Economists generally pack a punch with a tool of theory, backed by data and pie charts to defend themselves. But when they fight, the latest being the case of Amartya Sen and Jagdish Bhagwati, they seem to fight hard. No quarter given, and none asked for.

Unlike, say, heavyweight boxers who trade punches from an arm’s length, heavyweight economists fight from a distance – through write-ups in newspapers, and heavy-duty essays in journals and books, and shred each other’s theories and opinion on television news debates, public lectures.

But the slugfest between Harvard University’s professor Amartya Sen and his Columbia varsity counterpart, Jagdish Bhagwati, is an extension of the tussle that started with the mother of all battles in the 1930s: between British economist John Meynard Keynes and Austrian economist Friedrich Von Hayek. Their heated discussions were often billed as the “clash that defined modern economics”.

Both towering economists and thinkers of that era, Keynes and Von Hayek exemplified two different approaches. It was a battle between government intervention and free market capitalism. Keynes represented fiscal policy interventions by the government, while Hayek, known as the high priest of the free market ideology, minimum government intervention.

In his 2011 book ‘Keynes-Hayek: The Clash That Defined Modern Economics’, British journalist Nicholas Wapshott wrote: “That snarky disagreement was so vicious and ill-mannered that one old-school economics professor described it as ‘the method of the duello’ being ‘conducted in the manner of Kilkenny cats’.”
With their disciples around the world, Keynes’s and Hayek’s ideas are still hugely debated in policy circles.

As the UPA government completed nine years this May, issues like unemployment, slow economic growth, inflation and the relative failure or success of these years have not only been dissected at tea stalls, paan shops and at public places but also by the intellectuals of Ivy League universities of the United States. With general elections likely next year, the debate between Sen and Bhagwati on economics and growth model has caught public attention.

Bhagwati has, in fact, challenged Sen for an open debate.

Finding a model: Gujarat or Kerala/Bihar?

In the last few years, Bhagwati has been championing what is loosely called the ‘Gujarat model of development’. As an economist dealing with international trade, he is of the view that the Gujarat model is doing well not only in terms of economic growth but also in social development. Bhagwati’s book ‘India’s Tryst with Destiny: Debunking Myths that Undermine Progress and Addressing New Challenges’, written with fellow Columbia economist Arvind Panagariya, has a detailed description on it.

Sen, who has offered contrarian view to the growth-led model, in contrast prefers the ‘Kerala model’. “Kerala and Himachal Pradesh outshine others in terms of development because they follow the Asian model of development, which gives emphasis on human development,” he had said in January at the launch of International Centre for Human Development in New Delhi.

Sen’s background – he grew up in unified Bengal and saw its worst famine – has also helped him involve a fine mix of theory and practice in his work.
Significantly, even the event to release Sen’s new book, titled ‘An Uncertain Glory, India and its Contradictions’ and co-with another economist of repute, John Dreaze, in New Delhi recently was not spared from the Sen-Bhagwati sparring. While the Nobel laureate took a snipe at Bhagwati at the book launch, Bhagwati retorted: “He is the only economist to hurt India’s poor”.

Other fights between economists

Besides the Sen-Bhagwati ‘fight’ and the Keynes-Hayek ‘duel’, there have been several such famous arguments – in fact, a series of them in most cases – in the last nearly a century. In recent memory, the use of randomised control trials (RCTs), taken from medical research and used in economics by development economists, has been criticised by the old school of economists. Economists like Abhijit Banerjee and Esther Duflo use RCT liberally in their work.
(RCT is a study in which people are allocated at random to receive one of several clinical interventions).

But Princeton University’s professor Angus Deaton tore into Banerjee and Duflo’s work. “My experience says that RCTs are often conducted on a convenient sample. It is not random at all. It’s like designing a better lawnmower. There is no guarantee that a perfectly designed RCT will work in any other context,” he had said in an interview with Governance Now (read the interview here).

However, Duflo compared development economics “before the advent of RCTs” with “medieval doctors using leeches”.

Like Bhagwati, Deaton also challenged Banerjee for an open, one-on-one debate, though the much-anticipated event is yet to take place. Their arguments are put on the NYU Development Research Institute’s website.

Going back a decade, former World Bank economist Joseph Stiglitz had ripped apart International Monetary Fund (IMF) economists, calling them “third-rate economists from first-rate universities”. And if that wasn’t enough, here’s more from Stiglitz: “I was often asked how smart – even brilliant – people could have created such bad policies. One reason is that these smart people were not using smart economics.”

A stinging rebuttal from IMF came from its then chief economist, Kenneth Rogoff. While Rogoff accused Stiglitz of peddling “snake oil”, a few others called the World Bank economist “an ivory tower academic with no experience at the coalface.”

But besides the personal snipes, the Sen-Bhagwati debate seems to have brought in a new element as the country shifts gear for the elections to several state assemblies before the big one for the Lok Sabha. Their sparring has taken the fight beyond the clichéd ‘Narendra Modi vs Rahul Gandhi’ debate to the doorsteps of economic policies.

Prof George Selgin of Georgia University in the US had said, “The economy is like a drunk throwing up the morning after the night before.” Wonder whether the Sen-Bhagwati war of words would bring India its “It’s the economy, stupid” moment. That was coined by James Carville, Bill Clinton’s campaign strategist during the 1992 US presidential elections. And going by the figures, it sure does seem the economy is in for some debating before the poll dates are announced.