Deepak Lal: The ending of conversations

Last Updated: Fri, Jul 20, 2012 19:02 hrs

Deepak Lal remembers Ian Little, Manmohan Singh’s mentor and leading light of the engaged ‘Oxford school’ of economics.

In my column on ‘Remembrance of things past’ (December, 2009) I had noted the sadness of aging, with friends lost to the Grim Reaper with whom one could not continue conversations. This week saw another long standing friend felled: Ian Little. This column is in his memory, as not only was he involved with Indian policy debates from the late 1950s, but Prime Minister Manmohan Singh was his pupil at Nuffield College, Oxford. Ian remained engaged with India till the end.

My own association goes back to the mid-1960s with the background studies for the Little, Scitovsky and Scott (LSS) study of Industry and Trade in Some Developing Countries: A Comparative Study (OUP, 1970), and then with the application and dissemination of the project appraisal methodology he had developed with Jim Mirrlees in Project Appraisal and Planning for Developing Countries (Heinemann, 1974). This was all part of the “neoclassical resurgence” in development economics which he initiated, and of which he became the standard-bearer for the rest of his life. I was hoping to see him to continue last year’s conversation about the travails of Manmohan Singh. But that was not to be.

Ian’s death also marks the physical end of what may be termed the Oxford school of economics. When I went up to Oxford in 1960, there were three great economists in residence: John Hicks, Roy Harrod and Ian Little (the youngest). Hicks became my supervisor for the B Phil, Harrod my senior colleague at Christ Church where I was a lecturer, and Ian a life-long mentor and friend. Of the three, Hicks won the Nobel Prize and Harrod (according to Assar Lindbeck, Journal of Economic Literature) would have if he hadn’t died. Everyone at Oxford (and elsewhere) expected Ian to receive the telephone call from Stockholm. But it was not to be. This tells us something about both the man and the evolution of the prize.

In his brutally frank autobiography Little by Little, and his collection of collected papers Collection and Recollections (CR) (Clarendon Press, 1999), Ian described his landed gentry non-intellectual background, given over to hunting, drinking and gambling. He was shy and only gradually found his intellectual feet at Oxford during philosophy tutorials with Isaiah Berlin and Herbert Hart. He got a starred first in philosophy and economics after returning to Oxford as a decorated RAF pilot testing weird gizmos in the Second World War. He chose to do economics rather than philosophy in his postgraduate work, as he said there was less competition in economics, philosophers being cleverer than economists. But his philosophical training helped in his doctoral thesis and acclaimed first book A Critique of Welfare Economics, where he argued against the famous Hicks-Kaldor compensation principle. But, Ian soon turned away from theory, recognising that his minimal mathematical endowments were no longer up to the task.

After a life-changing visit to India in 1958 as part of Rosenstein-Rodan’s MIT India project, he writes, “I was primarily a development economist, and therefore a member of the sub-class then widely regarded as intellectually second-rate” (CR, p.74)! But LSS and LM were to change that perception.

In this first phase of his interaction with India, he and Trevor Swan were intellectually seduced (as he told me) by Pitambar Pant, and both robustly defended the Third Plan strategy of a heavy industry-biased import substitution. He admitted later that he was mistaken (see CR, p. 76). It was Manmohan Singh’s thesis which sowed the seeds of doubt about the “export pessimism” assumption on which the Mahalanobis-Pant strategy was based. His 1965 Indian visit, as part of the World Banks’ Bell mission, led to an evaluation of the heavy electrical plant at Bhopal. The consultant’s use of world prices to value the inputs and outputs, as they did not know what future domestic prices dependent on controls would be, provided the germ of the idea which became the Little-Mirrlees (LM) project evaluation methodology.

Ian had persuaded Pitamber Pant to set up a Project Appraisal Division in the Planning Commission under Lovraj Kumar, who in turn recruited me to produce the first (and I believe the only) set of shadow prices based on LM for India (subsequently published in my Prices for Planning). It is difficult now to understand the passions aroused by the battle of the OECD’s LM and Unido’s rival manual (authored by Sen, Dasgupta and Marglin). Very soon, however, I, at least, realised that social cost-benefit analysis would just become social cosmetic analysis in the hands of predatory governments. Moreover, its need was undermined by most of the Third World eventually accepting the globalisation message of LSS: open market economies were the best route to economic development and poverty alleviation.

LSS is the most cited book in development economics. It has also been the most influential in persuading governments and academics to change their dirigiste spots. Yet, despite these undoubted intellectual achievements, Ian never received the ultimate academic accolade of the Nobel. This is partly because, ever since his first development book (with Juliet Clifford) on International Aid, he realised that studies of development “need a broad canvas... [which] involves moral and political philosophy as well as economic and political analysis. This explains my production of books not articles” (CR, p. 79). Over the years, the Nobel committee — perhaps in obeisance to its “scientific” mandate — has preferred to reward authors of articles rather than books.

This has meant the end of the Oxford culture of economics, as exemplified in my youth by Hicks, Harrod and Little. They saw the subject as a worldly enterprise, where logical rigour was essential, but it was not a mere branch of applied mathematics. Theory for theory’s sake, with economists engaged in deriving “theorems”, was less at a premium than understanding and changing the world. For them, and most of the great economists, economics is not like physics, with the latest purportedly seminal journal article making past writings on the subject of only antiquarian interest. It is a human or social science in which the role of Oakeshott’s “human conversation” (quoted in my earlier column) is paramount. Books, unlike articles — with their increasingly rigid formalism — are the only way in which conversations requiring spaciousness can be economically enshrined for posterity. Ian always wanted for himself, and others, someone to talk to. Unfortunately time has now silenced him, and I mourn this untimely end to his conversations.

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