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Joseph Stiglitz, winner of the Nobel Prize, former Chief Economist of the World Bank, and Chairman of the Council of Economic Advisers under President Bill Clinton, has raised some fundamental questions about the standard textbooks of economics which are used not only in the US but in many other countries including India in his recent book titled ‘People Power and Profits: Progressive Capitalism for an Age of Discontent’.

These texts continue to make assumptions about nature of human beings, of markets and their process of operation and outcomes, which are at variance with reality and have been proven wrong by recent research.

To quote Stiglitz, “One of the contradictions of the economics discipline is that we model individuals simplistically, as if they were just selfish and materialistic. But even upon reflection, we know humans are more than that...

Standard courses in economics begin with the assumption that individuals have fixed preferences with which they are born; they are who they are with their likes and dislikes. The idea that tastes and preferences are immutable is, however sheer nonsense. As parents we try to shape our children. The marketing profession tries to shape what we buy...

Economics viewed the economy through the lens of ‘free’ markets. It pretended to be based on advances in our understanding of markets but the truth was just the opposite: advances in economics over the past seventy years had identified limits of free markets…markets on their own will fail to achieve shared and sustainable prosperity... Nor do markets work well when information is imperfect and some key markets are absent…or when competition is limited…

Look at a standard college economics textbook. The word competition is amply sprinkled through all of its chapters: the term power is reserved for but one or two. The term exploitation will likely be totally absent. A word long expunged from the conventional economist’s vocabulary.”

Stiglitz goes on to argue at length how this mis-education through standard textbooks has contributed to mismanagement of the American economy which is now in a difficult phase.

Reading of Stiglitz reminded me of my struggle with teaching economics in India. Some sixty years ago, when I passed my M.A. in Economics in Calcutta University with a Gold Medal, I was invited by my teachers to join the Faculty of Economics for post-graduate teaching in Calcutta University and I was asked to teach a course on macro-economics. I raised a question about the link of our teaching of macro-economics in the classroom with the macro-economic situation in the country. I argued that the examples of behavior of consumers, savers and investors based on American textbooks were not relevant for India and that we should teach macro-economics in India based on Indian realities. My teachers in my department were sympathetic to my concerns. But they argued that our students – who are competing with others for all-India services or for foreign degrees - will have to answer questions based on American textbooks and will be disadvantaged if we teach them something different. I lost my argument and ended up teaching the standard macro-economics.

Now that eminent economists like Joseph Stiglitz as well as many students in American universities are raising questions about the validity of the economic textbooks in America itself, we in India should also raise questions about the contents of our economic textbooks. The academic community should review our textbooks thoroughly and re-write them by purging them of western mistakes and aligning them with Indian realities. Of course, it is not going to be an easy task. But it should be considered as a part of what the Prime Minister has called the ‘Atmanirbhar Bharat Abhiyan’. Unless our thinking is self-reliant, our economy will not be self-reliant. Our eminent professors in places like Jawaharlal Nehru University should focus more on designing economics courses relevant for our country. They should spend time living in and studying village economies where majority of our population lives - unlike Europe or America.

It is interesting that many foreign students doing their research in India spend considerable time in villages for their research but hardly any Indian researcher does that. They should study the functioning of the informal sector which unlike in Europe and America, forms the majority of our work force. There are some organisations such SEWA which work with the informal sector and have produced books on functioning of these markets. But these hardly ever feature in our university syllabi. They should study the pervasiveness of the black-market economy and its corrosive impact on the country. They should study the impact of caste and other identity-based features of our economic transactions. The list can go on. But a start has to be made sooner rather than later. It is only when our economics teaching improves that our economic policies will improve. When we adopted planning, we went to the extreme of government control and created a license/permit raj in an economy which was still largely in the private sector. When we opened up in 1991, we opened up without any support for nascent industries. When we did demonetisation, we hardly had any knowledge or control on those who use black money on a large scale and have various instruments for laundering that money. When we did lockdown to flatten the curve of COVID-19, we had hardly any knowledge of how it will affect millions of migrant workers and their response to loss of jobs and places of living. Lack of understanding of our realities has hindered the formulation of sensible policies by our officials trained in standard economics. We should realise that if things go in the present trajectory, the 21^st century will not be India’s century but will see India losing its effective sovereignty much like many Latin American countries.