Introduction and Some Biography

My two main works, namely my book of 19 years ago Philosophy of Economics: On the Scope of Reason in Economic Inquiry (first published by Routledge, London & New York, 1989, 1991), and my monograph of 24 years ago Pricing, Planning and Politics: A Study of Economic Distortions in India (first published by the Institute of Economic Affairs, London, 1984) are both now republished here, each with a new preface. I have also published here for the first time the full story of my encounter with Rajiv Gandhi — an abbreviated version appeared in Freedom First in October 2001 which focussed on economic policy and deliberately excluded mention of my warnings about his vulnerability to assassination and my attempts in vain to get people around him to do something about it. I have also republished my three advisory memoranda to him between September 1990 and March 1991, which were first published in The Statesman‘s Editorial Page of July 31, August 1 and August 2 1991.

I have also published here now for the first time a public lecture I gave as the Wincott Visiting Professor of Economics at the University of Buckingham in 2004 titled “Science, Religion, Art and the Necessity of Freedom”. Also republished is “A General Theory of Globalization and Modern Terrorism” which was my keynote address to the Council of Asian Liberals and Democrats at their Manila meeting in November 2001; it appeared first in September 11 & Political Freedom: Asian Perspectives (eds. Smith, Gomez & Johannen) in Singapore in 2002.

I have also published for the first time my April 29 2000 address titled “Towards a Highly Transparent Monetary & Fiscal Framework for India’s Union and State Governments” to the Reserve Bank’s Annual “Conference of State Finance Secretaries”.

Also to be found in one place are my most recent signed writings since 2005 in The Statesman and elsewhere on India’s economy and foreign policy, Jammu & Kashmir, Pakistan, Afghanistan, China, Tibet, Taiwan, the United States, etc.

My political affiliation in India would be to a non-existent party — as may be seen from the article on a Liberal Party for India; and I trust it will be seen that I have dispensed criticism upon the present-day Congress Party, BJP/RSS and Communists equally harshly.

Readers are welcome to quote from my work under the normal “fair use” rule, but please quote me by name and indicate the place of original publication. Readers are also welcome to comment or correspond by email, though please try to introduce yourself.

The new preface of Philosophy of Economics is reproduced below as it is partly biographical.

“(Philosophy of Economics) germinated when I was 18 or 19 years of age in Paris, Helsinki and London, and it was first published when I was 34 in Honolulu. I came to economics from natural science (biology, chemistry, physics), not mathematics. It was inevitable I would be drawn to the beauty of philosophy as a theoretical discipline while being driven, as a post-Independence Indian, to economics as the practical discipline that might unlock secrets to India’s prosperity and progress. I belonged to an ancient family of political men, and my father, who had joined India’s new foreign service the year before I was born, inculcated in me as a boy an idea that I had “a mission” (though he later forgot he had done so).

I was fortunate to fail to enter Oxford’s PPE and instead go to the London School of Economics. LSE was at an intellectual peak in the early 1970s. DHN Johnson in international law, ACL Day in international monetary economics, Brian Griffiths vs Marcus Miller in monetary economics with everyone still in awe of Harry Johnson’s graduate lectures in macroeconomics, Ken Wallis, Graham Mizon, JJ Thomas, David Hendry in econometrics with the odd lecture by Durbin himself – I was exposed to a fully grown up intellectual seriousness from the day I arrived as an 18 year old. Michio Morishima as my professorial tutor told me frankly that, as an Indian, I would face less prejudice in Western academia than in the private sector, and said he was speaking from experience as a fellow-Asian. He turned out to be wrong but it was wise advice nevertheless, just as wise as his requiring pupils to read Hicks’ Value and Capital (which, in our undergraduate mythology, he himself had read inside a Japanese gunboat during war).

What was relatively weak at LSE was general economic theory. We were good at deriving the Best Linear Unbiased Estimator but left unsatisfied with our grasp of the theory of value that constituted the roots of our discipline. I managed a First and was admitted to Cambridge as a Research Student in 1976, where fortune had Frank Hahn choose me as a student. That at the outset was protection from the communist cabal that ran “development economics” with whom almost all the Indians ended up. I was wholly impecunious in my first year as a Research Student, and had to, for example, proof-read Arrow and Hahn’s General Competitive Analysis for its second edition to receive 50 pounds sterling from Hahn which kept me going for a short time. My exposure to Hahn’s subtle, refined and depthless thought as an economist of the first rank led to fascination and wonderment, and I read and re-read his “On the notion of equilibrium in economics”, “On the foundations of monetary theory”, “Keynesian economics and general equilibrium theory” and other clear-headed attempts to integrate the theory of value with the theory of money — a project Wicksell and Marshall had (perhaps wisely) not attempted and Keynes, Hicks and Patinkin had failed at.

Hahn insisted a central question was to ask how money, which is intrinsically worthless, can have any value, why anyone should want to hold it. The practical relevance of this question is manifest. India today in 2007 has an inconvertible currency, vast and growing public debt financed by money-creation, and more than two dozen fiscally irresponsible State governments without money-creating powers. While pondering, over the last decade, whether India’s governance could be made more responsible if States were given money-creating powers, I have constantly had Hahn’s seemingly abstruse question from decades ago in mind, as to why anyone will want to hold State currencies in India, as to whether the equilibrium price of those monies would be positive. (Lerner in fact gave an answer in 1945 when he suggested that any money would have value if its issuer agreed to collect liabilities in it — as a State collects taxes – and that may be the simplest road that bridges the real/monetary divide.)

Though we were never personal friends and I did not ingratiate myself with Hahn as did many others, my respect for him only grew when I saw how he had protected my inchoate classical liberal arguments for India from the most vicious attacks that they were open to from the communists. My doctoral thesis, initially titled “A monetary theory for India”, had to be altered due to paucity of monetary data at the time, as well as the fact India’s problems of political economy and allocation of real resources were more pressing, and so the thesis became “On liberty and economic growth: preface to a philosophy for India”. When no internal examiner could be found, the University of Cambridge, at Hahn’s insistence, showed its greatness by appointing two externals: C. J. Bliss at Oxford and T. W. Hutchison at Birmingham, former students of Hahn and Joan Robinson respectively. My thesis received the most rigorous and fairest imaginable evaluation from them.

I had been attracted to Cambridge partly by its old reputation for philosophy, especially that of Wittgenstein. But I met no worthwhile philosophers there until a few months before I was to leave for the United States in 1980, when I chanced upon the work of Renford Bambrough. Hahn had challenged me with the question, “how are you so sure your value judgements promoting liberty blah-blah are better than those of Chenery and the development economists?” It was a question that led inevitably to ethics and its epistemology — when I chanced upon Bambrough’s work, and that of his philosophical master, John Wisdom, the immense expanse of metaphysics (or ontology) opened up as well. “Then felt I like some watcher of the skies, When a new planet swims into his ken; Or like stout Cortez when with eagle eyes, He star’d at the Pacific…”

It has taken me more than a quarter century to traverse some of that expanse; when I returned to Britain in 2004 as the Wincott Visiting Professor of Economics at the University of Buckingham, I was very kindly allowed to deliver a public lecture, “Science, Religion, Art and the Necessity of Freedom”, wherein I repaid a few of my debts to the forgotten work of Bambrough and Wisdom — whom I extravagantly compared with the Bodhisattvas of Mahayana Buddhism, also saying that the trio of Wittgenstein, Wisdom and Bambrough were reminiscent of what Socrates, Plato and Aristotle might have been like.

I had written to Bambrough from within Cambridge expressing my delight at finding his works and saying these were immensely important to economics; he had invited me to his weekly discussion groups at St John’s College but I could not attend. Between 1979 and 1989 we corresponded while I worked in America on my application of his and Wisdom’s work to problems in economics. We met only once when I returned to Cambridge from Blacksburg for my doctoral viva voce examination in January 1982. Six years later in 1988 he said of my Philosophy of Economics, “The work is altogether well-written and admirably clear”, and on another occasion he said he was “extremely pleased” at the interest I had taken in his work. The original preface of Philosophy of Economics said he was not responsible for the use I had made of his writings, which I reiterated in the 2004 lecture. At our meeting, he offered to introduce me to Wisdom who had returned to Cambridge from Oregon but I was too scared and declined, something I have always regretted. It is only in the last few years that I have begun to grasp the immensity of Wisdom’s achievement in comprehending, explaining and extending the work of both Wittgenstein and Freud. His famous “Virginia Lectures” of 1957 were finally published by his admirers with his consent as Proof and Explanation just before his death in 1993. As for Bambrough, I believe he may have been or become the single greatest philosopher since Aristotle; he told me in correspondence there was an unfinished manuscript Principia Metaphysica (the prospectus of which appeared in Philosophy 1964), which unfortunately his family and successors knew nothing about; the fact he died almost in obscurity and was soon forgotten by his University speaks more about the contemporary state of academic philosophy than about him. (Similarly, the fact Hahn, Morishima and like others did not receive the so-called Economics “Nobel” says more about the award than it does about them.)

All I needed in 1980 was time and freedom to develop the contents of this book, and that I found in America — which I could not have done in either Britain or India. It would take eight or nine very strenuous years before the book could be written and published, mostly spent at Virginia Polytechnic Institute (1980-1985) and University of Hawaii (1986-1990) Economics Departments, with short interludes at Cornell (Fall 1983) and Brigham Young (1985-86). I went to Virginia because James M. Buchanan was there, and he, along with FA Hayek, were whom Hahn decided to write on my behalf. Hayek said he was too old to accept me but wrote me kind and generous letters praising and hence encouraging my inchoate liberal thoughts and arguments. Buchanan was welcoming and I learnt much from him and his colleagues about the realities of public finance and democratic politics, which I quickly applied in my work on India, published in 1984 in London as Pricing, Planning & Politics: A Study of Economic Distortions in India and republished elsewhere here. The visit to the Cornell Economics Department was really so I could talk to Max Black the philosopher, who represented a different line of Wittgenstein’s students, and Max and I became friends until his death in 1988.

Buchanan’s departure from Blacksburg led to a gang of inert “game theorists” to arrive, and I was immediately under attack – one senior man telling me I was free to criticise the “social choice” work of Amartya Sen (since he was Indian too) but I was definitely unfree to do the same of Sen’s mentor, Kenneth Arrow, who was Jewish! (Arrow was infinitely more gracious when he himself responded to my criticism.) On top of that arose a matter of a woman, fresh off the aeroplane from India, being assaulted by a senior professor, and when I stood for her against her assailant, my time in Blacksburg was definitely up.

The manuscript of this book was at the time under contract with University of Chicago Press, and, thanks to Mrs Harry Johnson there, I had come in contact with that great American, Theodore W. Schultz. Schultz, at age 81, told me better to my face what the book was about than I had realised myself, namely, it was about economics as knowledge — its subject-matter was the epistemology of economics. Schultz wrote letters all over America on my behalf (as did Milton Friedman at Stanford and Sidney Alexander of MIT, whom I had also met and become friends with), and I was able to first spend a happy year among the Mormons at Brigham Young, and then end up at the University of Hawaii where I was given responsibility for the main graduate course in macroeconomics. I taught Harry Johnson-level IS-LM theory and Friedman-Tobin macroeconomics and then the new “rational expectations” vs Keynesian material.

I was also offered a large University grant to work on “South Asia”, which led to the books Foundations of India’s Political Economy: Towards an Agenda for the 1990s, and Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s, both created by myself and WE James, and which led to the origins of India’s 1991 economic reform and the India-Pakistan peace process as told elsewhere. Also, this book came to be accepted for publication by Routledge, as the first economics book in its famed International Library of Philosophy.

Just as I was set to be evaluated for promotion and tenure at the University of Hawaii, I became the victim of a most vicious racist defamation (and there was some connection with Blacksburg). Quite fed up with the sordidness of American academia as I had experienced it, I sued in the federal court, which consumed much of the next half dozen years as the case worked its way through the United States Supreme Court twice. Milton Friedman and Theodore W. Schultz stood as expert witnesses on my behalf but you would not have known it from the judge’s ruling. There had been not only demonstrable perjury and suborning of perjury by the State of Hawaii’s officers, there was also “after-discovered” evidence of bribery of court-officers in the US District Court for the District of Hawaii, and I had to return to India in 1996 quite exhausted to recuperate from the experience. “Solicitation of counsel, clerks or judges” is “embracery curialis”, recognized as extrinsic fraud and subversion of justice since Jepps 72 E R 924 (1611), “firmly established in English practice long before the foundation” of the USA, Hazel Atlas, 322 US 238 (1943). “Embracery is an offense striking at the very foundation of civil society” says Corpus Juris 20, 496. A court of equity has inherent power to investigate if a judgement has been obtained by fraud, and that is a power to unearth it effectively, since no fraud is more odious than one to subvert justice. Cases include when “by reason of something done by the successful party… there was in fact no adversary trial or decision of the issue in the case. Where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practised on him by his opponent, as…where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client’s interest to the other side ~ these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree, and open the case for a new and a fair hearing….” (Hazel Atlas). There is no time-limit in United States federal law for rectification of fraud on the court of this sort, and I remain fully hopeful today of the working of American justice in the case.

The practical result was that this book was never able to be properly publicized among economists as it would have been had I become Professor of Economics at the University of Hawaii by 1992 as expected. The hardback sold out quickly on its own steam and went into paperback by 1991, and a friend told me it was being used for a course at Yale Law School. The reviews were mostly intelligent. Upon returning to Britain as the Wincott Visiting Professor in 2004, I found times had changed and so had Routledge who would not keep it in print let alone permit a second revised edition. But I am now free to republish the book as I please, and today in 2007, with the Internet growing to a maturity which allows the young geeks at to want to encourage blogging worldwide, I can think of no more apt place to reproduce the first edition of this book than here at my own blog

This is not a second or revised edition, and it is unchanged in content except for this lengthy new preface made necessary by the adventures and dramas the book’s author found himself unwittingly part of since its first publication. I am 52 now and happy to say I endorse the book just as I had published it at 34, though I do find it a little impatient and too terse in a few places. The 1991 paperback corrected a few slight errors in the 1989 hardback, and has been used. I am planning an entirely new book which shall have its roots in this one though it will be mostly in philosophy and not economics — the outlines it may take may be seen in the 2004 public lecture I gave on the work of Bambrough and Wisdom mentioned above and published elsewhere; its main aim will be to uncover for new generations the immense worth there is in their work which is in danger of being lost.

At least two names failed to appear in the original list of acknowledgements. G. Bruce Chapman, now of the University of Toronto, and I talked much of serious ethics and political philosophy when I first arrived at Cambridge in 1976. And in 1980 in Blacksburg, Anil Lal, then a graduate student and house-painter, borrowed my copy of Bambrough’s work, read it, and later made a comment on the metaphysics of John Wisdom which allowed me to see things more clearly.

Ballygunge, Kolkata,
April 7 2007″


Lessons from the 1962 War: there are distinct Tibetan, Chinese and Indian points of view that need to be mutually comprehended

Prefatory Note: This is part of a series of articles published in The Statesman since October 2007 and republished here, viz., Understanding China, India-USA Interests, China’s India Aggression, Surrender or Fight?, China’s Commonwealth, Nixon & Mao vs India, China’s India Example and China’s Force and Diplomacy. See

Lessons from the 1962 War



Beginnings of a solution to the long-standing border problem: there are distinct Tibetan, Chinese and Indian points of view that need to be mutually comprehended.




First published in The Sunday Statesman, January 13 2008,  Editorial Page Special Article



WAR is an existential experience from which nations emerge altered, reflective and sometimes more mature. Germany tried to purge anti-Jewish hatred, Japan to adopt pacifism, Britain to break class-structures, Russia to explode Stalin’s cult. America learnt little from its Vietnam debacle, creating new tactics and technologies to reduce American casualties in war but not showing any improved capacity to comprehend the world beyond its shores and borders.



India after the 1962 defeat by Mao’s China learnt less than was possible and necessary to do. The Government’s official history concluded: “In a fundamental sense, the origins of the 1962 Sino-Indian conflict lay in Chinese expansionism and occupation of Tibet. The issue got further aggravated due to failure of the Chinese to win over the Tibetans. Indian asylum to the Dalai Lama raised Chinese suspicions about ultimate Indian intentions. On the other hand, India, while tacitly accepting the Chinese occupation of Tibet through a treaty in 1954, failed to obtain any quid pro quo on the border issue.” This is true enough but a deeper probe is also possible.



India’s 20th Century political and intellectual leadership may have grossly failed to comprehend critical world events in a realistic manner, specifically Vladimir Ulyanov’s German-assisted Bolshevik coup d’etat, the Kuomintang and Maoist takeovers in China, as well as India’s own struggle for Independence. After BG Tilak, Annie Besant, GK Gokhale and other founders of Indian nationalism passed from the scene, leaders arose like MK Gandhi, MA Jinnah, SC Bose and J Nehru who tended to be consumed, to lesser or greater extent, by their own hubris and were less able to see India’s fortunes and capacities in context of a larger world. None had military, administrative or public finance experience needed for practical government; instead there arose almost a new hereditary caste of the “professional politician” who has no other vocation or anything better to do in life. Nazi-admirers like Mashriqi and Rahmat Ali among Muslims and the Mahasabha and RSS among Hindus also lent mainstream Indian nationalism a harsh distasteful colouration.



Czechoslovakia’s great nationalist Masaryk (who famously denounced Austro-Hungary as a “corrupt, pretentious, senseless relic”) was said to be “a leader who planned further ahead than his contemporaries, understood the corroding effects of power, the vital need of restraint in the ruler, and above all the need for taking the nation into his confidence, educating it in the sense of drawing out all its innate qualities and sharing its manifold aspirations” (Seton-Watson). India’s clear-headed statesmen of that calibre were not among its most visible or ambitious. Vallabhbhai Patel, MAK Azad, C Rajagopalachari and others were left on the sidelines of free India’s politics ~ as Plato predicted, the genuine pilot of the ship of state will be hardly invited to take its wheel nor even want to do so.



Nehru alone, as chosen by Gandhi, came to wield actual power in the 1950s, having maneuvered Rajendra Prasad to being President. And Nehru, besotted in middle age with a married British woman, seemed awestruck by appearance of a victorious Maoist communism in China just as he had been adoring of Stalin’s Russia two decades earlier. The Congress’s friends among India’s official Communists and fellow-travelers never had much original indigenous grassroots support and always looked abroad for guidance. Non-alignment needed to be made of sterner stuff.



Nehru’s flawed management of the relationship with Communist China included not merely choosing a favourite like Krishna Menon to head India’s military, but also imagining himself a competent world diplomatist. Girja Shankar Bajpai would have been far superior as India’s first Foreign Minister. In 1952, Bajpai, then Governor of Bombay, wrote to Nehru saying India should inform Zhou Enlai the McMahon Line was firm in law and non-negotiable.



Was the McMahon Line firm and just? Nehru was no Curzon but it was as a Curzonian imperialist that Mao and Zhou saw him. All Chinese, whether Communist or Nationalist, chafed at the way the Manchu-dynasty’s Empire had been carved up. “China is our India” was Czarist Russia’s intent towards China itself. China had an awful political and military history from when foreign depredations began in the 1840s all the way until the Mao-Zhou era ended in the 1970s. Indeed China’s polity between the 1840s and 1940s suffered far greater chaos and anarchy than India’s in the same period.



From a Chinese standpoint, Younghusband’s diplomatic and military invasion of Gyantze and Lhasa in 1903-1904 was an insult they had been unable to militarily confront. Curzon sent Younghusband’s expedition because there appeared to be Russian intrigues with the Dalai Lama via the Russian/Mongolian agent Dorjiev who had transmitted Russian ideas of extending its new Siberian railway to Lhasa and posting Cossack soldiers there. The Russians seemed to want to adopt the Dalai Lama given his religious influence over Mongolia. The British were alarmed and determined to annihilate the influence of Dorjiev which they did. Thence came the Anglo-Russian Treaty of 1907 which specified British and Russian spheres of influence in Iran and Afghanistan, and stated Tibet would be dealt with internationally only through the Chinese Empire. The McMahon Line, as a recognition of the traditional boundary, flowed naturally from the legitimacy of the Anglo-Russian Treaty. As for Sinkiang, though a Chinese province since 1884 it came to be ruled by warlords under Russian influence.



The Mao-Zhou war machine was determined to take over and militarily hold both Sinkiang and Tibet as an assertion of new China’s self-definition against Russia and Britain; hence their denunciation of Nehru as a pawn first of Britain and then of Russia. China building a road surreptitiously between Sinkiang and Tibet through Aksai Chin was reminiscent of Russia’s coercive behaviour against China in building the Trans-Siberian Railway through Chinese territory to Vladivostok. At worst, the Indians would have to admit that erstwhile J&K State since October 1947 had become an ownerless entity whose unclaimed territory had been carved up by force by the new Pakistan, new India and new China.



From an Indian standpoint, the traditional recognised boundary placed Aksai Chin clearly in Ladakh and not Tibet. Aksai Chain is a salt pit without “a blade of grass” but for all anyone knows, it could be rich in minerals. Karakorum Pass is also newly valuable to the Chinese as they seek to develop a land-route from Baluchistan’s Gwadar Port through Pakistan to China. If India has lost Aksai Chin and Karakorum Pass by force of arms without compensation, force of arms may be the only means of retrieval. Due compensation from China could be Chumbi Valley between Sikkim and Bhutan, and China seems once to have mentioned mutual perpetual lease of Aksai Chin and Chumbi Valley.



From a Tibetan point of view, the Amban representing the Chinese Emperor was driven out of Lhasa in 1912 and Tibet was independent of China for 38 years. Tibet has as much of a claim to be independent of China as Poland or Ukraine have had to be of Russia. As for the McMahon Line, it is indeed legally non-negotiable between China and India as it flowed directly out of the Anglo-Russian Treaty of 1907, and it was under that Treaty that China received international recognition of its formal suzerainty over Tibet since 1720 until that time. Mao once likened Tibet to the palm of a hand with Ladakh, Nepal, Sikkim, Bhutan and Assam as five fingers. Modern China must decide between such a metaphor of Maoist expansionism (which India would have to militarily resist) and joining the world of international law created since Grotius. Democratic conditions in Tibet would also have to be insisted upon so the Dalai Lama and other Tibetans may return home from India in peace and freedom.