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Re: Dissent/ Consensus



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Administrative Note:
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Week's Agenda: Economy
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Dear Sanjeev

In the context of the following debate I would make the points further below 
and, only for the purpose of distinguishing them from the context, I make my 
current comments in capitals: 

>Prof. Guptara said:

>"Incidentally, we never had socialism in India, we had a "babu-raj" or a 
collusion between certain industrial/commercial interests and certain 
socio-political groups."

>Dissent:
--------

>In comaparative systems analysis in economics we do not recognize any babu-raj 
system. There is socialism or there is capitalism. I have never been taught 
about any other economic system in any Ph.D. course. There may be shades among 
each, here or there. But these two are DISTINCT things.

>There are only two ways to operate an economic model, mathematically, in all 
graduate level books. 

>a) centralized social planner who knows the social welfare function

>b) decentralized economy with competitive firms and individuals determining the
solution.

WELL, SANJEEV, BOOKS DO NOT ALWAYS CAPTURE ALL REALITIES.  IN WHICH CASE, IT IS 
THE BOOKS WHICH ARE DEFICIENT, NOT REALITY.

YES, THE INDIAN CONSTITUTION DID SET OUT TO PROVIDE FOR A "SOCIALIST" REPUBLIC. 
BUT THAT DOES NOT MEAN THAT WHAT WE GOT WAS SOCIALISM.  

WE GOT A COLLUSION OF THE RULING CASTES/POLITICAL ELITE WITH THE INDUSTRIAL 
ELITE.  BETWEEN THEM, THEY CARVED UP THE COUNTRY.  I REMEMBER SEEING AN ESTIMATE
THAT, AT THE TIME OF INDEPENDENCE, THE BENEFITS OF THE ECONOMIC SYSTEM IN INDIA 
WERE CONCENTRATED AMONG THE TOP 5% OF THE POPULATION, WHILE BY THE TIME OF 
RAJEEV GANDHI'S DEATH THE PERCENTAGE THAT HAD THE OVERWHELMING BENEFIT OF THE 
WAY THINGS WERE ORGANISED, WAS SOMETHING LIKE 25% OF THE POPULATION.  THE 
BABU-RAJ OR THE LICENCE RAJ HAD NOTHING TO DO WITH PEOPLE KNOWING WHAT WAS BEST 
FOR THE CONSUMER.  IT HAD EVERYTHING TO DO WITH LIMITING COMPETITION.  IN 
TRADITIONAL ECONOMIC TERMINOLOGY, WHAT WE GOT WAS INSTITUTIONALISED OLIGOPOLY.

The capitals above are only for the purpose of distinguishing between my 
current remarks and the previous contributions, NOT for the purpose of 
emphasis!


Professor Prabhu Guptara
Director, Organisational and Executive Development
Wolfsberg Executive Development Centre
(a subsidiary of UBS AG)
CH-8272 Ermatingen
Switzerland
Tel: + 41.71.663.5605
Fax: +41.71.663.5590
e-mail: prabhu.guptara@ubs.com



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