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Shelf Life: Your money’s worth

Though economics is the only social science to depend heavily on math, almost as much as some of the pure sciences, the book is an eerily easy read.

Written by Pratik Kanjilal |
January 28, 2017 12:44:26 am
Economics without Tears: A New Approach to an Old Discipline, Ashok Sanjay Guha, Penguin Portfolio, book review An idiot-proof crash course in the significant ideas and theories of economics

Book: Economics without Tears: A New Approach to an Old Discipline
Author: Ashok Sanjay Guha
Publication: Penguin Portfolio
Pages: 242
Price: Rs 299

In the politically polarised academic culture of economics, Ashok Guha enjoys bipartisan support. His idiot-proof crash course in the significant theories and ideas of economics has been blurbed splendidly by Jagdish Bhagwati and Pranab Bardhan. Though economics is the only social science to depend heavily on math, almost as much as some of the pure sciences, the book is an eerily easy read.

There’s no math here, except for the curves without which no economist can possibly visualise the world. And there is the quantification of all things so beloved of economists, who face the terrifying challenge of measuring human behaviour, with all its irrationalities. Guha suggests that you don’t need game theory to understand maximisation. The ideas underpinning game theory suffice, and he shows how you can bring them to bear on everyday issues like protection for domestic industry.

Everything that is taught in a formal course of economics is in here — the theory of the firm in a competitive market, prices and market equilibria. Even spontaneous order is covered — the enforcement of rules without the coercive apparatus of the state, something which pervades nature but does not fail to amaze when it appears in human contexts (which tells us something about humanity’s low opinion of itself).

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Guha cites the example of the Maghrebi Jewish coalition which traded across the Mediterranean from the 11th to the 13th centuries outside government control, using a system of ostracism to keep the network patent and to prevent infiltrations by third parties. He could equally have mentioned the local barter systems which spring up autochthonously in financially disturbed areas. At the time when Grexit had seemed to be inevitable, barter networks developed spontaneously in some regions of Greece. Some had even started trading in paper, which they issued themselves. Something similar had happened in the Northeast following demonetisation, when IOUs on plain paper became tradeable, taking the place of currency notes, which are really just IOUs signed by the governor of the Reserve Bank of India.

In India, the old determinants of political success — social and community markers like caste, religion and language — are yielding place to economic issues. Other economies have been down this road before. In the 1990s, the European parliament used to discuss fishing rights with the passion we reserve for the border infiltration question. The US and Indian elections have been decided principally on financial questions. And the current government has made money the touchstone of politics. Guha’s book is timely because now, to follow politics, the informed voter must understand economics .

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