Sunday, 24 April 2016

Book Review : The Wisdom of Ants - A Short History Of Economics

Book Review : The Wisdom of Ants

A Short History Of Economics

By Shankar Jaganathan

The Wisdom of Ants makes an ambitious attempt : tracing the roots and development of Economics and Economic Thought right from its origins in the mists of time, going back all the way to Chanakya and Aristotle. While this may seem appealing only to the academician, it is in reality a riveting account, full of learnings and deep insights, as well as thought-provoking facts and arguments. The book traces the entire history in a relatively short 300-odd pages with consummate skill, making for a fast read, yet packed with powerful content.

From The Beginnings To 1776
Image result for the wisdom of ants shankar jaganathanThe beginning is with an examination of the politico-economic thoughts of ancient thinkers in trade, commerce – like Chanakya, Aristotle and Lord Shang. This is the only section that has a jarring aspect; given that the rest of the book is beyond reproach, let me first document the only negative I could find. In tracing the roots of Economics, the author has examined the lines of thought and books of the ancient thinkers, but has curiously dismissed any feasibility of anyone other than Europeans being the inventors  of Economics, which I find rather strange.

Was there no trade and commerce before the 1600s and the 1700s? Obviously there was; so why the cursory dismissal of their works? Aristotle gave a pretty detailed breakup of sectors; he also dwelt on the positives of money. Chanakya went much, much farther : segregation into Agriculture, Animal Husbandry, Manufacturing and Commerce; Taxation rates and details including incentives like exemption, wages, working conditions etc. Pretty much what we study in the basics. The theories were of course developed later, that is neither here no there.  Dismissing such ancient works or the grounds that they did not give any analysis seems rather far-fetched to me.

The book lays the foundation principles or prerequisites for Economics to flourish : The right to property, social sanction for a self-centred individual; and material acquisition being the measure of welfare. I don’t argue with the transparent logic of the first and the third; there cannot be commerce and trade without these two basics. The other one – self-centered individual is an idea I don’t accept, notwithstanding anything argued in the book.

The only real requirements as per me are right to property, and wealth acquisition. Commerce would still have flourished despite and even in the presence of a more, shall we say, altruistic belief in human societal set-ups. Needs and wants would be there; humans would need products for consumption; and thus specialisation would be there – meaning economics would be needed. The rise of a self-centered approach, so successfully traced to medieval Europe, is in reality a telling indictment of those European so-called thinkers. But that is another story, not fully relevant here.

Enter The Modern World : Adam Smith Onwards
It is in this section that the book really comes alive, and all arguments against its presentation fade away; my only wish is that this should should have been more detailed. In this part, the author lays before us the origins of Patents, Free Trade, {Free Trade, well – which, as I have looked at in earlier articles – isn’t and wasn’t free; but that is the way of the world, Might is Right}, Monopolies, and the general rise of the Europe, along with the attendant rise in economic thinking, and its currently laid out theoretical premise and basis.

The most engaging part of the book is the examination of the searching questions raised by Malthus, Ricardo, Say, Simonde – and Keynes. I found large common ground with only Jean Charles Leonard Simonde De Sismonde, whose works will bear reading even today.  In the observation that national wealth is the participation of all in the advantages of life, or in the observation that a large number of moderately rich people are better for a nation than a few super rich; or even in the development of intellectual “faculty”- we can spot powerful parallels in the modern world and India.

For the most part, the second half of the book is an enthralling see-saw between demand and supply side Economics, and the questions they attempted to answer as well as the problems they created. The succinct presentation does leave you wanting more details, to be honest; but inasmuch as this is a one-of-a-kind book, this isn’t a weakness; people like me can refer the bibliography for more; as I intend to – read up on Simonde, in whose questions I find many commonalities, as these are questions I have asked myself.

On the topic of Free Markets versus Government Interventions, I want the book seriously short of material – it was just not enough, period. The approach was way too succinct, and skirted the practical aspects of the matter; but then again – this is not an examination of Free Markets, but of the evolution of Economics. Given the approach, the material is justified. This topic can be and is the subject of research as well as volumes upon volumes of books!

The abrupt shift from this theme to the Nobel Laureates and their detailed examination almost defeated me, to be brutally frank; but given that I learnt quite a bit from this section, I am not classifying this as a negative. The abrupt shift from the Keynesian Era to the new Era has not been adequately covered – it could be that I am not upto speed in Economics, being a passionate reader {as well as schooled in Managerial Economics} on this subject only rather than a specialist.

The book closes its journey with a superbly analysed growth path and set of events that lead to the crash of 2007; the increasing financial deregulation, the belief in Free Markets, unregulated sectors combining with low interest rates that fuelled the growth, which, as it turned out, was hollow – leading to the great crash of 2007. This gels rather well with the book by Dr Raghuram Rajan, who has also identified no less than 7 fault lines.

The book is a 5-starrer, despite the negatives pointed out above. It is a deep reservoir of knowledge; leaves you with a far better understanding of the modern world and the business and trade environment; and, as the icing on the cake- raises questions inside you and a desire to learn more.  At the last page, you don’t discard this book to your shelf, but bookmark sections to be re-read, raising further reading and research ideas, like one quoted above : Simonde for me, as well as the Arthashastra, both of which  I now intend to read and review...

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