Dr. Rudi Jansma
Kanta Ahuja
J. K. Mehta became known to students of Economics during the fifties, through teachers who studied Economics in Allahabad University where he was Professor in Economics. The post World War II years witnessed big changes in economic theory and in economic thinking. Mehta comments upon and questions all of the new theories mostly on philosophical grounds although his command over mathematical and logical reasoning was beyond doubt. He applied his philosophical approach to many economic concepts e.g. production, cost, factors of production, equilibrium, static/dynamic approaches and money, to name only a few. Among the significant literary contributions of this period are:
nomics, which gave a new definition of Economics that is now accepted by most economists as a starting point. Among the several ideas and concepts found in Robbins are: (a) Economics studies how choices are made with given ends and scarce means that have alternative uses; (b) in making these choices economics is neutral between ends in the sense that it is value free i.e. it does not make value judgments about ends- means that can be either economical or uneconomical but not ends. Economics only examines the principles necessary for making the most economical choices; and (c) the most economical choice is the one that maximizes the given end (satisfaction, utility of net returns) or minimizes the cost of achieving the end. Second, there was Keynes[2]' General Theory of Employment, Interest and Money (1936) that gave us the beginning of macro-economics as we know it today. And third, there was the theory of social choice and of welfare economics initiated by the earlier contribution of A.C. Pigou[3] in his book Welfare Economics that gave us the policies that resulted in the creation of welfare states for providing social security in a comprehensive manner (Dynamic economic models that are the beginning of growth theory also emerged during this period although we have not included it in our selection that has been made in the context of J.K. Mehta's contribution).
In this context, from the books referred above, a few of the concepts or philosophical approaches of JK Mehta are discussed below to highlight that in Mehta's hands the 'dismal' science of economics with its emphasis on maximizing net benefits (and now increasing growth of the GDP to achieve higher and higher standards of consumption) contributed an alternative philosophy and applied it to almost every theory/ concept that the economists of his time were writing and discussing. It is, therefore, no surprise that the only Indian economist acknowledged by Mrs. Joan Robinson[4] in her preface to her path breaking book The Economics of Imperfect Competition, is Prof. J.K. Mehta. After reading his books - which are not easily accessible nowadays (nor are they referred in modern economics texts) - one is amazed at the depth of thinking in his writing. At the same time, one also realizes why Mehta has been sidelined in Economics. The borderline between Mehta's Economics and metaphysics disappears and in fact his approach begins with the premise that all sciences, both physical and social, in their search for the ultimate or inner truth come close to metaphysics. And for him economics was no exception.
On wantlessness and rational behavior
We begin with his basic premise that man cannot succeed in his maximizing pursuit by satisfying his wants because they are limitless with new wants being generated along with satisfying an existing want. Maximum satisfaction implies reaching a state of wantlessness. This state can be reached only by eliminating wants and not by satisfying them. Let us examine Mehta's reasoning in reaching this conclusion. According to him, the universe as it reveals itself to us through our sense organs is a collection of objects; it is complex. The human mind seeks simplicity though, and the scientist seeks to see the uniform interior of the universe and searches for the 'one in many'. He seeks uniformity by diversity. The sage sees this by his intuitive power, and the scientist through logical reasoning supported by experimentation. And if and when he succeeds in finding 'the one in the many' or discovers the inner truth he becomes a sage or a seer and the distinction between science and metaphysics becomes thin (or disappears).
Economics is a social science that studies human behavior. For the economist man is not merely a physical being but he is a 'wanting' psycho-physical being who reacts to external stimuli in harmony with his scheme of wants. The economist seeks generalization about his behavior. The ability of the economist to plan and predict depends upon his ability to discover this inner uniformity/ constancy of responses and on his ability to establish causal relationships. The manner in which a man reacts to stimuli is determined not so much by the body as by the mind. The mind is the instrument through which the inner self tries to satisfy its urges and wants. All reactions subserve an objective or an end. Inanimate objects do not have an end to pursue. Is economics neutral between ends? Lionel Robbins was of the view that means can be economical or non-economical, but not an end. According to Robbins, "Economics is neutral between ends." But for Mehta this cannot be so as man's end is maximum welfare for himself.
The basic assumption of economics is that a man wants maximum satisfaction by getting rid of wants by satisfying them and getting rid of pain associated with having a want. But, according to Mehta, this amounts to pampering the mind in an undignified way. There is another and a dignified way of getting rid of pain and that is by ordering the want to quit. "When we satisfy a want we make it quiet for the time being. When we order it to quit we do not merely make it quiet, we kill it as it were." But how are wants killed? They can be eliminated and killed only by stronger (nobler or superior) wants. One noble want can kill several baser wants. The state of happiness can be reached only when "the mind remains absolutely free from the tormenting pressure of wants."
This is the state of wantlessness and can be reached only with the help of a guru or when man himself has an innate desire to reach the state of wantlessness. Wants can never be satisfied as they recur and new wants arise. Therefore, the only way in which man can reach a state of bliss or satisfaction is through getting rid of wants and reaching a state of wantlessness.
The basic postulate of economics is that man's behavior is rational compared to behavior that is unpredictable and is intuitive. Rationality implies that man tries in all situations to maximize anticipated net utility (satisfaction). However, what is rational in the short term may not be rational in the long term. Time horizon of the modern man is short. "Our rationality has been able to do very little for us. And that is due mainly to our short-sightedness which created all the more destructive of all good things of life by our greed, jealousy and distrust of our neighbors.
On money
Modern economies are highly monetized economies. Money, it is said, is the root of all evil. Mehta does not use these words, but his views on money would corroborate the statement. How is the creation of money and its role explained by Mehta? Money is basically a medium of exchange. It is also a store of value. Mehta uses the example of Robison Crusoe's economy as a testing laboratory of his ideas in their purest form. In a simple Robinson Crusoe economy, Crusoe exchanges goods with himself by postponing consumption of any surplus that he may produce. For him, the store of value function is unimportant as what he produces has a short span of life (e.g. catching birds or hunting for food). What is produced is not durable and therefore cannot be stored for long. Further, material goods can be stored but services produced are consumed concurrently with production - they cannot be stored. The objective condition of durability of a good to perform the function of money as a medium of exchange is the necessary condition for creation of money. But it is not sufficient as it has to be backed up by a subjective condition, viz. the person owning it must be willing to postpone its consumption; he himself should be durable in the sense that he should be able to survive without the consumption of the good. Monetization of the economy is the result of these conditions. Also, it is necessary that the good whose consumption is being postponed is superfluous or that the quantity produced is in excess of what is required for immediate consumption. But this by itself is not sufficient unless the person is also willing to wait, or what we would call, he must be willing to discount the future. This would be a subjective condition of superfluity.
In modern economies, consumable goods are no longer used as money. Such good, like cattle, beads, metals etc. - are replaced by paper and credit. The characteristic of the new forms of money is that its real cost is negligible compared to the cost of a physical good used as money. Useless things can be used money which becomes only a unit of account. This means that the "institution of money in a social economy is raised on an immoral base."
Crusoe had to labor, work hard, think and wait in order to have money for future consumption. This was the moral base of the Crusoe economy. The modern macro-economy lets people accumulate money without any constraint giving them purchasing power or command over other people's labor and work. Money is not a good that can be used for direct consumption. It is only a medium of exchange. "An individual owner of money, wishing to make use of it, has the time and energy of so many other individuals for his purpose." At the same time, there is lack of effective control over the supply of money. This plays havoc with our economies. Some people accumulate more money than others. There is an imbalance between the goods produced and the money accumulated to buy them. Goods are consumed and money is accumulated to be used after a time lag. The use of money with a time lag is the rule rather that an exception in modern economies. Its lagged performance distorts the distribution of income. The lack of co-operation among people who form a society is the real cause of such malfunction. Each for all should be out motto. Instead we look upon social institutions as a means of helping ourselves at the expense of others - all for us becomes our motto.
Other effects of the uncontrolled expansion in money supply are better known. They are inflation/ deflation, trade cycles, cyclical fluctuations, inequalities and concentration of wealth in the hands of a few. What is the solution? According to Mehta, the application of physical sciences to industries has produced disastrous long period effects "even though they are concealed behind the glamour of the so-called and so-seeming rising standard of life." Staggering advances in industrial technology are a social evil as it is used to exploit Nature's gifts and increased 'superfluity' in modern economies. Consumption is the end of production. But in modern economies, production is for the sake of producing more and more things. This superfluity of production also increases the superfluity of money. Superfluous production is exchanged for superfluous money that accumulates as wealth of individuals. Production much beyond the needs of consumption (and of capital goods needed for sustaining consumption) results in superfluity of goods and accumulation of money holdings of individuals who have surplus production. Mehta has a remedy: "The remedy, if it is to be applied at this front lies in placing an embargo on the application of scientific discoveries to the art of production. Let not people laugh at such a suggestion of ours; let it be remembered that unless we put an end to this mad rush for wealth and luxurious living we cannot eradicate social evils from our midst." Knowledge is innocent if it is sought for its own sake but when it is used as a weapon to rob Nature of its beauty and its secrets and our fellow men of their right to have an equal share in the gifts of God it degrades man and gives him a status, perhaps far below that of the jungle beasts."
An additional source of creating superfluity in the economic system is our time preferences: we prefer the present to the future by discounting the future. Present needs must be satisfied and therefore primitive man had a high rate of time preference or a high rate of discount of the future. Today, we make provisions for the future much beyond what is required for a rainy day or for the infirmities of old age or what can be justified on religious or ethical grounds. He writes: "Our concern should be for the present that God has gifted us with. The future shall be his gift when it comes. Let us not demand it from Him." If money is to be neutral, we must cut down its durability (restrict accumulation) and its superfluity (restrict supply of money)."
We have selected the two concepts in Mehta's economics to give the readers a flavor of his thinking on the nature of consumption by man. Wants can never be satisfied but they can be eliminated if only we create a desire to do so through a conscious effort of introspection and reasoning. If a moral basis of our activities is accepted, it would eliminate greed and selfishness and result in a more peaceful society. The pursuit of higher growth of the Gross Domestic Product (GDP) and reaching the stages of high mass consumption that many developed societies have reached would become meaningless. 'Are we ready for such a change?'
References
Defou, Daniel: Robinson Crusoe (Full title: The wonderful life and surprising adventures of that renowned hero, Robinson Crusoe: who lived twenty-eight years on an uninhabited island, which he afterwards colonised. London: Printed for the inhabitants of his island, and sold by T. Carnan, in St. Paul's Church Yard, [ca. 1783]. Also available online.
Keynes, John Maynard: The General Theory of Employment, Interest and Money. London, Palgrave Macmillan,1936.
Pigou, Arthur Cecil: The Economics of Welfare. London: Macmillan and Co.,1920.
Robbins, Lionel: An Essay on the Nature and Significance of Economics. London: Macmillan, 1932.
Robinson, Joan: The Economics of Imperfect Competition. London, Macmillan, 1933.
