/**SNAP Code begin **/ /**SNAP Code end **/

Thursday, October 16, 2008

Linking Economic Prize to Indus and Vedic Periods

I am always amazed at Bibek Debroy's columns in IE. His knowledge about seemingly disparate events or things is stunning. May be it's a Bengali intellectual thing! In his recent column, he brings together the recent Nobel Prize for Economics winner Paul Krugman's original thesis on trade, presented sometime in the 70s, on Economies of Scale - a term that's in common lexicon in business and trade nowadays - and growth of cities, and Bharatiya history. Not just recent history but mostly unknown Indus and somewhat known Vedic periods of Bharatiya history! Of course, he doesn't go into much detail in a short op-ed column. But the thought that the two aspects can brought together is something.

However, the myth of an Aryan invasion having destroyed the Indus Valley civilisation still continues, compounded by problems of equating the word “Arya” with ethnicity rather than language and our inability to decipher the Indus Valley script completely. What we do know is that this civilisation was, at least in its mature phase, an urban one, with urban planning, municipal governments and sewage, drainage and sanitation systems. It prospered on the basis on trade, commerce and transportation, though agriculture wasn’t unknown.

In contrast, the Vedic civilisation was nomadic and rural, with horses and chariots, unknown to Indus Valley. Nor do we quite know why the Indus Valley Civilisation declined. Perhaps no single explanation provides the answer, though climate change, deforestation and drying up of rivers played a role. Perhaps the word decline or destruction is inappropriate. The civilisation simply moved elsewhere and was assimilated, such as in Rajasthan and Gujarat. However, during the Vedic period (around 1500 BCE to 500 BCE), India de-urbanised and became increasingly rural. Neither of the two epics describes an urban centre in any great detail, barring Lanka, which was different. Urbanisation didn’t recover until Mahajanapadas of the post-500 BCE period and Mahajanapadas meant kingdoms or republics, rather than cities. At that time, there were 16 Mahajanapadas. Though lists differ, the most common list has Kashi, Koshala, Anga, Magadha, Vrijji, Malla, Chedi, Vatsa, Kuru, Panchala, Matysa, Surasena, Ashmaka, Avanti, Gandhara and Kamboja. But this is a list of kingdoms or republics. The city list has Varanasi (Kashi), Ayodhya, Sravasti and Saketa (Koshala), Rajagriha (Magadha), Vaishali (Vrijji), Kaushambi (Vatsa), Indraprastha and Hastinapura (Kuru), Adhichatra (Panchala), Mathura (Surasena), Podana (Ashmaka), Ujjain (Avanti), Purushapura and Takshashila (Gandhara) and Rajapura (Kamboja)...

Krugman won the Nobel prize “for his analysis of trade patterns and location of economic activity”. In addition, “Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman’s theories have shown that the outcome of these processes can well be that regions become divided into a high-technology urbanised core and a less developed ‘periphery’.”...

Contrast this with our approaches to urbanisation, not only in recent debates about conversion of agricultural land into non-agricultural usage, but also in Government attitudes to development, where the general idea is to keep people in rural India, rather than bring them into urban locations. Might this have something to do with the way India’s historical development occurred, or with the way we perceive this historical development to have taken place? In pre-Maurya and pre-Gupta India, two phases of urbanisation were Indus Valley and Mahajanapadas. We ignore the first and don’t know how to fit it in. For the second, how many of those sixteen cities listed continued to prosper as cities? And how many declined with the decline of Buddhism and Jainism, leaving us to search for Arcadia in rural India? [IE]
Of course, I wish the prize went to the other great trade theorist and strong global trade advocate Prof Jagdish Bhagwati of Columbia, who is also much older then Krugman. It's unusual for someone in their fifties to receive a Nobel prize. But then I suspect the increasing political Nobel committee probably wanted to stick it to US president Bush one last time before he departs by giving a prize to a Bush hater - an almost deranged hate at that - after giving prizes to Jimmy Carter and Al Gore in past years. Unfortunately, the loser is Prof Bhagwati as the Noble committee is unlikely to give a non-posthumous prize for another trade theorist anytime soon.