A Conversation with Jagdish Bhagwati on Indian Politics, Globalization, Socialism, Entrepreneurship, and African Aid
Vinod, H. D., Indian Journal of Economics and Business
This reports an informal discussion with Professor Jagdish Bhagwati of Columbia University, one of the greatest economists of our time from India. It was held at 2PM on August 10 at 113 West 60th St, New York, NY, the Lincoln Center campus of Fordham University. At the suggestion of Professor Kulkarni, the editor of the Indian Journal of Economics and Business, we kept an audio and video record for easy reference. We were having a lot of laughs and the following report is intended to give the reader an informal window into his great mind. Professor Bhagwati did edit this on February 1, 2006. I have retained many of his blunt, insightful and entertaining comments regarding people like Morarji Desai, Arundhati Roy, Jeffery Sachs, Amartya Sen, etc. I trust the reader will agree with me that this informal format allows us to get to the main point rather quickly. I am grateful to my student Ms. Meghan M. Hennessy for carefully transcribing the interview tapes, despite obvious problems with our accents. We both underestimated the amount of work involved in this task. I do not know how to give proper credit to Meghan for her work.
H. D. Vinod: Let me begin the interview with a statement. This interview is on behalf of the Indian Journal of Economics and Business. Many Indian economists are looking forward to hear your views, especially now in the year of your 70th birthday. The interview will focus on some issues involving the international economy as it affects India. Perhaps, we can start with Globalization.
Jagdish Bhagwati: Globalization can be looked at from the perspective of two sets of issues in the public domain. First, I believe that it is desirable that India participate in the world economy in a much deeper way than it has done do far. Second, of course is the broader question that transcends India: whether the economic globalization that is steadily going on along many dimensions such as trade and direct foreign investment flows is desirable or whether it is a malign force, as alleged by anti-globalization critics, among them our very own Arundhati Roy. Her writings on the subject are so devoid of intellectual content that one can only remark wittily that her conclusions are more obvious than her arguments.
So let me take the first question which remains a matter of concern in India even though we have had a steady expansion of reforms, especially since 1991 when the present Prime Minister Manmohan Singh initiated them. Let me first observe that a number of economists like me and Amartya Sen came back from the West after studying at Cambridge, Oxford and the London School of Economics. We were all trained in a left wing tradition; our teachers had been radical or progressive economists from a little left of center to all the way to the left, with luminaries such as Nicky Kaldor and Joan Robinson. We were taught basically about market failures and how when markets failed, the invisible hand of Adam Smith would fail: it would point in the wrong direction. For the invisible hand to point in the right direction, we would have to intervene to adjust market prices so that they correctly reflected true social costs.
Now, when we returned to India with this training, we were programmed to endorse all kinds of interventions, because India, and indeed most underdeveloped countries, seemed to be afflicted by all kinds of market failures. I'm talking about the late 50s and early 60s. I was at Cambridge University together with the current Prime Minister Manmohan Singh from in the mid-50s when we were students in St. John's College in Cambridge. Both of us returned to India, having spent time also at Nuffield College in Oxford. We both had the advantage of working close to the ground and finding out that the knee-jerk interventions which had spread through the economy were counter-productive and course correction was necessary. I pushed for the reforms, now under way, from the academic, scholarly side; he, from the policymaking side. …