The first generation of modern Indian economists in the late nineteenth century became known as the Early Nationalists, as they began India’s fight for independence. When historians and political theorists analyse them, they often portray them as political scientists and nation-builders who mostly regurgitated existing European economic thinking. Much less has been written on their contribution to economics, despite them being the first generation of modern economists in India. This book shows how they produced original, forward-thinking knowledge on economic development. The intention is not to define development a priori, but to use development as an overarching focus to tease out the concepts, theories, models and policy prescriptions that the first generation of modern Indian economists studied and disseminated, and to bring these Indian economists into the global debate around what progress and development mean. This book places these economists into the history of economics and offers economic historians new sources on the Indian economy at the end of the nineteenth century. The book explores their understanding of how India’s economy evolved, their prescriptions for bringing progress back to India, the economic consequences of imperialism, and a global plan for development. By relocating development economics to another time and space, the book uncovers new variations on the idea of development.

Chapter 1 focuses on the narratological strategies that turned a set of mathematical equations into an economic model in Robert Solow’s “Contribution to the Theory of Economic Growth,” the article behind the classic reference “Solow 1956.” In the first place, the paper was all about the setup of a smoothly working neoclassical growing economy, which consisted in the interplay of algebraic equations, diagrammatic visualizations, and verbal accounts. The article revolved around this artifact, made (up) by the narrator figure and, at the same time, to be used and experimented with by others, independently of its construction history. While denoting the artifact “a model” throughout, references to a world beyond its narrow boundaries were vague. Straightforward was its function as an exemplar for how proper economic reasoning should look. The text presented its model as improving a so-called precursor, the “Harrod–Domar model.” In this way, it contributed to canonizing earlier dynamic theory with its focus on instability and crisis and set the course for an angled historiography of growth theory that downplays the differences in approaches and objects until the present day.

Chapter 1 provides philosophical foundations for the arguments of this book in discussing the issue of scientific objectivity in economics. It criticizes a closed science, “view from nowhere” conception of economics, and defends an open science, “view from somewhere” conception of economics as an objective science. The first conception is ascribed to current mainstream economics, is associated with its principle practices – reductionist modeling, formalization, limited interdisciplinarity, and value neutrality – and has as its foundation the abstract Homo economicus conception. Two problematic consequences of these practices are value blindness regarding the range and complexity of human values; fatalism regarding human behavior in employing a tenseless rather than tensed representation of time. In contrast, the principle practices of an open science, “view from somewhere” conception of economics as a science – complexity modeling, mixed methods, strong relationships to other disciplines, and value diversity – provide the foundations of a socially and historically embedded individual conception. The chapter closes with discussion of the question: Might mainstream economics be a science bubble?

Chapter 2 introduces identity analysis and uses it to examine whether the Homo economicus conception can identify real-world individuals. It describes the self-referential, circular character of that conception, and shows that the belief that Homo economicus identifies real-world individuals rests on a fallacious inference known as affirming the consequent. The chapter reviews how the identity concept came into economics by making a person’s individual identity their utility function. This is compared with how social identity theory understands individual identity, and economics and social identity’s view of representative agents is then distinguished. Sen’s multiple selves view of individual identity is contrasted with both in light of its ontological basis. Section 4 of the chapter critically evaluates rationality theory’s two independence axioms regarding preferences, the logical basis for saying choice is context-independent and for the unembedded Homo economicus individual conception. It argues neither can be defended and that not only must choice be seen to be context-dependent, but that individuals need to be seen as socially and historically embedded.

Just over a century old, John Maynard Keynes’s The Economic Consequences of the Peace (1919) remains a seminal document of the twentieth century. At the time, the book was a prescient analysis of political events to come. In the decades that followed, this still controversial text became an essential ingredient in the unfolding of history. In this essay, we review the arc of experience since 1919 from the perspective of Keynes’s influence and his changing understanding of economics, politics, and geopolitics. We identify how he, his ideas, and this text became key reference points during times of turbulence as actors sought to manage a range of shocks. Near the end of his life, Keynes would play a central role in planning the world economy’s reconstruction after World War II. We argue that the “global order” that evolved since then, marked by increasingly polarized societies, leaves the community of nations ill prepared to provide key global public goods or to counter critical collective threats.

This brief chapter illustrates the object of the book: to analyse the various dimensions of the notion of power (economic, political, cultural etc.). It also outlines the contents of the book and its political objective, the strategy of structural reforms aimed at reducing inequalities in the social distribution of power.

A brief illustration of past interpretations of power is followed by alternative definitions of power as differential of potential, as barrier to entry, as relative weight. Webers ideal types of power (legal, traditional, charismatic) are combined with the main areas of power (economy, politics, culture) in a scheme for attempting a characterization of different societies and their evolution in time. Cumulative processes and balancing processes in the evolution over time of the distribution of power in society are then considered.

Environmentalism in the United States historically has been divided into its utilitarian and preservationist impulses, represented by Gifford Pinchot and John Muir, respectively. Pinchot advocated conservation of natural resources to be used for human purposes; Muir advocated preservation and protection from humans, for natures own sake. This schism left an unsatisfactory state of affairs which would only be reconciled in the post-war period. Meanwhile, the conservationist side could only recognize the value of material resources, not beauty or wilderness. The preservation side seemingly left out a place for humans. In the first half of the 20th century, American natural resource economics was firmly on the conservationists side of that schism. It developed an American theory of property rights and institutions distinct from other theories of externalities.

The history of environmental economics is interwined with other histories and movements. These include (1) humanitys thinking about its relationship to Nature; (2) a redefinition of economics from the study of material welfare to the study of tradeoffs, including tradeoffs between developing resources and preserving them; (3) rising consumer movements and a shift in economic focus from the producer to the consumer, which in turn facilitiated a shift from thinking about the exploitation of resources to the enjoyment of preserved landscapes; (4) developments in economic theories of externalities and public goods; and (5) the increasing involvement of economics in government policy, from agricultural and resource economics to planning government spending and regulation.

The Lucas critique is valid, but the Lucas solution developed by mainstream macroeconomics represents an abject failure. Heroic aggregation assumptions are embodied in the creation of a representative agent: even if individual preferences could be taken as well-defined, exogenous, and stable over time, the celebrated Sonnenschein-Debreu-Mantel results show that microeconomic rationality imposes only very weak constraints on the properties of aggregate excess demand functions. Using simple examples, this chapter illustrates how restrictive assumptions are needed to ensure the existence of a representative agent and discusses the implausibility of these conditions being approximately satisfied. The chapter also questions the utility function of the representative agent as the basis for welfare analysis. Although supposedly ‘natural’ and ‘objective’, this approach imparts a systematic bias against the poor and in favor of the rich. As a corollary, moreover, changes in the distribution of income renders the representative agent’s utility function unstable; the Lucas solution is subject to a Lucas critique.

This chapter offers an introductory discussion of the state of macroeconomics. It presents a brief outline of the historical background to traditional Keynesian macroeconomics and its replacement by the current orthodoxy based on microeconomic foundations and intertemporal optimization, with DSGE models at the center. This scholastically motivated paradigm has been a costly detour. A promising alternative structuralist and behavioral approach can draw on behavioral economics as well as rich traditions that have been marginalized within the profession.

The Introduction outlines the book’s conceptual foundations, starting with a theory of political economy as constitution that builds on both economic and political thought to conceptualise the relationships between the economic and the political bodies. Accordingly, the body politic is an orderly arrangement of individuals and groups fitting a collective condition, or purpose, which would at a minimum include the persistence of the political body itself. Similarly, the economic body is an orderly arrangement of individuals and groups fitting a systemic condition for material sustenance and welfare, which would at a minimum ensure resilience of an organised economic sphere. The theory of political economy shows shifts between a focus on dispositional activities (such as allocation of capabilities or resources) and a focus on material and social interdependencies. This dynamic often makes it difficult to identify the underlying unity of political economy. Reductionist theoretical developments, both in economic and in political theory, have failed to address the embeddedness and mutual shaping of dispositions and structures at multiple levels of aggregation in the economy and the polity. The Introduction sketches a new theoretical framework that avoids both types of reductionism by highlighting the close integration between human dispositions and socio-economic interdependencies.

Although the normative model of rationality discussed in the first chapter is central to microeconomics, microeconomics is a positive theory describing, predicting, and explaining actual choices and their consequences. This chapter presents generalizations concerning market demand for commodities and services and consumer choice theory, which by means of economic models explains and to some extent corrects the generalizations concerning market demand. It presents an example of a simple economic model, where a consumer faces a choice between bundles consisting of only two infinitely divisible commodities, and it makes preliminary comments on the apparent empirical anomalies consumer choice theory faces. In reflecting on the theory of consumer choice and the explanation of demand, many questions arise concerning the structure of economic theory and whether the propositions of economic theory are in accord with the evidence. The material here should be familiar to economists.

Mainstream economics portrays individual agents as choosing rationally. Many of its generalizations concerning how people actually choose are also claims about how agents ought rationally to choose. Chapter 1 focuses on the conception of rationality that is incorporated in contemporary economics and is central to it. It begins with the concept of preferences, which is the central concept in mainstream economics, and with the theory of rationality that focuses on preferences. The fact that a normative theory lies at the foundation of economics raises philosophical questions. What are requirements of rationality doing in what purports to be a scientific theory of economic phenomena? After presenting the axioms of ordinal utility theory, it offers an account of preferences, a critique of revealed preference theory, and an introduction to expected utility theory. It argues that if one wants to understand economics, the modeling of rationality is the place to begin.

There are fundamental commonalities in the way nationalists view the economy and these commonalities are important enough to speak of a distinct nationalist approach to economic thought and policy. This does not mean all nationalists think and act in the same way – many policy positions are hotly contested among nationalists. But it does mean that nationalists choose their economic aims from a common menu. This introduction develops a conceptual framework to investigate this policy menu. I argue that the basic options on this menu are, firstly, isolation from the world economy, and secondly, economic expansion. Attempts to overcome the potential conflict between these two aims drives much of nationalist policy making. The introduction then focusses on solutions nationalists have used to overcome this dilemma through compromise, regulation, political reform, or imperial expansion. It proceeds to discuss the degree to which these choices are determined by interests or ideas, and finishes by analysing how such ideas are commonly translated into policy.

Part I introduces the five protagonists of the book by discussing their childhood and youth during and after World War II. What made them choose economics? What made them amenable to the ideology of Marxism-Leninism as taught in their undergraduate studies? This chapter focuses on their experiences with Nazism, their socialization in the Hitler Youth, and the discrimination they were subjected to because of their ethnic or religious identity. It also highlights the postwar tumults that made them prone to the postwar propaganda on securing peace in the name of socialism and the opportunities to engage in ideological confrontation during the first cleansing waves at university.

To begin at the beginning. In 1953 Joan Robinson wrote ‘The Production Function and the Theory of Capital’ (Robinson [1953–4]) in which she made a number of specific complaints about the state of economic theory and the state of some economic theorists, who soon were to become identified as the latter-day neoclassicals whose HQ is now Cambridge, Massachusetts.

The chapter discusses Pasinetti’s arguments for a theory which is ‘firmly placed on an objective foundational framework’ rather than on the fictional reality of the ‘purely imaginary world of rationally behaving individuals’. This approach – Pasinetti argues – was typical of the ‘Cambridge Keynesians’, which following a path traced by Marshall, placed at centre of the analysis not abstract entities, but flesh-and-blood economic agents acting in various specific markets. The vision of economic behaviour guided by customs and habits, setting limits to the crude maximisation through marginal analysis, was shared by Kahn and Keynes, who accepted it in its modified form, namely, not as exact calculation but as the outcome of a trial and error method. Although they did not endorse Sraffa’s rejection of its validity for price determination and income distribution, they shared the common objective of placing reality at the centre of their analysis, rather than abstract rationality, as the principle guiding behaviour. In other words, what characterises the approach is a vision of individuals less stereotyped than mere maximising machines. This means that in the Cambridge approach there is room for rationality in depicting political and economic decisions, as long as we interpret it as constrained by limited knowledge and uncertainty.

Chapter 1 is concerned with sociopolitical and epistemological developments in Muslim countries at the beginning of the twentieth century and the formation of the modern nation-state as a distinctly European project. It explores Muslim revivalists’ vision of an Islamic state and society within the parameters of a modern state, as well as Muslim scholars’ reappropriation of mainstream economic theories through the Islamization of knowledge process.

The Industrial Revolution cannot readily be modelled if research is treated as a public, private or club good. Recent work on the knowledge commons and on ‘network’ and ‘anti-rival’ goods has offered more promising perspectives, but we have proposed that research is most suitably considered as a novel good, namely a ‘contribution good.’ A contribution good is a non-depletable good jointly available only to those who have contributed to its creation. Here we show that the Industrial Revolution, and some of the institutional developments that accompanied it, conform well with a contribution good model of technical change.