each individual.
This requires no fucking theory or ideology whatsoever. Illiterate people can do it better than Professors of shite.
The right fetishised individual agency to the point that it had no resources to think about collective action.
No it didn't. The Right wanted a strong Army and Police and so forth so that the country could collectively fuck up anyone who tried to fuck with it.
Both, in a sense, don’t understand politics: the left sees it as an epiphenomenon, the right as instrumental to economic efficiency.
While Mehta sees it as an arena where he can shit over everything without actually saying anything substantive at all.
The left’s dogmatism on history compromised its intellectual integrity.
What fucking intellectual integrity do paranoid nutjobs have?
The right, too, looked for history in service of identity. Both converted history into a simplistic battle of medieval India: for or against?
i.e. was Aurangazeb sweet and kind to kaffirs?
Ancient India: for or against?
i.e. were Brahmins evil bastards?
The left, in the name of protecting minorities, sought to freeze their identities. Right-wing economic ideologues often hitch their star to reactionary forces.
Only Leftists babble about 'reactionary forces'. Mehta, it seems, had already chosen sides. He just didn't know it himself.
The economic right has not been much of an intellectual force in India but it often taints itself with the odour of cultural majoritarianism.
Being Hindu in a Hindu majority country means, according to Mehta, that you smell bad. Chee! Chee! Go take shower. Don't put on janeo. Wear T-shirt which says 'Ram Murdabad!' Then people won't think you are a great big stinkpot.
Neither has a stellar record on freedom. The Left’s institutional conduct in West Bengal left a poisonous legacy from which the state will find it hard to recover. The right, for all its fascination for economic freedom, has not been an arduous defender of civil liberties against the state. It does not see the tension between freedom and state muscularity.
Was Indira's Emergency Left Wing or Right Wing? Who cares? The fact is there is a tension between andolanjeevis being a big fucking public nuisance and the State calculating that this will cause a backlash in their favour. What history shows is that curbing public nuisances is a vote winner. Just don't be a dick about it.
Mehta's core delusion now becomes clear. He thinks talking bollocks about 'civil liberties' keeps 'reactionary forces' at bay. Why not simply make a Voodoo doll of Modi and stick pins into it?
It is not an accident that both the left and right come across as strangely deluded.
Nor was it any accident that Mehta, serial resigner that he is, would resign from the positions he then held before resigning from Ashoka. The guy is fucked in the head. He lives in a world where he is very very important. If he doesn't resign from whatever job he has, the World will be disappointed in him. Reactionary forces will triumph. People will say 'Jai Shri Ram'. Brahman hegemony will be re-established. Jains will be slaughtered.
The sins of theory have been compounded by the sordid associations of their practice. If the Left parties are to play any constructive role in bourgeois democracy, they will have to go back to the drawing board.
Fuck that! They will have to do booth management and last mile delivery same as everybody else.
And India’s economic right is living in a fool’s paradise if it thinks a libertarian utopia is about to unfold.
Nobody was living in Mehta's paradise where his essays were not regarded as utterly foolish. True, he got a job at Ashoka and- briefly- had a credulous audience. But he resigned quickly enough so no lasting damage was done.
The script of democracy and the demands of development are a lot more open ended.
Like the asshole which shat out this article.
A contest between the power of privilege and the claims of the poor will always matter to politics.
No it won't. The power to adjudicate the claims of the poor is a privilege. Modi worked hard to get it. Mehta shat the bed.
But it will take more than ideological templates to negotiate those tensions. It will take the ability to craft a genuinely New Deal.
The New Deal was the wrong solution to the wrong problem. What mattered was that the monetary shock be speedily reversed. Stupid fiscal tinkering harmed the economy.
India won't tackle the right problems- which have to do with reforming labour and land acquisition law and so forth- but will do stupid, populist, New Deal type shite till the country goes over a fiscal cliff and, as in 1991, a weak coalition pushes through unavoidable reforms.
Mehta did not really absorb Western Paideia. He just got worthless Credentials. Returning to India, he was incapable of 'parrhesia'- speaking truth to power- because he believed all sorts of stupid lies- e.g. the New Deal was successful.
At one time, Mehta and Guha &c seemed a welcome respite from the Lefty jhollawallahs spouting paranoid shite. But Mehta & Guha &c had low I.Qs. They were part of a bien pensant citation cartel of a deeply boring and irrelevant type. As they grew older they began to think of themselves as Mahatma Gandhis or even more tragically martyred Gramscis. The truth was they were nice enough kids who, sadly, didn't do Chartered Accountancy or Computer Programming and thus were doomed to be a glorified sort of child-minder in the 'safe spaces' of pretentious Campuses unless they could get by publishing worthless books.
I suppose Mehta now has no other option than to write his own book on Gandhi- if he hasn't already. Indian imbecility tends to bottom out in that manner. I may mention, my Gandhi book came out in 2013.
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