I was flabbergasted to read the following summary of Kaushik Basu's latest book, Beyond the Invisible Hand: Ground­work for a New Economics in The Journal of Economic Literature, March 2011:

Presents a critique of mainstream economics and Adam Smith's idea of the invisible hand, arguing for collective action and a shifting of focus from effi­ciency to fairness in societies. Discusses speaking in praise of dissent; the theory of the invisible hand; the limits of orthodoxy; the economy according to law; markets and discrimination; the chemistry of groups; contract, coercion, and intervention; poverty, inequality, and globalization; globalization and the retreat of democracy; and what is to be done. 

What! Et tu Basu? A social democrat? An enemy of liberty?

At one time Kaushik Basu and I had corresponded a fair bit and I took his permission to publish the only copy on the internet of his article, “Markets, Governments and Laws” which was originally published in Bimal Jalan’s book, The Indian Economy: The Anatomy of a Crisis in 1992 (I published it on the India Policy Institute website).

Professor Jeff Nugent, the chair of my dissertation committee had gifted me Basu's book, Analytical Development Economics in May 1999. I examined this book fairly closely later and found nothing alarming in it, although I did write "Shocking! Does not cite Hayek or Easterlin" on the cover page, since his name index cited neither of them.

It was disappointing that Basu did not talk about big picture issues like liberty, like Deepak Lal does (one of the few Indian economists I still admire). But I didn't think something was wrong with Basu. Indeed, just a few months ago I listed Basu as part of my list of  GOOD Indian economists (this list gets a fair number of hits every week from google search).

But the title of his new book, and its short summary in JEL is absolutely alarming!

Does Mr Basu think he can re-invent economics? Does he even understand THE BASICS of Adam Smith or Hayek?

It seems likely that Basu has been increasingly influenced by Amartya Sen. That's a shame. One more good Indian economist down the drain. The social democratic confusion being created by Sen is spreading further. What good is all the technique in the world without STRONG foundations of liberty? 

Recently, on Marginal Revolution, I had occasion to comment adversely about Basu's suggestion that bribe givers be de-criminalised. That was an example, to me, of someone who neither knows the laws in India nor about the gaming that occurs at the highest level in India. It seemed to me that India's Chief Economist is losing his touch. That was the first inkling I had of Basu's potential derailment.

But this new book seems to take the cake. If you have any detailed information on this book, or a view on it, please let me know as soon as possible. Alarm bells are ringing in my mind. I've removed Basu's name from the list of good Indian economists.

Let's hope I'm wrong on this.

Addendum

I just checked and found that Basu has cited Amartya Sen 14 times in Analytical Development Economics. Maybe I simply didn't care to understand Basu well enough earlier. Maybe he was a lost cause long ago.

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