As a graduate student in the University of Rocheste, USA, you chose to take up General Equilibrium Theory as your field of research. What were the main reasons for choosing this field? What were the fundamental questions in this area at the time? How has the field of General Equilibrium Theory evolved since then?
അപ്പോള് അദ്ധേഹത്തിന്റെ മറുപടി വളരെ രസകരവും സംഷിപ്തവുമായിരുന്നു.
When I was a graduate student, it was clearly understood that general equilibrium was the only sensible way of approaching any problem and so the question of doing anything else seemed clearly unattractive. And then of course the problem of choosing among supervisors clearly vanished: you worked with McKensie of he would have you. So it was not as if there was an area called general equilibrium analysis. You chose whatever area that interested you but you chose the method of attack to be general equilibrium theory. There were people working on various topics in optimal growth, international trade and on dynamic aspects of equilibrium and believe it or not, on informational aspects but all of us chose general equilibrium methods. So there were many questions that students at that time analysed and tried to solve but there was an attempt at generality: what could be said in general without making too many assumptions. Or if you will, what minimal set of assumptions ensured that a particular result was true. It should be clear that results follow only because some assumptions has been invoked. Over time the method of general equilibrium fell into disrepute: people wanted sharp results and results which looked interesting so they resorted to very specific formulations and questions and the methods of Arrow Debreu and McKenzie and standards set by them were forgotten. As I said there is no field of general equilibrium theory: there is only a method of analysis. There was brief flicker when CGE models became a tool for empirical research; but these models are far too removed from the generalities of theory, making specific choices of preferences and production relations. This is true of other more fashionable areas today. As an example, much (if not all ) of contract theory deals with people with separable utilities thus denying the existence of income effects: this was some thing which would have been unthinkable to assume when we were students.
അതുപോലെ മറ്റൊരു ചോദ്യം ഞങ്ങള് J N U വിലെ C E S P കാര് അധേഹതോട് ചോദിച്ചു
You joined CESP at an early age of your life in 1973. You served the Centre for almost four decades. You, along with some other faculty members have played a major role in turning CESP into one of the premiere centres for teaching and research in economics. Please share your thoughts on how the centre has evolved over time.
I joined the centre when I was 28 and I am leaving it at the ge of 65 so almost four decades is right. From nothing to something is always a great step and I suppose the best thing that kept us going was the belief and confidence, that we had, that we were doing a better job than any other department of our times regardless of what people said. There was also in the preliminary years a feeling that we belonged to a club and we d=had great mutual respect for one another and this coherence paid rich dividends. Over the years as the centre grew in size from 6 members to now 24 or 25, the coherence diminished and the interest and preoccupation of faculty members with other activities grew. May be this has been the way that most other departments have evolved over time and we have not done anything different.
പിന്നെ ഞങ്ങള് അധേഹതോട് ഒരു പൂര്ണമായ ഇന്റര്വ്യൂ തന്നെ നടതുകയുണ്ടായ് ഇത് പ്രൊഫസര് അന്ജന് മുഖര്ജി സെന്റര് ഫോര് എകനോമിക് സ്ടടീസ് ആന്ഡ് പ്ലനിങ്ങില് നിന്നും വിരമിക്കുന്നതിനു മുന്പാണ്.
Some of the results which emerged in the area of general equilibrium theory in 1970s, fo instance the Sonnenschein-Mantel-Debreu set of results, appear to have attracted a lot of attention. How would you place these results in the literature? Some contemporary macroeconomists have argued that these results pose a methodological problem with the practice of deriving macroeconomic conclusions from microeconomic foundations. Do you agree with this view?
These results have been much misunderstood I feel: particularly the arguments that macroeconomic conclusions cannot be drawn from microeconomic foundations. In fact in this, there is no other way of proceeding. What the Debreu-Sonneschein-Mantel results show is that optimization does not restrain economic behavior in any meaningful way or that Samuelson's conjecture that one of the sources of meaningful results is maximizing behaviour is generally not true. However my own current research shows that the message of these results may be seen in a different way. Maybe what they are saying is that distribution of resources matter and this aspect has not been taken note of.
Two important areas of research in the field of Economic Theory gained popularity in the 1970s: information economics and the study of imperfect competition. The both are seen to have posed a few serious challenges to the general eqilibrium theory. Do you agree with this view? How were these issues dealth with in the context of general equilibrium theory? Do you find them satisfactory?
Not really; these areas did not pose any particular challenges: if these areas posed challenges it was to the notion of competitive markets and clearly competitive markets did not handle any of these notons well ruling ourt imperfect competition by definitions and informational asymmetries by default. But general equilibrium theory was not affected; its claims were not affected; the general equilibrium models taking into account informational issues or imperfect competition became difficult things but it was not as if the method of analysis crumbled. Economists gave up these methods because they could not find clear cut solutions and hence took to using short cuts coming up with solutions which were not real solutions to any real problems. Specific results began to be used as general and that brought about the many instances of policy failures that we have seen in our times.
In recent times you have worked in the area of economic dynamics, especially in applications of non-linear and complex dynamics in the field of economics. How important, do you feel, are these tools for an economic theorist?
These tools are basic for any theorist; in fact the standard assumption of linearity that is often made is invalid and conswquently non-linear methods are a must. In dynamics this creates fundamental problems and in fact since dynamics is basic to much of macroeconomics, the process of successful policy formutlation in any area depends on such methods. So not only are these methods of analysis important to theorists but it is crucial for any policy makers as well. This is what makes formulating policies difficult.
Your work on the Kolmogorov-Lotka-Volterra class of models have produced some of the most general and robust results in this area. How far, in your opinion, do these results address some of the concerns regarding well-known economic applications of this class of മോടെല്സ്?
I came to these models via a different rout: the Scarf example in general equilibrium theory. The ability to produce very well behaved dynamics in that model surprised me. In fact in 1998-99, I was invited by Kazuo Nishimura to address his group working on non-linear methods and I was the only speaker in five sessions spread over two days in Kyoto. I wanted a good example to exhibit the phenomenon known as Hopf Bifurcation. I realized that the Scarf example provided me with this example. Nishimura himself (together with Benhabib) had used this phenomenon to locate a cycle and this was the first time that someone had employed this method in economics. Discussing matters it quickly became pparent that what I had observed with Scarf was more widespread and the analysis of Predator-prey models followed. I presented this analysis in the centre and I remember that the OHP wire caught fire suddenly: it was thus memorable. It is not as if mathematicians were not unaware but economists appeared completely so. In spite of Samuelson's famous claim that Lotka-Volterra models were crucial to an understanding of much of economics. We tried to address some of the queries: found out what aspects of the formulations were responsible for the cycle and how robust these conclusions were and at the same time we also found out how to handle the question of bounded variables (along with Soumya). My general results indicate that there may not be too many other things left to find! May be there are! But applications are still possible in a very wide area of economics.
You have often emphasized the importance of economic theory in understanding economic problems. Can you elaborate on this?
I do not think I have any thing else to add on this: see for example my piece on this subject which appeared in the VKRV Rao Volume (Justifying Beliefs: The Role of Economic Theory, in Footprints of Development and Change, Essays in Memory of Professor VKRV Rao, ed. by N. Jayaram and RS Deshpande, Academic Foundation, New Delhi, p. 37-52, 2008); it was first presented at the DSA conference held at the CESP some years ago. Basically in a nut-shell, good economic theory provides the set of assumptions under which a set of conclusions hold. This is the reason why one must pay attention to the tenets of economic theory.
What are the biggest challenges to economic theory today? In which area of economic theory would you like contemporary research to proceed in near future? What would be your advice to contemporary young researchers in this ഫീല്ഡ്?
This is a difficult question to answer. The biggest challenge facing economic theory in India is the complete ignorance of most policy makers of the tenets of economic theory. What is worse is that universityes have stopped teaching basic courses in the area and if you look around in Indian Universities, researchers are not engaged in any branch of economic theory. So basically a renewal of interest in economic theory has to take place. There is nothing in economics which has been fully researched and we can say that we know all about it. Better answers are required. All areas of economic theory are open; that they may not be fashionable for research is another matter; so choose questions well and analyse them as well as you can and please pay attention to details.
We are looking forward to your upcoming book on Mathematical Methods and Economics Theory. Can you elaborate a bit on this book? What other academic projects are you currently engaged in? What other work are you planning to do in near future?
First of all, the book is a joint peice of work; written with Subrata Guha and began when we were both members of the RBI Unit at the Centre. As a former student put it, this book contains all that I have taught generations of students. The way mathematics is taught is often a problem and the kind of issues that are handled in introduction to matheco type books often show that one may dispense with them. But if one considers the three types of problems that I raise in the VKRV Rao volume, one realizes the centrality of these methods.
As to other thing: i have three projects in mind at the moment: one is to investigate whether much of competitive theory on which all policies are based is value-free as it is made out to be. The answer is no. I would like to spell this out in a small monograph. A second project which I have looked at now and then, is to try and provide a contemporary approach to the economics of the Arthashastra. And a third is to look at what is happening with one of the most depressed areas in India: the state of Bihar. The last would be a completely new area of research and I am not sure how far I would be able to go but then these are the plans that I have. In between I may have to do other things to earn a living but if all other things were taken care of this is what I would like to do.
What do you think has been the achievement of the centre in the general area of economic theory?
It has been generally felt that CESP was weak in theory; our strength apparently lay elsewhere; this perception, from the very beginning has grown by leaps and bounds. And to my great regret, I find, that unlike previously, members of the CESP fratenity have started to believe in this canard. I find this upsetting mainly because if one looks at achievements of the centre in this area, not only is it difficult to argue that CESP has been 'weak' in theory but a case can be made out that in economic theory this is one of the strongest deartments on the basis of achievements alone. A belief, that we are 'weak' in theory based on some feelings but being ignorant of facts is simply silly. I hope it is only that. But now let me state some relevant facts:
three voluem, published in 2000 (titled Equilibrium, volumes 1-3, edited by D Walker, Edward Elger, 2000) provided a collection of papers on the notion of Equilibrium. In these three volumes thre were two papers from a single department; not only that, in the preface, the Editory while discussing further readings mentions another paper which was part of the doctorla dissertation in the same department. The department was CESP; I doubt whether there was any other department so well represented and Mr Walked was not a friend of the centre and I doubt very much if any one from the centre has ever met him.
There have been several books on Economic Theory written by faculty members and published by reputed publishers both at home and abroad.
There are now at least five or six former students of the centre who have done a Ph. D from the centre, whose dissertations may be broadly classified as being in Economic Theory and who have been appointed to positions in central Universities and in leading economics departments. This count is an understimate and is rising.
Yet there is studied silence whenever Economic Theory is mentioned; and whenever anything about DSA or CAS is mentioned, there is never a mention of Economic Theory as a possible Thrust Area. In fact, if memory serves me right, the first DSA committee of the centre kept several of us out! I find this most strange on the part of the fraternity. We do not yet know what our strength is. Or is the fraternity ashamed to acknowledge or even admit that there have been people who have achieved these things? I would like to think that this is ignorance rather than any predetermined effort to stamp out theory by sometimes completely ignoring what has been happening and at other times, by inflicting scurrilous comments. What our fraternity should realize is that because of the activities mentioned above in a. - c., CESP academic programmes maintains whatever credibility that it still has.
പ്രൊഫസര് മുഖര്ജി എന്നും സി ഈ എസ് പിയുടെ മികച്ച അധ്യാപകനായിരുന്നു. എന്നാല് പലപ്പോഴും നോണ് മതമാടിക്സ് ബാക്ഗ്രൌണ്ട് ഉള്ള കുട്ടികള്ക്ക് തികച്ചും അപരിച്ചതമായിരുന്നു. പലപ്പോഴും കണക്കിലെ വിരുതന് മാര്ക്ക് അദ്ധേഹത്തിന്റെ ക്ലാസുകള് മനസ്സിലാകുമായിരുന്നില്ല!
