DR. SHRIKANT JICHKAR
Minister of State for Information and Public Relations, GAD, Energy, Finance and Protocol M.B.B.S., M.D., D.B.M., M.B.A.,B. Joum., LL.M (International Law), M.A. (Public Administration), M.A. (Sociology), M.A. (Economics), M.A. (Sanskrit), M.A. (History), Ex-I.A.S. and Ex-I.P.S.

The science of economics was explored in its newness by the end of the last century. The beginning of the nineteenth century laid the foundations of economic analysis with the Ricardian school of economic analysis. The close of the century, however, witnessed the giants amongst the economists in Europe. Walras could be mentioned as the pioneer in the new methodology using the concept of equilibrium as the concept of economic society.
There was also the shift in the approach to the resource allocation. The polarity in resource allocation was earlier debated in socialist as well as capitalist camps. All units of production should be in the private enterprise, with no role for the State in the economic activities. The opposite was also argued. All economic activities should be under the control and regulation of the State. Mill in this respect was tilting towards socialism with minimum economic activities governed by the State.
The discussion is relevant from the standpoint of our earlier delineation of the economic theory. The competition in the economy, we have witnessed, leads to the small sized family units of productive activities. This ensues production without exploitation because the family units do not use the hired labour. This, however, raises the important question. There are areas of economic life where sizes larger than the family size are necessary for the living in society. Further, there are areas of economic activities that cannot be operated on the family size of the business. The railways, post and telegraph, electricity, public health services, are some of the area where larger sizes of the economic activities are necessary in the very nature of their operations.
This proposition, therefore, must explore the socially necessary large scale organisations in the economy without exploitation. It should be remembered that we have discovered the family size of enterprises in the economic theory. This is the cell of the new economic order. The cell could be suitably larger in itself. The joint family organisations and the co-operative forms of organisations, therefore, are larger forms of organisations. Whether the economy would engender family units or the larger units mentioned above would be decided on the criterion of optimum income. The people in economic activity would move towards their optimum income based on their own experience.
Marshallian Externalities
The socially necessary large organisations however ought to be organised because their functioning is beyond the behaviour pattern of the family enterprise or the co-operative or the joint family size enterprises. It is, therefore, necessary to explore the organisation of such socially necessary large forms of economic activity. Hence the reference to the economists who examined the studies in economic development with newness of the analytical technique.
Alfred Marshall consolidated all the earlier views on the economic analysis. He introduced mathematical tools to study the movements of values and utility. Till his time, there was the plethora of evident on either side of the laws of returns in production. He studied the then available literature and formulated his famous "externalities" in the economy. The great debate on the scale of returns could be settled in the externalities promoting efficiency and productivity in the internal activities subjected to diminishing returns.
Marshall's analysis opened new areas of economic analysis specially with reference to economics of welfare. Pigou published his views in this realm of economic theory. The maximisation of the economic advantages could be achieved by organising the socially owned public utilities and their synchronisation with the private sector investments. Pigou's economic of welfare was a great discovery in the capitalist economy itself. The benefits of the competitive capitalist economy could be maximised by social investments in the areas of welfare activities.
The role of the State in the capitalist economy therefore was rationalised in the economic theory of welfare. The allocation of resources for activities suggested by Pigou was the study of intensive research. Welfare economics partakes the form of socialist economy in the non-Marxian socialism. The concept of mixed economy in capitalism was its counterpart among those who did not agree with socialism, as such-The need to arrest depression was to a large extent satisfied in the investments in the publicly owned social sector of the capitalist economy.
Welfare economics was helpful to settle the debate on scale of return to a large extent. The nature of the public sector investments results in increasing returns and the benefit could be passed on the investments in the economic activities subjected to the diminishing returns.
I have collected pebbles from the sea shores of economics studies in the communist camp and the capitalist camp. Mine is an exploration in the economy that would be free from the crisis which has now manifested in the probabilities of nuclear warfare. The Kenesian economy as has been developed in the West has reached its frustration. It fails in the realm of economic theory to enjoy the abundance. How could one reconcile with the statement of the capitalist economists that there is a crisis if the supply is more than demand? Rather the society would enjoy this state of the economy because the price level would move downward. This one-sidedness in the economic philosophy has created the foundations of armaments and warfare in the political economy. Similar one-sidedness has been discerned in the economics of socialism in the camp of the Marxist school. All production under the theory of Marxist socialism is controlled and governed by the State. The weaknesses of the proposition have been admitted in the current debate on economic reform in the communist countries.
This does not mean that the science of economics has remained weak in all these hundred years. It has discovered theories and theorems and the tool-box of analysis has been enriched. The methodology followed in natural science could now be followed and compared in the studies of economics. Hence the increasing use of mathematics in economics. No statement in economic theory can be made without its rigorous examination like the one in natural sciences. The Nobel Prize in economics is therefore its natural culmination in the field of knowledge.
I am reminded of the exclamation of the young boy in the New York Times when he saw the film on Gandhi. The Presidents of the USA and the USSR should see the film together, he said. There is great significance in this exclamation. Similar situation has appeared in the world of economists. If one reads the economic literature of both the schools of political economy, one may collect pebbles useful for the economic order without warfare and armament. If Gandhi's film could influence the Western society including Soviet Union, his vision could be equally helpful. This impelled me to study some literature on Gandhi.
Economic theory must substantiate Gandhi. This is the criterion of Gandhian economy in the science of economics. I have discussed the principle of competition and have indicated some of the results. Competition leads to decentralisation and ubiquitous household enterprises in the economy.
Large Organisations
Prof. Pigou's welfare economics created debate and many found weaknesses in the earlier economic analysis. This, therefore, is the reason why "empty-boxes" were argued by Pigou. It is fully known in economic studies that Pigou retorted angrily that the major function of theory was to pursue the implications of a given set of propositions. The so-called empty boxes, said Pigou were important elements of the intellectual exercises of modern economics. The objective, he continued, was to build better boxes and see how they might be filled.
I emphasise that these remarks are greatly relevant in the discussions of theory, specially in India. The academicians have a tendency to dismiss the whole theoretical construct, by locating one or a few weaknesses in the theory. In the natural science, this is not so. They call it the black holes in the search for truths. Explorations in the black holes has discovered many newnesses of the propositions of the original theory. The studies in astronomy have gone ahead by exploring the black holes. This is woefully lacking in social sciences.
Gandhiji's views are fully known and yet there are empty boxes. We shall welcome communism, said Gandhiji, if it comes without violence. This proposition looked like an empty box. Can communism come without violence? The answer is positive now, because the Marxists themselves have spelled out world peace and the use of democratic method for transformation of capitalism into communism. Another observation of Gandhiji's equally relevant. Though he envisioned decentralised small scale units of production, he agreed that there is a place of sewing machines in his economy. Who will produce the steel and the sewing machines? Gandhiji replied that he was socialist to that extent that the machine producing factories should be owned by the State. The economists in India have to cognise the need to examine the empty boxes of the vision of Gandhi as regards his economy.
Coming to the role of the State in the productive activity of the state in relation to the goods and services, the economic theory of welfare maximisation has to be explored in the scheme of decentralised and non-exploitative socialist economy. The one-sidedness of the socialist theory of all resources to be controlled and developed by the State has been fully substantiated. This is the lesson of the economic reforms in the communist countries. The recent issues of Moscow News should be read. In one of its recent essays in Moscow News, the policy of promoting family farms has been endorsed without reservations. China has gone ahead in the competitive units in the economy.
Indivisibility of Prof. Samuelson
Since the publication of the theorems of welfare economics, the economic literature has enriched itself with the contributions of eminent economists. It should be remembered that the Marxist scholars have also contributed in this exploration. Prof. Maurice Dobb and Prof. Ronald Meck were the members of the British Communist Party. Prof. Paul Sweezy is a communist with Trotsky-tilt. Prof. Oscar Lange, Prof. Kalecki were internationally known economists who belonged to the communist philosophy. The Indian Marxists should know this fact. These great economists also participated in the analysis of the welfare economics as a theory. After all, the goals of the socialist society are achieved in the maximisation of the results in the use of resources. Some critics of the bourgeois school of economics went to the extent of cognising the Soviet economy as the best of the welfare economy, known so far.
Prof. Paul Samuelson has enriched the studies of welfare criterion and its measurements. He has distinguished between the individual goods and the indivisibility of the goods and services. The indivisibility-characteristics of the goods and services necessitates the collectively organised economic activity. This is why the public health services, street lights, education, water supply etc. as indivisibility could be best organised on large scale and controlled by the State. The debate on the values and prices in the organisation of the indivisibility is most enlightening in the realm of economic calculations. Prof. B. V. Krishnamurthy of Bombay University had received high praise from Prof. Maurice Dobb on his doctoral thesis, 'Pricing in Planned Economy'.
The organisation of the socially owned sector of the production of goods and services has promoted the economic categories of average cost of production and the marginal cost of production. This delineation became necessary because the socially organised economic activity has to have the monopolistic form in discharging its function. The need to study economic calculations in the economy moving towards monopoly was the bench mark of the Italian economist, Prof. Sraffa. He worked in London in his later period. Since then the economists devoted themselves to know the parameters of monopolistic organisations. We have now enough of the empirical data and the economic theorems in respect of economic calculations of the socially organised monopoly in the economy.
I am tempted to use Prof. Chamberlaine's concept of monopolistic competition in a new way. Chamberlaine delineates competition of commodities which have monopolistic integuments in the monopoly capitalism. The patented goods, with their brand names compete on the capitalist market. He has however, not disclosed that the capital and the labour in the monopoly corporations do not discern any competition as such. Apart from the weakness of this type in his analysis, his monopolistic competition is greatly relevant in the organisation of the socially necessary forms of monopolistic nature in socialism. It is not conceivable that there would be one organisation for production and distribution of electricity in a country like India. There will have to be many corporate units of the State. They are not monopolistic in the nature of capitalist investments. They have to organise under the regulation of the State. The data flowing from these units could be compared in the knowledgeable circles. The inter-unit comparison helps the process of emulation. Lenin has rightly said that emulation is natural competition. This emulation in the natural economy introduces the element of competitiveness in the resource allocation for socially necessary state owned organisations. This is probably the line of the economic reforms in the Soviet Union. Prof. Kantarovitch has done original research in linear programming for price formation in competitive and socially owned investments in a communist economy. We all know that Prof. Koopman had done similar research in the distribution aspects of the monopolies of the oil companies. Prof. Koopman and Kantarovitch were awarded Nobel prizes in economics for this area of research.
The parameters of the monopolistic competition could be greatly useful in an economy without capitalist mode of production where the socially necessary state enterprises have to be organised. Therefore, my temptation to use Chamberlaine's popular phrase.
It is not necessary nor desirable to organise one monolithic organisation in the areas of socially necessary goods and services. Wherever, feasible, many independently incorporated units should be promoted by the State. These units could then be synchronised. We could witness the extremely independent organisations of international postal services with their tariffs and yet they are fully synchronised. Same is the case with international air services owned by different companies and even by the Governments.

Harmony In Economy
The process engendered by the competitive market finally results in the small units in the production activities. However, we have experienced the monopolies in the economic living. The economic theories emanating from the cost and revenue are in themselves useful economic tool. The average cost and the marginal cost relating to the variables of price policy have been discovered in the studies. These economic parameters could be used with advantages in organised social ownership of the socially managed services like electricity, public health, transport etc.
There would, therefore, be two complimentary tiers of the economy. The foundation of the commodity production will be fully competitive enterprises which would be of small sizes in the economy. Family organisation would be its cell like form. It could grow over the joint family organisation and co-operative organisation. The experience of the people in the economy would decide the final shape of the stable organisation with optimum input-output economic parameters.
The socially organised businesses would be monopolistic in their very construct. The price policy should take into consideration the studies in economic theories so that their monopoly character would not be disadvantageous to the competitive sector.
If labour is free in competitive sector, it should be free in monopolies also. The equality of labour anywhere is the absence of monopoly everywhere in the economy. The term services in the monopolies of the socially necessary business, should go a long way to promote competitiveness in their interconnection with rest of the economy. This needs more in-depth study in the realm of economic theory.
The externalities and the internal economies referred earlier was one of the hotly discussed issues during the period of Alfred Marshall. The socially necessary organisations in the economy are externalities. These externalities create the conditions for efficiency in the competitive sector comprising the family enterprises. This complimentary movement of resources in the economy will promote harmony and necessary growth in the economy. This is, in brief, the essence to emphasise the role of socially necessary large scale organisations in the economy which we are exploring through the prism of economic theory.
Competitiveness of What?
The monopoly in the economic activity is known to us. Its epistemology, however, lies in the theory of the classical school of economics. Labour theory of value is the discovery of the classical school. The Marxists also agree with this theory. In fact, we know that Marx belonged to the school of classical economists. Perhaps, he was the last scholar in the classical school. Labour produces values. The individual values are manifested into socially necessary value, which we cognise as market price. The role of the market through which this process of socially necessary value and price emanate is fully endorsed in this theory. If this process is fully competitive in the market, labour and all its economic manifestations like capital and commodities also remain competitive. We have studied how the capital has become monopolistic. The monopolistic capital is in the form of trust, Kartels and monopoly houses. Prof. Chamberlaine has also explained that the commodities have become monopolistic in the market economy. His discovery is in the product differentiation of the commodities. He studied patents and brands in support of his thesis. Commodities have thus become monopolistic in the market.
In the formal logic, we know that capital is past labour used by current labour. Thus the reciprocal relationship is explained in dialectics. The characteristics of the one is reciprocated in the other. If capital is monopolistic, its labour also must be monopolistic. This is dialectics. Further, if the past labour and the current labour are monopolistic in their constructs, its commodities must be also monopolistic. This is obvious because commodities are manifestations of the characteristics of the labour and capital in production.
We have therefore cognised commodities and capital in their integuments. We have to cognise philosophically the monopoly of labour in the dialectical explanation of the political economy.
This proposition helps us to engineer any organisation either monopolistic or competitive in the economy. The process is known to us. In the proposed social organisations, the competitiveness could be ensured by keeping the labour force competitive in the economy. Hence the suggestion that term contract services engender the monopolistically oriented form of organisation into a real competitive form.
If the labour component of the social organisations is competitive, the advantages of the monopoly are greatly harmonious for the rest of the economy. The economy in its foundation is competitive and the social organisations also are competitive. The harmony of the two competitive forms of organisations in the economy is achieved. The two forms would pulsate and the results of the two forms would maximise the input-output tables of the national economy. This is harmony. The commodities from the family forms of organisations would flow into the social organisations on the one hand and the goods and services of the social organisations would flow to the foundation of the economy.
Contractual labour in social organisations does not metamorphise into the growth of proletariat in the economy. The proletariat is one who has lost his means of production and has no other source of living except to sell his labour power in the market. Since we have a foundation of the family organisations in the economy, everybody who loses his job in the social organisation could join his own family's organisation of the economic activity. This is a kind of full employment economy not only for these people but also for all kinds of disabled people in the family. If we could give jobs for the disabled people in the existing economy, the family could easily allocate suitable economic activity to al its members irrespective of age and physical state of affairs.
This is how the economy moving towards its naturalness could be envisioned. Gandhi's heuristic of smallness in the economic activity and the place of some sectors under the control of the State is relevant if the economic analysis is correct from the standpoint of theory. It is suggested that all aspects of the theory should be scrutinised before jumping upon the conclusions. Economic theory should validate anybody's utopia, whether it is from the west or from the east. Otherwise, utopia at the hands of the devotees becomes religiosity in practice.