When Adam Smith Met The PM

My favourite story of Adam Smith is of the time he met the then Prime Minister, William Pitt the Younger. This was in 1787, three years before Smith's death. At the time, Smith was very ill - "wasted to a skeleton." And as for the younger Pitt, he was "at the moment reforming the national finances with the Wealth of Nations in his hand." John Rae describes the incident thus:

... they met on one occasion, of which recollection has been preserved, at Dundas’s house on Wimbledon Green, - Addington, Wilberforce, and Grenville being also of the company; and it is said that when Smith, who was one of the last guests to arrive, entered the room, the whole company rose from their seats to receive him and remained standing. ‘‘Be seated, gentlemen,” said Smith. ‘‘No,” replied Pitt; ‘‘we will stand till you are first seated, for we are all your scholars.”

About Pitt's devotion to Smith's ideas, Rae writes:

Pitt always confessed himself one of Smith's most convinced disciples. The first few years of his long ministry saw the daybreak of free trade. He brought in a measure of commercial emancipation for Ireland ; he carried a commercial treaty with France ; he passed, in accordance with Smith's recommendations, laws simplifying the collection and administration of the revenue.

Pitt was only 24 when he became PM. A popular ditty commented that it was "a sight to make all nations stand and stare: a kingdom trusted to a schoolboy's care." Rae also records how Smith was impressed by Pitt:

Smith was highly taken with Pitt, and one evening when dining with him, he remarked to Addington after dinner, ‘‘What an extraordinary man Pitt is; he understands my ideas better than I do myself.” Other statesmen have been converts to free trade. Pitt never had any other creed; it was his first faith. He was forming his opinions as a young man when the Wealth of Nations appeared, and he formed them upon that work.

To fully appreciate the influence of Adam Smith in his own lifetime, it is necessary to note that he had always been a devoted Whig - while Pitt was a Tory. However, it is equally noteworthy that Pitt preferred to call himself an "independent Whig." You can read more about Pitt here. He was one of Britain's better prime ministers, known affectionately as "Honest Billy." When he died, he left £40,000 in debts. He is buried in Westminster Abbey.

Adam Smith's Wealth of Nations became the "canon of western civilisation" for at least the next hundred years. Things changed with the advent of socialism - and then Keynesianism. But these false philosophies are on their way out, and let us hope that 2011 will see their final defeat.

A very happy new year to all of you.

An Arrow Against Error - Take # 2

The other day, I had briefly written on how Science that deals with the objects of nature - through the method of observation and measurement of "regularities" - cannot be allowed to transpose this method into Economics, because in The Market all data are in a permanent flux and there are neither regularities nor any "mathematical constants." There are only "variables."

I then briefly described the methodology of the Austrian school of economists, how their "subjective" focus made them look into the human mind and find regularities in "laws of thought."

Thus, the laws of demand and supply are laws of thinking common to us all - they are not our "responses to stimuli." Our actions are guided not by external events, but by our thinking.

The other day, I began a re-read of Ludwig von Mises' Theory and History and found that in the introduction itself, he makes this point extremely well:

...we do not know how external events—physical, chemical, and physiological—affect human thoughts, ideas, and judgments of value. This ignorance splits the realm of knowledge into two separate fields, the realm of external events, commonly called nature, and the realm of human thought and action.

Mises goes on to explain the difference between the science of human thought and action and that of physics and chemistry:

The sciences of human action start from the fact that man purposefully aims at ends he has chosen. It is precisely this that all brands of positivism, behaviorism, and panphysicalism want either to deny altogether or to pass over in silence. Now, it would simply be silly to deny the fact that man manifestly behaves as if he were really aiming at definite ends. Thus the denial of purposefulness in man's attitudes can be sustained only if one assumes that the choosing both of ends and of means is merely apparent and that human behavior is ultimately determined by physiological events which can be fully described in the terminology of physics and chemistry.

Mises goes on to describe the difference between objects of nature and Man

Epistemologically the distinctive mark of what we call nature is to be seen in the ascertainable and inevitable regularity in the concatenation and sequence of phenomena. On the other hand the distinctive mark of what we call the human sphere or history or, better, the realm of human action is the absence of such a universally prevailing regularity. Under identical conditions stones always react to the same stimuli in the same way; we can learn something about these regular patterns of reacting, and we can make use of this knowledge in directing our actions toward definite goals. Our classification of natural objects and our assigning names to these classes is an outcome of this cognition. A stone is a thing that reacts in a definite way. Men react to the same stimuli in different ways, and the same man at different instants of time may react in ways different from his previous or later conduct. It is impossible to group men into classes whose members always react in the same way.

[You can find a PDF of the book here.]


Thus, statistical measurements and mathematical "modeling" are inappropriate for the Science of Economics, which must rely on "discursive reasoning." Economics is a "logical science." You will not find a single mathematical equation, statistical chart or table, nor any graphs in any book by an Austrian economist.

A few years ago, I read somewhere that Mises used to tell his students to carefully study An Introduction to Logic and Scientific Method by Morris R. Cohen and Ernest Nagel. I got myself a copy. The last chapter is titled "Fallacies" and its third and last section is "Abuses of Scientific Method." In this section, under the sub-heading "The fallacy of Simplism or Pseudo-Simplicity" the authors have an interesting example of why "ideas" matter - or, rather, that the world of matter and the world of ideas are separate fields of inquiry:

Thus popular materialism thinks it is scientific in arguing there is nothing in the world but matter, because everything we can talk about intelligibly contains matter or reference to it. But obviously, erroneous views exist in this world, and the materialist cannot argue that errors are themselves material. Errors do not exert electric or gravitational influence. And if he argues that only matter has real existence, he has only given us an implicit definition of "real existence"; he has not effectively denied that there are other elements in this world besides matter.

What you see in all those charts and graphs and mathematical equations is not "science." They are all examples of "pseudo-simplicity." Hayek called this "scientism" - the imitation of the methods of science. But it is really worse than that. Because it seems simple to grasp, it conveys its errors more powerfully.

A great example of such a "pseudo-simple" textbook is the best-selling one by Paul Samuelson. It used to be in technicolour in my time, with charts, graphs and whatnot. It trained you to see the world in Keynesian complexities. Yet it was "simple."

Robert Higgs of The Independent Institute has written of the "dangers of Samuelson's Economic method" - and you can find this article here.

After long and thorough reasoning, Higgs concludes:

Seventeen years ago, Reason magazine invited a number of writers, including me, to contribute a brief entry for a feature called “Know Thy Enemy.” The idea was that each of us would “suggest a book published in the last 50 years that is significant because it has helped promote wrongheaded ideas with serious consequences” (1993, 32). For my contribution, I selected Samuelson’s Foundations. If I had to identify such a book today, I still could not think of a more apposite choice.

Incidentally, Paul Samuelson was the first American to win the Nobel prize in Economics, which he received for having "done more than any other contemporary economist to raise the level of scientific analysis in economic theory."

Indeed, errors have a material existence. And they cause havoc. Especially in the Science of Economics, which concerns human survival. Mainstream Economics is nothing but error - beginning with their epistemological foundations, their very method, their "theory of knowledge."

Friedrich Hayek wrote a slim book on the history of positivism titled The Counter-Revolution of Science: Studies on the Abuse of Reason. Well worth a read. The "IIT-IIM mind" is the perfect example of the deliberate cultivation of such mindsets in socialist India - all in error. The "abuse of reason."

To understand the Austrian method in a few pages I suggest Hans-Hermann Hoppe's excellent introduction, which you can find here. Read the first chapter a few times. The second might just confuse you, so you can leave it for some other time.

What Is An Indian "Political Party" Today?

What is a "political party" in modern India's "socialist democracy"? This becomes a serious question at a time when the CONgress is morally, spiritually and intellectually bankrupt, when Hindutwits appall, when Commies seem insane, and as for the rest...

The other day, I read this Times Crest article that recorded some strange facts about the "student politics" of the Trinamool Congress in Kolkata.

Here is Strange Fact #1:

Said Samit Kar, sociology professor at Presidency: "I don't find any ideology in student politics now. It's a means to establish hegemony in colleges.... Yes, there was violence during the Naxalite movement, but there was also some kind of ideology, flawed perhaps. That is missing now."

Politics without ideology?

Also, do note that "real students" - that is, those who "study" - stay away from all this shit:

[This violence is]... the surrender of student leaders to political parties capturing campus politics. The intrusion has been possible because of a vacuum created by a disdain for politics amongst students. This alienation has given space to external forces grabbing students' unions, most of which earlier went uncontested to the CPM's student wing, the SFI.

But there is a lot of violence, including killings - and a lot of money is being spent by the student's wing of the Trinamool Congress. This is "legitimate party politics"!

And there is no "ideology"!

The Trinamool Congress is just an off-shoot of the main CONgress. The two are combining to oppose the Commies in the next elections. The Trinamool leader is a "rail mantri" - like Laloo.

Since we are on the subject of "student politics," and the CONgress is telling anyone who wants to listen that it is 125 years old, allow me to record how our Grand Old Political Party was founded.

Allan Octavian Hume, a retired East India Company "civilian" - and a "Haileybury man" - wrote to all the graduates of Calcutta University. He called for 50 volunteers "to promote the mental, moral, social and political regeneration of India" - and the enthusiastic response he received led to the formation of this Great Mistake, in 1885.

And as for the "ideology" of the original INC under the guidance of the Haileybury man Hume, the following is an extract from Surendranath Banerjea’s presidential address to the Indian National Congress in 1895:

England is our political guide and our moral preceptor in the exalted sphere of political duty. English history has taught us those Principles of Freedom which we cherish in our lifeblood. We have been fed upon the strong food of English constitutional freedom. We have been taught to admire the eloquence and genius of the great masters of English political philosophy. We have been brought face to face with the struggles and the triumphs of the English people in their stately march towards constitutional freedom.

[A longer extract from this speech is available in this earlier post.]


This was not the Marxist-Socialist-Nehruvian "Soviet model" CONgress that has misruled India since 1947 - who don't know what "constitutional freedom" means.

In 1895, when Surendranath Banerjea headed the INC here, Britain was still in the Victorian age and the ruling ideology was "Gladstonian liberalism." The British Labour Party had not yet come into being.

Surendranath Banerjea spoke the language of a "classical liberal." It might be pertinent to note that today, if some classical liberals in our country attempted to establish a political party, it is illegal. Ask SV Raju. Or Sharad Joshi.

A few months ago, the socialist Supreme Court of India upheld the legislative ban on political parties that do not adhere to socialism - and I wrote that the judges were being "patriotic."

Politics is a "civilising activity" that enables the formation of a political community through the open clash of competing ideas - which is why "debate" is really what MPs are supposed to be doing. In India, one set of ideas is being deliberately and brutally kept out. This is to the loss of the Indian people. I find it hilarious when Barkha Dutt claims ours to be a "liberal democracy" - and her primetime show is called "We, the People." This reveals that the "liberal" tag is important for our enemies!

Choose Between Producers And Consumers

Yesterday, I asked my reader to choose between shopkeepers and planners - and proffered the reasoned advise that it would be prudent to opt for The Market.

It follows that Unilateral Free Trade is an essential part of this civilised means of survival - "I shop therefore I am" - for only then you will find all the shops stocked with all the goodies possible from all over the world. As a Consumer, you will truly be King.

Quite obviously, the Producer will not like it - and will argue for Protectionism.

Protectionist producers are "schizophrenic": they are "divided selves." They do not see themselves living both roles in their daily lives - of being both Producer as well as Consumer.

Thus, 20 years ago, if Rahul Bajaj wanted cheese, he'd get only Amul: The Taste of India; and if Kurien wanted a scooter he'd get only Hamara Bajaj.

Society can follow only one policy - either for Producers or for Consumers.

A Producers' Policy is anti-social; it creates scarcity and monopoly.

A Consumers' Policy is in the best interests of the "commonwealth"; no particular interests are served. There is abundance. There is economic growth and development - because everyone's consumption improves.

This is very good for daily wage earners - for they get to spend their daily wages on the best possible goods the world has to offer. In socialist India, there are many who profess to champion "workers' rights" - but always in their capacity as Producer of labour; never in their capacity as Consumer of wage goods.

Cheese is one such "wage good." And we live in Amul Land, one billion of us. Here is today's news of some heavy-duty "diplomatic" fuck-ups between the USSA and our Central State minister Sharad Pawar over the entry of American cheese into Indian markets. The report says the respective representatives of their central states will soon issue a "joint statement."

If Liberty prevailed we'd smoke the joint and buy whatever cheese we liked - and, did you know that De Gaulle once said, about France, that "you cannot rule a nation with 249 kinds of cheese." I have never heard of any great American cheese. What about Italian cheese, Swiss cheese full of holes, Dutch edam, English cheddar? And think of all the "joint statements" that will have to ensue. Then think of the WTO - a club of politicians and diplomats.

Unilateral free trade snaps all relations between Politics and international trade.

It is noteworthy that the politician Sharad Pawar, who in his capacity as Central State minister is denying Indian consumers cheese, is claiming to be doing so in order to "protect the consumer." He says there might be some "non-veg stuff" in the American cheese so he must stop its entry in order not to "hurt religious sentiments."

Yet, why can't we leave that to The Consumer. You get locally tinned corned beef and a wide variety of fresh as well as processed pork products in Goa and no Hindu or Muslim "religious sentiments are hurt." Further, shopkeepers will step in to stock goods - and it is they who should really decide which goods not to stock in case they do offend customer sentiments. This is "local knowledge." And we can have compulsory labelling for non-veg contents. And by "compulsory" I don't mean statute - it could be a market dictate, like MacDonald's in north India not selling beef burgers. But India is a huge place. Lots of local cultures. There are many cities in India where I am sure MacDonald's can happily sell beef burgers. So why can't we leave it all to consumers and shopkeepers? Why drag the Politician into cheese? This one's already got his hands full with cricket and sugar.

You are a Consumer. It is only in a Free Market that You are truly Sovereign. Do you gain materially when politicians intercede? Do you like "joint statements"?

If not, raise a shout for Unilateral Free Trade!

And if you are a Producer who disagrees, let me quote Bastiat for you:

Competition is Liberty - and the absence of competition is Tyranny.

You cannot Force us all to buy your products by using the guns of the customs department against your competitors.

This is TYRANNY!

Choose Between Shopkeepers And Planners

In my previous post, I wrote how "improved consumption" should be seen as a sign of "economic development." Since there are many among us who deride "consumerism," allow me to elaborate. After all, from the 1950s to the 1990s, why did millions of Indians migrate to the West - if not for "improved consumption"? If some nations are considered "developed" today, the only reason for this status is that their citizens are able to consume more and better goods. In the socialist India I grew up in, there was nothing at all to consume. The fact that the Indian consumer is far better provided for today than he was then is in itself proof of the validity of "economic reforms" in the 1990s. So let us not underrate the importance of consumption. Consumption is the goal of all production. We produce in order to consume.

In that post, I discussed the Bania shopkeeper:

In the small market town 3 kms from the village where I live in south Goa - the only market town in a vast, rural (and forested) district - is a Bania shopkeeper. His little shop is always crowded with poor villagers who come from miles around to buy this or that, in very small quantities. And he never fails them. I always get my carton of cigarettes from him - and he stocks hundreds of other goods. We should pause to appreciate the tremendous amount of diligence that goes into running such a shop, upon which so many rely, and how he "improves their consumption." When shops and markets close, people suffer - especially in far-flung parts of the empire. We may also note that all the mathematics the Bania uses are the four operations of Arithmetic.

Some additional points need to be noted: First, that this Bania, like all entrepreneurs, "makes provision for the uncertain future." When he buys his stocks, his mind is on the future needs of his customers, which he tries to successfully anticipate. Further: he invests his own money in provisioning for that future. He is a capitalist and speculator - and he "serves the people" in a very important way, and that is by improving their consumption.

Now, there are two ways by which we can pursue "economic development" - one is by using such shopkeepers as the vehicle, and the other is by using the central planners of The State.

When we contrast shopkeepers with planners, we see that the two perform very different kinds of "work." The shopkeeper has his eye on physical stocks and their rate of depletion as he sells hundreds of goods to his customers. The planner has no customers. The planner studies government files and government reports. On the basis of the recommendations in these files, the planner decides to allocate "public capital" towards certain projects aimed at improving the lives of the people. All these projects are executed by the bureaucracy. In all these cases, the bureaucracy benefits - not the people, whose needs remain unsatisfied, despite all the complex mathematics and detailed statistics. It is no coincidence that anything planned is in short supply - like roads and electricity. Only entrepreneurs can produce "goods"; governments produce "bads."

Let us also not forget that the planner is spending money that does not even exist - by borrowing and by printing - and that both taxation and inflation impair consumption.

We in India therefore have to choose between the Market and the State. We must see that only shopkeepers and free trade can improve our material lives - not planners. We must call for a completely free economy.

No more 5-year plans. No more "Indian Economics" textbooks.

I have been singing this song for a long, long time. Barely a week into my stint as editorial writer for The Economic Times (1998-2002) I wrote one titled "Close it down, Monty" in which Montek, then heading the Planning Commission, was advised to close down this house of horrors. The next morning, I was surprised to find that my editorial had not appeared. I called the editor and he replied that he simply could not publish such an opinion. I immediately offered to quit - for I said I was unwilling to co-exist with central planning. The edit was published the next day. The time has now come for more and more journalists to think along these lines - and shout, "Close it down, Monty."

Open Society & Economy - And The North-East

The plight of North-East India was brought to mind by this recent editorial in Mint recommending that the "troubled frontier", i.e. the border with Bangladesh, be "fenced and sealed." This is a recipe that will cost the taxpayer hugely - and lead to the proliferation of border guards, guns and checkpoints. The North-East is underdeveloped because it is not properly linked to the rest of India. Today, Sikkim and Arunachal are hoping to open the border with China. Will autarky be good for the North-East?

Socialism, central planning, and "balanced regional development" have all failed the North-East. So the very idea as to what constitutes "development" must change. No longer must centrally funded "projects" constitute development. Rather, development must be seen as increased "consumption" on the part of the ordinary people. Ordinary people buying mobile phones should be seen as development - and not some PSU.

When we turn the discussion to market-led development, the focus immediately shifts from politicians, planners and bureaucrats to traders and entrepreneurs. In many cases, those who undertake such trading activities will necessarily be "outsiders." These outsiders should be seen as valuable and useful - and not as easy pickings. I have for long heard horrible stories of how Bania shopkeepers who venture into the North-East are treated - especially by all the "rebel" groups. So, to begin, let us understand how these Bania shopkeepers benefit a local population.

In the small market town 3 kms from the village where I live in south Goa - the only market town in a vast, rural (and forested) district - is a Bania shopkeeper. His little shop is always crowded with poor villagers who come from miles around to buy this or that, in very small quantities. And he never fails them. I always get my carton of cigarettes from him - and he stocks hundreds of other goods. We should pause to appreciate the tremendous amount of diligence that goes into running such a shop, upon which so many rely, and how he "improves their consumption." When shops and markets close, people suffer - especially in far-flung parts of the empire. We may also note that all the mathematics the Bania uses are the four operations of Arithmetic.

The land-locked North-East, the furthest-flung part of this empire, presents to The Market the appearance of an unexplored (and unsafe) "frontier." The real foot-soldiers of The Market in this frontier are the intrepid traders. Small traders. Outsiders. Travellers. The specific purpose they serve is that they improve consumption for the local people. Thus, they should be encouraged. Just as any "trade delegation" from abroad is to be welcomed.

The alternative, "closed society" view of one state-one people-one leader - what the Nazis called ein reich, ein volk, ein fuhrer - is seen far too much in local politics these days, all over the land. This view requires fences, border guards, checkpoints and "papers." Consumption does not improve. Taxes are misspent.

Since the editorial specifically recommends a border fence between Meghalaya and Bangladesh, allow me to add something about Shillong. The British built this city, which was then the capital of the entire North-East and is today the region's educational capital. I have never visited Shillong, but I recently read a great contemporary novel set in this city, and the picture it offers is of a town with many markets, trades and professions, churches, schools and colleges - and also a very mixed population. The protagonist is a Muslim girl from UP, a college teacher, with a Manipuri boyfriend (she even eats pork momos!). There are, however, some boors who go round harassing outsiders and extorting money from shopkeepers. One shopkeeper is even shot dead. (Brings to mind a thought: A gun is a consumer durable that serves to make the consumer more durable.)

Instead of a border - fenced and sealed - between Meghalaya and Bangladesh, I suggest a great big highway running from Shillong to the Bangladesh port of Chittagong, so that container traffic can enter the North-East directly from the nearest port. Chittagong is also close to Tripura and Mizoram. The investment in the highway could well come from an entrepreneur in The Market.

There are troubled parts of the North-East - the entire border with Burma is troubled - but there will perhaps always be troubled parts on this troubled planet. All we can do is promote the market ethic. And hope it spreads. But it bears repetition that small traders are the foot-soldiers of the market economy in such "frontiers." I borrow this particular word from Peter Bauer's The Development Frontier: Studies in Applied Economics, in which he writes about Africa - and the skills of the small traders there.

These "development frontiers" of the Third World - or should I say the "socialist" Third World - present a picture that is not very different from parts of Eastern Europe in the 15th and 16th centuries, when Poland-Lithuania was underdeveloped and underpopulated. The lords of all the vast lands were poor. What saved them were the great migrations of the time, which brought urban Jews from west to east. The Polish lords responded by settling them in their own towns and letting the urban market economy develop. This is how vodka came to eastern Europe. All these urban trades "improved consumption." Bangladeshis are great migrants. They are found all over India and are hard-working and honest. It was 7 AM one morning in London when I went out looking for cigarettes. Only one little cubbyhole was open - run by a Bangladeshi.

There is lots and lots of hope for the North-East. Scotland was extremely underdeveloped compared to England in Adam Smith's time. It was trade that made Scotland flourish - a trade that was encouraged and studied in Glasgow University. In those days this university produced more useful knowledge than Oxford and Cambridge combined. There was Adam Smith, of course. But also James Watt, inventor of the steam engine that powered the next century. And there were others as well, in Physics, and in Geology. The novel I read about Shillong paints a horrible picture of the State-run higher education system today.

Like the North-East, Switzerland, too, is land-locked and mountainous - and was once poor. At a souvenir shop in Interlaken I found figurines of Swiss women carrying bundles of firewood on their heads. The Swiss have succeeded because of peace, free trade and free enterprise, urbanisation and a top-class transportation system. Goods have to physically travel. Transport is the key, not border fences.

Recommended reading: My recent column in Mint, titled "Catallaxy: Key to an Open Society."

We Don't Need Trade Policy

In yesterday's post, I wrote of some "inhuman action" on the part of two very senior IAS men - the abolition of import duty on onions combined with State import of the same. Towards the end of the post, in which I examined the laws of inhuman thought that guide inhuman action, I concluded that "they think like communists." I ought to have written that they think like Nehruvian socialists.

How far we have come from the classical liberal training imparted to its civilians by the East India Company at their academy in Haileybury, of which one testimony goes:

At Haileybury, everyone had learnt that political economy was a matter of laws, that money and goods would move by themselves in ways beneficial to mankind. The less any government interfered with natural movements, the better.

It was one such classical liberal British colonial civilian who transformed Hong Kong - and the first policy there was unilateral free trade.

Contrast that with the IAS secretary of commerce vision: Duty-free onion market.

Now, imagine what will happen if a ship from Hamburg docks in a Goa harbour, laden with a million cases of weissenbier and one sack of onions. The customs will let the onions in duty-free and order all the weissenbier back!

Someone raised an objection to my call for the abolition of customs duties. She said: "What will happen to the revenue?" I said protectionists are NOT interested in revenue. Tariff "barriers" and tariff "walls" are such enormous obstacles to exchange that there is zero trade - and hence, zero revenue.

So that's the choice before all our port cities and towns - the duty-free onion market or the duty-free anything and everything market.

We don't need "trade policy."

Onions - And Kleptocrats

Onions are in the news because crop failure has resulted in high retail prices. Our The State responded by immediately banning exports. I thought this quite insane because, if crops have failed, there is not much to export anyway. Thereafter, it seems our The State woke up to its folly and abolished import duties on onions - which is the sensible thing to do, not just for onions, but for everything else as well. But then, after freeing imports (of only onions), true to form, our The State messed up - badly.

According to this report in Mint today, our The State has directed three State-owned firms to undertake all the onion imports required. This means that these State-owned companies will spend taxpayer money - without any concern for profit and loss. This is essentially a "kleptocratic" idea - for it will inevitably lead to gross corruption. Remember that the current CVC was indicted for corruption in a similar scam - he imported palm oil for the Kerala "public distribution system" to tide over a shortage.

What I find most entertaining is that two top-ranking IAS officers have been named in the above report for having taken this decidedly kleptocratic decision. They are cabinet secretary K M Chandrasekhar and commerce secretary Rahul Khullar. The report says Chandrasekhar is "personally monitoring the situation, [and] earlier in the day asked the commerce ministry to 'speed up' onion imports to augment domestic availability." And as for Khullar, he is quoted as saying, “I met CMDs of three public sector companies MMTC, STC and PEC and asked them to look around for import contracts (for onion).”

I find it hilarious that a cabinet secretary - the senior-most IAS officer in the land - should think that his job lies in "personally monitoring" the onion trade. Is he getting "tweets" from dealers all over the land? And who is he trying to kid?

After all, there is an IAS officer in Delhi who runs all the booze shops. Does he "personally monitor" the trade? Ask any hapless consumer and he will tell you that his favourite brand is often unavailable at his local shop.

Only competing private traders can be possessed of the "knowledge" required to solve the onion shortage problem. They will each seek to "buy cheap and sell dear" - and by their combined actions, conducted under conditions of open competition, they will wipe out the shortage and flatten retail prices. Since import duties on onions have been abolished, it is these private traders whose private capital and energies should have been unleashed. Instead, these top-ranking IAS baboons have ordered "public capital" and "public enterprise" to monopolise imports.

Indeed, if imports had always been free, the current crisis would never have arisen, because all these private traders would have found it profitable to begin importing long ago. Each one of them, with his "personal monitoring" of onion prices here and there, would be alert to wide differentials far earlier. Here again, the idea that a central mind can better perform market functions fails. And it fails in a critical area - thinking ahead. Always remember these words of Mises:

The social function of the entrepreneur is to make provision for the uncertain future.

Our "centralised mind," after all, woke up only after lots of news reports and even public outcry. They also claim to be "thinking ahead" - at least for the five years of their five-year plans. But if you look into anything that is being monopolistically planned - like roads, electricity and water - you will find a shortage. Like Bajaj scooters in the bad old days. And on the other hand, if you look for anything that is being free traded, like scooters today, you will find abundance. I had thought that, by now, our knowledge-based administrative elite would have learnt something that would affect their philosophical position on the market-state debate. Yet, it is plain that they think like communists.

Thus, it seems quite apparent that the IAS is part of the problem - the problem of "knowledge failure" that characterises our The State. Their precise role in our system of government lies in rendering knowledge-based policy advice to the representatives of illiterates. However, it is obvious that they themselves are suffering from "acute economic illiteracy."

To these accursed kleptocrats, I offer some words of Pascal that Peter Bauer was fond of quoting: "Struggling hard to think clearly is the first step to moral conduct."

Regularities, Science, And Austrian Economics

Today is the winter solstice - the day celebrated over 4000 years ago as marking the birth of the pagan god Mithras, the "Unconquered Sun," the patron of contracts, the subject of a previous post.

From the summer solstice till today, nights keep getting longer and longer. Night would completely swallow day were it not for this day, after which days start lengthening. And the sun remains unconquered - or so the ancients thought.

If we think about how our remote ancestors made "scientific" discoveries - like the equinoxes, solstices, seasons, and tides - we see the importance of "regularities." When there are regularities, the world is no longer chaos and confusion, and certain events can be accurately predicted. This kind of "knowledge" mattered greatly to nomads, just as they did to settled farmers or those who lived off the oceans. The methodology consisted of observation and measurement. This is how the first almanacs and calendars were created. This remains the basic method of "science" till this day, especially Physics.

Whereas the natural sciences and Physics in particular have advanced tremendously, thereby improving our lives, it remains a queer fact that the Science of Economics appears very late in human history. It was unknown to the ancient Greeks as well as to the Romans. Chanakya's Arthashastra has nothing to do with Economics at all, and is what I consider to be a treatise on the public administration of a totalitarian State. The first real economists of the world are from 16th century Spain - the "Scholastics" - and Lew Rockwell's speech in their honour provides a good introduction to them. Adam Smith had no idea of their work - and his Wealth of Nations came only in 1776. Why did the Science of Economics take such a long, long time to appear?

In my view, the simple answer to this question lies in the basic truth that there are no observable and measurable "regularities" in economic affairs. All the "data" that anyone can collect will always reveal a continuous flux. It is for this precise reason that "positivism" in Economics - based on statistics and mathematics - can never work.

Let us take an example from modern commercial "knowledge": a recent report from Deutsche Bank on inflation and "monetary policy" in India (this link is available for the next 90 days only). The "research team" of this major multinational bank is looking for "regularities" so as to be able to make "predictions" - but the stark fact remains that they cannot find any. Their data-crunching reveals that different "rates of inflation" are occurring in different classes of goods.

This is proof of a very huge error in mainstream Economics - the belief that there exists a strict mathematical relationship between the money supply and the "price level." There is, in fact, no such price level at all. All the data is in a state of flux. Thus, the scientific basis of "monetary policy" is complete nonsense. If there was "sound money," commercial banks would not waste money "studying" such things.

In any case, inflationism is "deliberate policy." It is the deliberate choice of an immoral and anti-social method of financing State expenditure: and banks should know that.

The credit for making Economics truly "scientific" goes to the Austrian School, whose founder, Carl Menger, discovered the idea of "subjectivity" - that is, of valuation within the individual mind - in his very first work of 1871, just about 100 years after Adam Smith. This unique approach - of looking for regularities within the mind rather than in the outside world of observation and measurement - took him directly into methodology, which was the subject of his second book in 1883. These initial ideas were fully developed by Ludwig von Mises in the next century.

At the core, the uniquely Austrian method lies in an examination of the "logical structure of the human mind" - an exercise that reveals certain "categories of thought" in matters economic that are common to all of us. For example, the category of Capital exists very much in the mind of the unlettered nomadic herdsman, who keeps a careful eye on the size of his herd to make sure he is not "consuming capital." Nomadic herdsman were the first "capitalists" - and cattle were money in ancient times. The word "pecuniary" has its root in cattle.

Once we have our focus on the inner workings of the mind - how it thinks, the "laws of thought" that guide human action - we find an altogether hidden set of "regularities": these reveal, in brief, that the indirect exchange economy of The Market is completely "human." It is our "natural order." "Indirect exchange" refers to the intermediation of Money - a "medium of exchange," something that trading minds spontaneously created: Indeed, in Menger's Principles of Economics (1871) you will find a section "On the Origin of Money" that makes for highly enjoyable reading, written in lucid prose with pertinent references to ages past, unlike the "reports" and other jazz that come to us nowadays from the State, the universities, the chambers of commerce, and even multinational commercial banks, with all the numbers and figures and all that "positivist" measurement of the external world.

[Menger's Principles can be downloaded free here, thanks, of course, to the Mises Institute. Click on Chapter Eight to begin reading about the origin of money.]

A PhD scholar recently wrote to me about his proposal to build a computer-intensive, "agent-based model to study volatility." It seems this approach is proceeding fast apace in many western universities - a kind of "growth area," if you know what I mean. All I did was to point out the futility of looking for theory in "volatility." Theory must be looked for in "regularity."

The CONgress - And Liberty

The Times of India "believes" in the CONgress: today's lead editorial, "Down with corruption," begins with a crisp salute to the Party High Command:

As tough rhetoric, it was music to the public's ears. At the Congress plenary session, Sonia Gandhi demanded zero tolerance for corruption, listing steps needed to fight it.

These steps include "State funding of elections" - and the editors do not object to the use of the taxpayers resources to fund even the advertisement campaigns of "unknown" candidates from umpteen "parties"?

Music to our ears?

The music of the CONgress is playing itself out at a town in Haryana quite close to Nude Elly and we can tune into this music directly through this Rediff report of a journalist who actually went there - and spoke to CONgressmen from here and there - one of whom opined that this was just a "tamasha." At the end, two choppers took off - and Chacha Manmohan left with his "ten-car cavalcade."

Then there is the music of those who are watching all this - and this opinion piece from Yahoo India is written as a reaction to Rahul Gandhi's election tour of Bihar, during which he kept telling the assembled poverty-stricken crowds that the CONgress is the "party of the poor" - that the CONgress is "their party."

In reaction to this claim by Rahul Gandhi, the author says:

...someone in the crowd should have stood up and hurled a chappal in utter disgust. Or some editor should have used the pen [or keyboard] to prise open some very bare and basic questions.

Since the editor of the ToI will not do it, allow me to "prise open some very bare and basic questions."

First, is it even conceivable that all our poverty-stricken masses are going to improve their economic well-being because of the actions of politicians and bureaucrats? Or with "foreign aid"? Or with IMF-World Bank loans?

If poverty is be meaningfully tackled, what all poor people need is the Liberty to buy and sell in markets. Now, markets are never in "villages"; they are always in "towns." And then in "cities."

And how do poor people who go to cities and towns fare?

How are transport connections between villages and town markets? And between towns and cities?

What are all the "land scams" in all the cities and towns?

Instead of "rural land reform," would the poor be better off with "urban land reform"? - and with aggressive urbanisation?

Choose between a room in a city and an acre or two in a village? is a question I have often posed to rural youth - and they have always refused the rural acres.

What about "economic freedom"? Bars and taverns in Europe have traditionally served poor people. In cities there is "nightlife" - an "entertainment industry," a "performing arts industry" and all that. City economies are 24-hour economies. In this area, the plain fact is that The State is an "obstruction."

If the urban market economy is free, lots and lots of poor people "get jobs" - thus, they provide for themselves and even pay taxes. They need no "welfare." They need Liberty! The blanket solution is constitutional Inviolability of Property.

Economic freedom is also about Consumption - for we "produce" only in order to "consume." We work all day for the pleasure of spending our earnings. A free, internationally competitive market arena is good for each citizen in his capacity as Consumer. Cheap Chinese toys mean that poor kids will have toys.

We are a Protectionist country. This goes against the interest of every citizen in his capacity as Consumer. This especially impacts the poor - because they possess even less to exchange. It is a heartening sight to see that the consumption of our poor people has improved because of many multinational companies. Free trade, free capital flows, a free market for the widely divergent skills of our poor workers - these are all in the interest of poor people.

But our The State insists it wants to give them "welfare"! And, we the taxpayers have to foot the bill. To make matters worse, The State, in its eagerness to buy votes, even engages in the criminal insanity of inflationism to fund it.

I think Self-Help is the best help. I think dependency is awful. I think the very idea that The State exists to "help the poor" takes away from human motivation the positive encouragement that poverty-stricken societies need. Deng famously said, "To be rich is glorious." The best way to help the poor is to give them the freedom to succeed - as producers and consumers - in urban market economies. Encourage each and every business and industry.

I could list 1000 viable businesses that are simply "not allowed" in our cities and towns - beginning, of course, with ganja-charas cafes. In much of India (outside Goa) you cannot even open a bar! Delhi is a horrible place to live for any drinker of moderate means. Poor people in our cites drink really sad stuff. And you don't get feni outside Goa! Internal free trade, anyone?

Don't forget about mahua.

And the dance bars of Mumbai - a city where "stars" get extremely rich because of dancing skills. And think also of the musicians who backed them up, the bartenders, the waiters, and all the other staff, and their suppliers - like the booze wholesaler.

We need Liberty - not The State, which is an "obstruction." And we need this Liberty in our urban market economies.

Liberty matters greatly to port cities - which could immediately emulate colonial Hong Kong's unilateral free trade policies and prosper. Tariff walls, by their very name, are "obstructions."

With unilateral free trade, all our port cities could become duty-free shopping areas - and compete for shoppers and tourists. But these guys are an "obstruction" to the supermarket business as well!

Note that all "welfare" is about villages.

The best way to attain liberty is to make Private Property constitutionally inviolable. This is the surest guarantee from State interference. This will preserve Liberty and create Capital. And, with capitalism, Civilisation will proceed. There will be more and more cities and towns. More markets. Fewer people will live in villages.

Very few do even today. An exodus from rural to urban environs has been an ongoing story in modern India - a phenomenon the CONgress never understood. Their "economic development" ideas are all centred on villages, rural development, and welfare.

The CONgress represents just one thing: ORGANISATION.

This is an organisation that is a principal participant in this "democracy" - which is central to the control of State organisation, and a centralised State at that.

There is a crucial difference between a "business organisation" that produces "goods" and a State organisation that produces "bads" - like obstructions. The lesson is that the former must be encouraged while the latter must be severely restricted - and this is the key lesson that our ancestors had never been taught. They created this "organisation" to fight for "freedom" - and now we must wonder what exactly has happened to that freedom. It is a very deep philosophical error.

So you can "vote" - for the CONgress or some other "political organisation," all of whom produce "bads."

On the other hand: you cannot open a beer bar or a hash cafe! Or dance. Or sell mahua.

This vote will get you more of "them."

With Liberty, you can attempt to do anything you yourself want to do - and have the greatest chances of succeeding.

We Need A Big Bang

The other day, I wrote about a Mint editorial titled "A crisis of legitimacy" - which said that Chacha Manmohan S Gandhi has flopped real bad. Now, another major league editor has echoed this view: Shekhar Gupta of The Indian Express, in a column titled "The meteoric fall of UPA-2."

Gupta writes:

In the Westminster system, whatever his personality, the prime minister is where the cabinet’s centre of gravity resides. If you look at UPA 2, it has not seemed to be the case at least in the last six months.

He concludes with what he thinks will emerge from the ongoing AICC meet:

... usual swagger, verbose platitudes and loud declarations of loyalty and sycophancy.

At the AICC meet, the CONgress has given Sonia Gandhi another term as President - and she has loudly supported Chacha.

Yet, politics is about political ideas and ideals - not personalities. As far as Sonia's and Chacha's politics go, we know all about that - welfare. Add to that "central planning," central banking, PSUs, a hatred for Private Property, a hatred for free markets, and a hatred for Liberty. And yes: a great desire to "educate" the young - forcibly!

It is this "idea" that has failed. This is "knowledge failure."

So what do we do?

I found one column arguing for "radical overhaul":

A big bang cleansing of institutions, bureaucracy, corporations and political milieu is required. This is unlikely to happen of its own accord. The collective energy of the people rising up to demand this radical overhaul may well have to be the trigger. Such “revolution” is only likely after major, disruptive change.

I am all for the "big bang" - but this certainly need not be "major, disruptive change."



If Property becomes constitutionally inviolable - and Liberty prevails - there comes about "order," not "disruption." Legislations, edicts, decrees - these are disruptive. In the critical area of money, it is inflationism that is "disruptive." Many have said socialism is "anti-social."



There is a "natural order" in city markets. When Srinagar, Kashmir, returns to "normalcy," the pictures you see are of streets packed with people, cars and two-wheelers - all of them out to do their shopping.



So, it is essential that we change the focus of our thinking of a "social order" - from that of a monolithic sub-continent being magically and benevolently ruled from Nude Elly, and discover the pre-existing social order all around us. We must think of city and town markets, aggressive urbanisation - and Mayors.



In other words, where central knowledge has failed, only local knowledge can work. The core of "politics" ought to be restricted to that polis. Competing urban governments put government itself on The Market; a "vote with the feet" is a more effective way to achieve good local government than the ballot - an insight that came from Charles Tiebout.



Thus, the "idea" that I am suggesting - of city and town markets, free exchange based on Private Property - is not in any way disruptive of society. On the contrary, it is "socialism" which is disruptive - with its nationalisation, land acquisition, and endless legislation. All these are the ways of "interventionism" - an activity that can be rightfully called "irrational," or even "criminally insane."



(If you click on the label "interventionism" on the right-hand bar, you will find many posts in support of my opinion.]



So the Great Big Bang must first of all be in our own minds - the conception of another idea.



If we achieve this and find the "collective energy of the people rising up to demand this radical overhaul" - then they will know "what exactly to demand." One possibility of such a big bang being peaceful is a Magna Carta style "Charter of Liberties" signed by the highest functionary representative of State Sovereignty on public demand. A previous post on constitutional "limits" on The State in today's circumstances addresses the question "what exactly do we demand" in detail.



Before you ponder over these important issues, it might help to first read Murray Rothbard's essay "Do you hate The State?" Comparing his "big bang" position on what needs to be done about The State to the middle-of-the-road "gradualist" position of other "libertarians," Rothbard concluded thus:

Perhaps the word that best defines our distinction is "radical." Radical in the sense of being in total, root-and-branch opposition to the existing political system and to the State itself. Radical in the sense of having integrated intellectual opposition to the State with a gut hatred of its pervasive and organized system of crime and injustice. Radical in the sense of a deep commitment to the spirit of liberty and anti-statism that integrates reason and emotion, heart and soul.

The opposite of radical is "conservative" - the one who wants to "conserve" and preserve the existing political system. We need to think "radical." Radical change.



Another good read: This LRC column titled "Who has integrity?"

Happy Days Lie Ahead...

In all the doom around, and all the gloom that looms ahead, I was mightily cheered by this forecast for 2011 by the celebrated "trend spotter" Gerald Celente. This is Forecast #7:

Journalism 2.0 Though the trend has been in the making since the dawn of the Internet Revolution, 2011 will mark the year that new methods of news and information distribution will render the 20^th century model obsolete. With its unparalleled reach across borders and language barriers, "Journalism 2.0" has the potential to influence and educate citizens in a way that governments and corporate media moguls would never permit. Of the hundreds of trends we have forecast over three decades, few have the possibility of such far-reaching effects….

So I raise a toast to all those at Google who have made blogging possible, and to Google Image that gets me the pictures.


And to the season of jollity that lies ahead.


Long, long before Christmas, the winter solstice was celebrated as the birth of the pagan god Mithras - the "patron of contracts": the very word means "contract" in Old Persian. And the "Unconquered Sun" lies in that little word:

Mithras stood for Contract, and therefore for fairness, therefore for Justice, therefore for honesty, therefore for Truth, therefore for light, therefore for The Sun.

The above quote is from Paul Kriwaczek's In Search of Zarathustra: The First Prophet and the Ideas that Changed the World - a wonderful history intermingled with travelogue written by a former BBC television programme-maker with special interest in Central and South Asian affairs. Kriwaczek is a Jew from Vienna - who successfully fled the Nazis and was raised and schooled in London. He was born in 1937 - and this, his first book, appeared in 2002. It is a testimony to wide travel, knowledge and a continuing deep interest in the "culture" of Persia and its surrounds, an area now known as "Islamic" but from where Jews and Christians also originated. The central story, his "search for Zarathustra," reveals that the sacred spot in Zoroastrian temples is named after Mithra - and that this is the very same Mitra of the early Rig Veda. This book is about Persia, where the Aryans came from - and it was a learning experience to read that in modern Iran, the Shiite Muslim population celebrates the Navroz with huge jollity - just like our Parsees. Muharram is sorrow; Navroz is The Party!


Note that Parsees are an "urban business community" - and, further, that they are "migrants."


Mithra is the "patron of contracts" - and Contract is the "Mystery of Capital" that Hernando de Soto finally solved. When Property is "represented" in pieces of paper, and these are exchanged and honoured, the entire Market Economy system kicks in with two huge advantages: first, that you can better Plan your own future, for all contracts are over a future period of time; and second, that Property, through exchanges into the future, becomes Capital.


In other words, what matters is not just property, but something representative of that property - the Title. With titles, you can enter into written contracts - so you have rent, mortgage, loans, collateral, sale, purchase, wills, bank deposits and, finally, the paper "banknote" of the goldsmith. Contract is covenant; it is promise.


Kriwaczek takes his reader through the bombing of London in WW2 - which unearthed a temple to Mithras under the Olde City of London - and then to where this temple has been re-built: next door to the Bank of England on Threadneedle Street!


I am now halfway through Kriwaczek's second book on the Yiddish civilisation. This "lost civilisation" is recreated with emphasis on its achievements - and it offers a fascinating glimpse into eastern Europe, both past as well as present, and to religious hatred. It is a tale of urban living, urban communities, urban trades. It is also a great story of the intermingling of races and faiths, and languages - and the fascinating tale of how an entirely new language "spontaneously" arose. How a "backward" area was "developed." I began my post with the "good news" of Journalism 2.0 - and Paul Kriwaczek is a great journalist I have found, thanks to my friend Varuna. Her name, coincidentally also from the Rig Veda, is that of the sky god worshipped alongside Mithra!


Sound Money and Free Banking Under Law - humanity's escape from fiat paper currencies and inflationism - require nothing much more than Contract: which is Private Law, conduced freely between Individuals, just as in the case of actual market exchanges.


This great journalist from the BBC has found for all of us the Ancient God of Contract - whose traces can be seen all the way from Hadrian's Wall to Samarkand right down to Mumbai.



Mithra is the "Unconquered Sun" - born during the winter solstice because that is when days start getting longer. This time of the year was celebrated 2000 years before Christ.


So I raise a toast to Mithra, the ancient god of contract - and pray that he may bless my journey through Journalism 2.0.

Sound Money and Free Banking under Private Law.

Crisis, Hero, Zero - And Journalism

The lead editorial in Mint today, titled "A crisis of legitimacy," is a historic document, for this is the first time a mainstream business daily has opined that Chacha Manmohan S Gandhi has flopped. The first para says:

A grave crisis of legitimacy afflicts the United Progressive Alliance (UPA) government. This is due, in very large part, to the absence of leadership in government and in the political system. There are no signs of this abating anytime soon.

And the edit concludes thus:

... the prime minister’s first and last line of defence has been his personal honesty and integrity. No one disputes that. But after five-and-a-half years at the helm of India, that shining banner has frayed into a tattered standard. The question is not about him or his honesty but what his ministers do; what do his partymen do; the inability of his government to carry out key, nay the very basic, tasks of governance. In this and much else, Manmohan Singh, in spite of his lofty credentials and even higher expectations, has been found wanting. In calmer moments, he will do well to reflect on what needs to be done to stem the rot that not only threatens his government but also the present and future of the country.

This crisis of legitimacy has many dimensions - political, economic, and legal. In politics, it is about certain legitimising concepts - like "democracy" and "socialism." In economics, it is about markets - as against "welfare" and PSUs. And in law, it is about Property - and legislation.

At another level, the crisis is about "organisations" - like the "political party," the bureaucracy, the armed forces, the State Police and the State judiciary.

What is most heartening is that some editors are realising that a crisis is underway. There are no simple and easy solutions to such a crisis - no "magic bullet" - but it might be comforting to note that this crisis is near universal: it afflicts the USSA and the EU too, where the very same legitimising concepts in politics, economics as well as law are also battling it out. So it is a long haul that lies ahead. More and more journalists must uphold Truth, Liberty, Property and Sound Money.

In order to inspire such journalists, I would like to introduce them today to the works of a great hero of 20th century economic journalism - Henry Hazlitt (1894-1993). His Economics in One Lesson (inspired by Bastiat, another great journalist) is a must-read, as is his The Foundations of Morality. Hazlitt became an economist under the personal influence of Ludwig von Mises - and it not unsurprising that he wrote quite a few critiques of Keynesianism that need to be resurrected and popularised today. He also wrote against "welfare" - and how Third World poverty cannot be cured by "foreign aid." For 20 years, his column in Newsweek upheld laissez faire capitalism and the gold standard; and railed against the machinations of central bankers, the IMF and the World Bank. Murray Rothbard honoured him on his 80th birthday with this tribute, in which he points out why Hazlitt remained ignored - and what follows is the first of five points:

In the first place, he lacks both a PhD and an academic post – those twin passports to intellectual and academic respectability. For a scholar to discuss or footnote a book by Hazlitt – no matter how important or scholarly – would be to lose caste and brownie points in the status-anxious world of academe.

Note that the Big Flop we started off discussing, our Chacha, has a PhD and has held academic positions - and that he has many friends in academia worldwide. It is precisely for this reason that I say we need many more self-taught journalists like Hazlitt - not only to take on academia, but also to enlighten the reading public.

To reinforce the fact that the university academics of our time are very much "part of the problem," let us turn the discussion away from the great hero Hazlitt to the Great Zero - Milton Friedman of the Chicago School, who won the Nobel prize in 1976. To most people, Friedman is considered a "free market economist" - but the fact remains that he was always a "court libertarian," one who helped the State in many ways, and who is also responsible personally for the "positivism" that characterises the methodology of mainstream Economics.

For example, it was Friedman who came up with the idea of a "withholding tax" (what we in India call "tax deducted at source"). It was also Friedman who conceived of "school vouchers" - a statist idea that does not question the role of State in education, and a vast budget for the same. Friedman and his Chicagoites are all believers in fiat paper money, in "stabilisation," in the notion that Economics can be divided into "micro" and "macro" - and that the State has a role to play in the "macro" domain. Friedman championed welfare as an "automatic right" - in the form of a "negative income tax." None of these ideas are even remotely "libertarian."

Murray Rothbard, whose tribute to Henry Hazlitt I have cited above, also penned a powerful critique of Milton Friedman and his Chicago School. This valuable document is available here. Rothbard concludes thus:

The libertarian movement has coasted far too long on the intellectually lazy path of failing to make distinctions, or failing to discriminate, of failing to make a rigorous search to distinguish truth from error in the views of those who claim to be its members or allies. It is almost as if any passing joker who mumbles a few words about "freedom" is automatically clasped to our bosom as a member of the one, big, libertarian family. As our movement grows in influence, we can no longer afford the luxury of this intellectual sloth. It is high time to identify Milton Friedman for what he really is. It is high time to call a spade a spade, and a statist a statist.

The great "crisis of legitimacy" that is currently underway is in many ways a crisis for academia - that is, "mainstream economics." And this includes the Chicago School. The only challengers to these views are the Austrians - and Hazlitt was very much an Austrian. Hazlitt taught himself - and wrote. That is what more and more economic journalists need to do.

Natural Evolution Of Society - And The BJP

As the CONgress faces terminal decline, the only "national party" that presents itself as an alternative is the BJP - the party of "Hindutwits," as Ashok V Desai calls them, who have the RSS and Bajrang Dal in tow. A chance conversation brought out the enormous dangers of such rulers - and I decided to write these down right away.

We were discussing "social norms" involved in the institution of marriage, and I made the point that human society is constantly evolving, in ceaseless flux, because certain pioneering individuals opt to alter their lives by dropping some traditional norms and adopting other norms, sometimes modern ones, sometimes adopted from other cultures.

In India, we see this all around us - from the love life of the stars of Bollywood to Gen-Next to our village folk who follow their ancient ways.

Some people don't like this sort of free social evolution.

And they are the "orthodox."

From ancient times to today, many an orthodoxy has been able to use State Power to prevent free social evolution. Whenever this has happened, civilisation has suffered.

In ancient times, religion was constantly evolving. There were various kinds of Jews, various kinds of Christians, and even Islam saw a split - and, under these principal faiths of the "Holy Land," there were traces of even older beliefs, from Mani's "Religion of Light" to Zoroaster's assertion that Evil is also a force ever-present in this world. There were many rulers who let things be, and did not interfere - like Cyrus the Great. Then there was peace and peaceful exchanges among diverse people with completely different sets of "values" - and civilisation trotted along merrily.

At other times, rulers adopted a religion or enforced an "orthodoxy." In all these times, peace gave way to war, massacres, mass migrations and worse.

Any "orthodoxy" is necessarily an interpretation of norms as observed in the recorded past - and it is just a "snapshot" of that past, a close-up of sorts, which does not reveal the other norms that might have existed in that society at that time.

I think it would be a terrible thing if religion and politics were to mix. A dictator who issues commands "in the name of God" is far more terrifying than a dictator who extorts his tax at bayonet-point but leaves god out of it.

Any enforced orthodoxy takes the whole of that society back in time. All natural evolution stops. Do we want that in our country?

On the other hand, quite apart from all these religious norms and their petty theological quibbles, the "secular" Law was also evolving in ancient society. Property had become a "norm" - a secular law - long before "thou shalt not steal" became a commandment. And as for Contract - it is a curious fact that the pagan god Mithras, whom the Romans worshipped, was known as "patron of contracts." A temple to Mithras was found under the Olde City of London; another close to Hadrian's Wall. And yet another in distant Samarkand!

Torts too have evolved. They were the customary law of the Anglo-Saxons. Restitution for damages is old, natural law.

Religion is a good thing, perhaps, but it must have its limits. The reason being that there are too many competing faiths. All should be free - and separate from the State. The primary "political" goal should be the preservation of the peace. The enforcement of any "orthodoxy" is unthinkable.

Further, the essential concerns of religion - like God, the afterlife, the soul, etc. - do not belong to "real life politics," which is about something else: real life, the here and now, life as it is lived on this planet, and particularly in this phenomenally diverse country.

A diverse society like ours, already evolving in many different directions, can only progress peacefully if it maintains a clear break between religion and politics. Religion is personal - and adoption of its rules are voluntary. On the other hand, there are the "secular rules" of Property, Contract and Tort, without which markets cannot function. It is only in a functioning market order that all our diverse people with different "values" can peacefully interact - and our society can progress. And I don't mean only material progress, but also "spiritual" progress, as pioneering individuals adopt alternative norms and lifestyles. Religion must also evolve freely. Only recently, among the Hindus, there have been alternative movements like the Brahmo Samaj and others. In the past, Buddhism and Jainism came out of our society.

The more I read about the past, and the more I read about the present, the more I am sick of religious hatred. And the politics of religion.

The rules and norms of religion may get you into heaven, but the secular rules of a market order will get you civilisation here on earth.