A Battle for the Soul of India

O debate entre dois grandes economistas indianos: Jagdish Bhagwati e Amartya Sen


At first glance, there did not seem to be anything unique, or, voyeurism aside, even all that interesting about this past summer’s public quarrel between Indian economist and political philosopher Amartya Sen, a Nobel laureate who now teaches at Harvard, and his former Cambridge University classmate Jagdish Bhagwati, a Columbia University economist and law professor who has long been one of the most eloquent champions of globalization based largely on free trade as the surest, if not indeed the only sure, way for poor countries to become prosperous. As Henry Kissinger is said to have remarked, academic politics are so vicious because the stakes are so low. Those who like their sarcasm gift-wrapped in erudition may enjoy reading about slagging matches between scholars, whether of the ‘witty fury’ type exemplified by the decades-long quarrel between the British historians A. J. P. Taylor and Hugh Trevor-Roper, or of the ‘titanic clash of narcissisms’ type that Edward Said and Bernard Lewis illustrated so indefatigably in their exchanges over Said’s ‘Orientalism.’ It is true that these and other such rivalries were partly grounded in political and even moral differences of real substance. But their effect on the politics and public policy of their time is usually pretty trivial, even if the disputants don’t usually see it that way.

Every once in a while, though, a bitter controversy erupts between scholars where, far from being small, the stakes in terms of public policies affecting the lives of huge numbers of people and the wealth or poverty of nations could scarcely be higher. Unsurprisingly, they usually involve economists (though Krugman v. Rogoff and Reinhart is not one of them!). The most important of these in the twentieth century was certainly John Maynard Keynes and Friedrich Hayek’s long-running debate over the question of whether significant state interventions in fiscal and employment policies, above all massive government spending, were what were needed, as Keynes thought, or, as Hayek believed, instead would either have no effect or even potentially prevent the economy from recovering from the Great Depression.

One of Keynes’ colleagues at Cambridge described it at the time as “the method of the duello conducted in the manner of Kilkenny cats.” The recent Sen-Bhagwati debate had something of the same character, with one crucial difference: while Bhagwati can surely be said to have gone the Kilkenny cat route, apart from one letter to the Economist, Sen has not. Even there, Sen contented himself with saying that “I have resisted responding to Mr. Bhagwati’s persistent and unilateral, attacks in the past,” before going on to say that Baghwati distorted the position they had taken in their recent book, An Uncertain Glory: India and Its Contradictions, when he charged that Sen and his collaborator, the Indian economist, Jean Dreze, had only been giving lip service to the importance of economic growth—the centrality of which Bhagwati and his collaborator and fellow Columbia University economist, Arvind Panagariya, had emphasized in their recent book, Why Growth Matters: How Economic Growth in India Has Reduced Poverty and the Lessons for Other Developing Countries.

In contrast, Bhagwati (Panagariya has been a good deal more circumspect) has gone after Sen with an ad hominem remorselessness—“foot, horse, and gun,” as the late Christopher Hitchens, who was fond of such British imperial expressions, liked to put it—that an outsider is left awestruck by the energy of the assault but somewhat baffled as to what possible purpose it could serve. For example, in one article, the rumbustious Bhagwati, having labeled Sen as the only Indian economist “to have inflicted damage twice on Indian policy and therewith on poverty reduction,” went on to deprecatingly called him “the Mother Teresa of economics,” only two sentences later to retract the charge, saying, “Let us not insult Mother Theresa,” who, he said, at least “did a lot of good at the micro level, whereas [Sen’s] policy prescriptions have done huge damage instead.”

Bhagwati went on to charge in the same piece that Sen’s commitment to supporting economic growth—the position Bhagwati views as the one that he, contra Sen, truly espoused—was false, and that Sen’s claim was akin to “an anti-Semite [who] would claim that Jews are among his best friends.” And in a subsequent interview, Bhagwati said that it was “high time to jettison Sen…whose ideas are harmful to the poor.”

Understandably, editors and journalists in India have been fascinated by Bhagwati’s assault (and doubtless in some cases, hoping that sooner or later Sen will reply in kind), and have devoted amounts of space to the controversy usually reserved for gossip about politicians, plutocrats, Bollywood stars and cricketers to what one of them called this “one-way shouting match.”

But in response to numerous reporters’ queries that would have provided Bhagwati the opportunity to dial back his comments, he has consistently insisted that he has done nothing untoward, and that compared with what he called “the brawls” between Taylor and Trevor-Roper, his critique has been mild. At moments, it has even seemed as if Bhagwati considers himself to be the aggrieved party. For example, after telling an interviewer that “Unlike Sen, who talks and writes as if he is not constrained by facts or analysis, I am more cautious,” Bhagwati went on to insist that, “My exchanges with Sen are truly polite.” But then, like a skier making stem Christie turns down a slope, Bhagwati went on to reveal that he had declined to review the book by Sen and his frequent collaborator, the Indian economist Jean Dreze, had published earlier in the summer, telling the editors of the British magazine Prospect that “it was likely trashy and I did not want to destroy the book.”

The only thing missing from Bhagwati’s indictment is a direct accusation charging Sen with corruption. What Bhagwati has done is allude to such charges without stating whether or not he finds them credible. And in an interview with India’s Business Standard at the end of this past August, Bhagwati, also made a point of saying that he had been “told” that “lascivious photos of [Sen’s] actress daughter are now circulating on the internet.” Bhagwati went on to insist that Sen had brought such “gutter politics’ down on himself because of anger over his attacks on Narendra Modi, the chief minister of Gujarat and now leader of India’s main opposition party, the BJP. To be clear, Bhagwati had not been asked by the interviewer to comment on either matter and brought both up of his own volition.

Anyone who has followed Bhagwati’s career will know that Sen is scarcely the only economist to be on the receiving end of this signature combination of self-aggrandizement combined with slash and burn, ad hominem attacks. In his latest book, Bhagwati calls the views of his Columbia colleague, Joseph Stiglitz, and of George Soros, ‘Jurassic Park economics.” Nor have his maledictions been confined to them. More recently, when the deputy chairman of the Indian Planning Commission, Montek Singh Ahluwalia, who at twenty-eight was the youngest division chief in the history of the World Bank, defended Sen, Bhagwati dismissed him as a “bureaucrat. “No one,” he said, “could expect [such a functionary] to offer sincere opinions.” And about Muhammad Yunus, who won the Nobel prize for his work setting up the Grameen Bank, Bhagwati said in the same recent interview that it “should have been awarded instead to Elaben Bhatt…a true Gandhian and not into cultivating influential people who work for your Nobel Prize.” One does not have to be the second coming of Sigmund Freud to wonder whether that last dig wasn’t directed at Sen, who is also a Nobel laureate, by Bhagwati, who is not?

The great pity of all this is that the substance of the debate between the two men, and between the two schools of economic thinking about poverty and development that each has had such a huge role in shaping, is of enormous practical, political and moral significance. While Sen and Bhagwati would doubtless differ in their evaluations of individual Indian leaders and of particular national policies, they would agree on India’s enormous achievements since independence in 1947. They would also agree, Bhagwati and Panagariya enthusiastically, Sen and Dreze more reservedly, that the economic reforms that began in the early 1990s that put an end to the so-called ‘License Raj’ were what lie at the root of India’s astonishing economic growth over the past two decades that has averaged over 8 percent annually and have, depending on how one measures the phenomenon, raised up to 200 million Indians out of poverty. As Sen and Dreze put it, the pre-1991 system, in which virtually all private business initiatives required government permission, and in which the Indian market was virtually closed to imports, “made economic enterprise extremely difficult and put it at the mercy of bureaucrats (large and small), thereby powerfully stifling initiative while nurturing corruption considerably.” For the top 20 percent of the population, that is, for the middle class of the License Raj and the post-1991 new middle class, living standards have “improved well beyond what was expected—or could be anticipated—in the previous decades.”

But Indian growth has now slowed and even the country’s most fervent boosters, whether at home or abroad, no longer talk about ‘India Shining,’ a merchandising slogan devised by the Grey Worldwide advertising firm to promote the country abroad and popularized by the BJP during the 2004 elections. But if two hundred million Indians can still celebrate their newfound prosperity, the overwhelming majority of its one billion people cannot do anything of the sort, and that is leaving to one side the estimate that there will be at least 1.6 billion Indians in 2050, with most of this population growth in the country’s poorest states and among families from those states who have migrated to richer ones. Three hundred million Indians are without electricity, open defecation is the only option for almost half the population, with all the obvious public-health consequences, above all for children, and at 43 percent the country’s childhood malnutrition and undernutrition rates are double that of the sub-Saharan African average. According the UN’s Human Development Index, India ranks 136th out of the 186 countries surveyed.

What can and should be done about this? This is what the debate between Bhagwati and Panagariya and Sen and Dreze could and should have been about, had it not been obscured by Bhagwati’s summer-long tantrum in the media. For their analysis and their prescriptions are as radically different as their political sympathies. But like the Keynes-Hayek debate, and unlike the Tory Trevor-Roper and the Laborite Taylor, whose views were impassioned but largely irrelevant to the course of the British state in the post-World War II period, the fate of hundreds of millions of Indians depends to a significant extent on whether the Indian government signs on to the basic premises behind the economic and social policies Bhagwati has been recommending, or, instead, to the one Sen has championed.

Some Indian economists and pundits have suggested that the gap is not in fact as wide as all that, and not even remotely as wide as Bhagwati has claimed. “The boring truth,” wrote the prominent Indian journalist, Swaminathan Aiyar, “is that differences between Sen and Bhagwati are much exaggerated, as also between the Congress [Party] and the BJP.”

If all that Aiyar means is that both agree on the need for growth, as Sen would surely agree, even if Bhagwati would not, then he is on solid ground. Aiyar is also correct in saying that while, rightly or wrongly, Sen is widely viewed as a supporter of the Congress and Bhagwati of the BJP, Congress has experimented Bhagwati’s prescriptions for cash transfers to the poor, while the BJP has supported the Food Security bill that commits the government to providing subsidized food to more than 50 percent of the Indian population just passed in the Indian parliament—a piece of legislation that very much reflects Jean Dreze’s influence and that Panagariya recently charged was part of the cause of India’s current difficulties.

But this begs the question of which model of growth is the one India should follow? And here, Bhagwati’s furious insistence of the incompatibility of his views and Sen’s is probably closer to the mark, and one wonders if Sen, though he has refused to be drawn, would disagree. If one economist calls for an emphasis on growth that relies primarily on the deepening of trade liberalization both internationally and domestically, private-sector entrepreneurship, and a smaller role for the state, and the other emphasizes redistribution and, as Sen and Dreze put it, harnesses “the constructive role of the state for growth and development,” you are not just offering two paths to growth that politicians will eventually find a way of largely reconciling. To the contrary, like the great economists of the past, Smith and Marx, Keynes and Hayek, Minsky and Milton Friedman, Bhagwati and Sen’s policy prescriptions depend for their force and coherence on a philosophical vision of what a good society is. An obvious example is not where either man stands on the need to reduce poverty but rather on the importance each attaches to not just to economic inequality but to social equality as well. Their divergent views on Gujarat is a case in point. For Bhagwati and Panagariya, what stands out about Narendra Modi’s tenure as chief minister of the state is the economic growth he has brought to it. For Sen and Dreze, Modi’s anti-Muslim attitudes and what they view as its consequence, the Muslim community’s economic marginalization in the state, go hand in hand. As the political editor of Open magazine, Hartosh Singh Bal, put it in a critique of Bhagwati and Panagariya’s book “this is the kind of inequity that cannot be quantified.”

One of Baghwati’s and Panagariya’s most ardent supporters, the Carleton College economist Vivek Dehejia, has called Sen’s rights- and entitlements-based approach to development “a sophisticated retread of the failed socialist policies that led [India] to the very brink of economic ruin in 1991,” that is, just before the country turned to economic liberalization. And whether or not one agrees with him, Dehejia is surely right to insist on the ideological character of the dispute. The importance of whose ideas prevail to India’s future is obvious. But its effects will be felt in the rest of the world as well. The authoritarian capitalism of China has profoundly altered how we now view capitalism itself. So will the implementation either of Bhagwati or of Sen’s conflicting visions for the economic organization of the country that soon will displace China as the most populous country on earth.

David Rieff

Fonte: The National Interest