At the start, Lord Meghnad Desai triggers curiosity in the idea of why the Great Recession by boldly reversing the legend of the Emperor’s New Clothes, about two weavers who swindle an Emperor with a new suit of clothes invisible to those who are stupid. No one dares to say that he doesn’t see any suit of clothes until a child cries out, “But he isn’t wearing anything at all!”
In this case, the naïve child is the Queen of England, Elizabeth II, who naively asked the emperor — leading economists of London School of Economics — “Why did nobody notice it?” The answer — failure of collective imagination, with a psychology of denial — failed to satisfy no one. Least of all Lord Desai, a former professor at LSE and a Labour Party member to House of Lords, who is willing to turn in his tribe by giving an emphatic response — Hubris.
In choosing such a shocking title, Lord Desai is braving the wrath of this fraternity — in a manner of an intellectual expose of the year — building on a simple inner understanding — the economist would refuse to understand any theory of full employment, or cause of massive employment — to retain his own job.
Given the titular scope, Hubris is divided into two parts. The first, a retrospective analysis of the Great Recession — arguably the biggest economic crisis of the West since the Great Depression of 1929 onwards, is a spectacular chronicle and analysis of the development of economics as a study, the lives and major contributions of great economists, since Adam Smith to John Maynard Keynes, the biggest challenges and questions facing them, their major ideas and impact, and the progress.
Here is the author dancing through history, taking us on a dance through time, effortlessly, connecting dots and ideas across the landscape of the history of economics. Starting with John Locke, the book traces the greats and the lesser known economists — Adam Smith, David Ricardo, Malthus, Leon Walrus, Karl Marx, Knut Wicksell, Joseph Schumpeter, Nikolai Kondratieff, Marshall, Fisher, Arthus C. Pigou, and Keynes. In a manner of Will Durant in The Story of Philosophy, Desai takes us through an irresistible trip of ideas of economics, combining conditions of nations and their wealth — rising and falling — over centuries past with an amazing insight into each thinker, and their contribution.
In setting a context to answering the question posed by the Queen, the book takes us with ease into the world of the economist, their politics and assumptions, their boxes of limitations, their psyche of denial and above all, the increasingly and seemingly impossible to bridge, gap between the economist and real economics. Desai adopts a simple but highly interesting approach, with near perfect chronological, and logical, blocks takes us from the setting of definitions of micro-economic units of productivity — land, labour, rent and profit — to the pegging of gold against issue of currency and role of central banks, the problem of inflation and interest rate control, and cycles of boom and bust.
Taking a cue perhaps from Stephen Hawking, who famously revealed that in writing A brief history of time, his publishers had warned him that every single mathematical formula included would inversely impact the readership — Lord Desai keeps it simple, and the few graphs included are executed with minimalist fuss. On page 238, out of 263 comprising the book, we are in the descriptive, and best, part of the work. One of the arguable simplest works on the recession of 2007 — it can be declared a mandatory read for the layman and expert alike, student and economist, policy maker and professor, banker and trader.
Enter the prescriptive zone — an eternal danger for economists — and the book disappoints. Dubbing the endeavour to make a new model to explain his pill to avoiding the next crisis as nearly impossible, Desai reveals he retains a Keynesian heart.
Desai, in trying to keep the book about ‘economics’, does not extend to advocate strong policy changes of a revolutionary scale, like Keynes, on behalf of the market. What should be the upper inflation acceptable to all? How much can central banks cut interest rates? Can and should economics point to an upper limit to government taxation and spending, and what is the deficit red line? Desai plays both safe and short. Maybe, the author has set a scope for a sequel. Yet, the book is a magnificent work, one that brings economics to everyone, and takes the professional economist to task. Proving to be the brave child calling the emperor’s new clothes, the author gives us a glint of hope that perhaps we may trust economists a little more.
Sriram Karri is the author of the MAN Asian Literary prize longlisted novel, Autobiography of a Mad Nation, and a non-fiction debut, The Spiritual Supermarket
