‘POOR' ECONOMICS

A RADICAL NEW THEORY REDEFINES MONEY, AND OFFERS WAYS TO ADDRESS POVERTY, UNEMPLOYMENT AND ECONOMIC INEQUALITY

- NAVIN J. ANTONY

In 2005, the Nobel Prize-winning economist Paul Krugman told a sob story about why, despite their pretensions, economists are not scientists.

The occasion was the Bhagwati Festschrift in Columbia University—a conference and gala dinner (Festschrift roughly means feast-script in German) in honour of Jagdish Bhagwati, Krugman’s teacher and an authority on trade theory. After suitably identifying himself as a SOB (acronym for ‘student of Bhagwati’), Krugman revealed his strongest memory of studying with the great man. It was an old joke. “At one point, Jagdish explained to us his personal theory of reincarnation,” Krugman said. “It was that if you are a good economist, a virtuous economist, you are reborn as a physicist, and if you are an evil, wicked economist, you are reborn as a sociologist.”

The joke, he said, was not on sociologists or physicists; it was about economists. “They aspire to what they imagine physicists to be, to this rigour and certainty and mathematical complexity,” said Krugman. “Given his record of achievement, progress, open-mindedness, and just sheer human goodness, I am sure that Jagdish will be reborn as a physicist.”

Sadly, economists waiting for rebirth still have the unenviable task of making sense of the world. With their theories and mathematical models, many of them acquit themselves well, but the fact remains that economics perennially plays catch-up in solving poverty, unemployment and inequality.