Reflections On Free Market: Economy, Capital Markets, Banking, Forex Markets And Governance by G. R. K. Murty

… The book in general deals with a wide variety of issues, challenges, and opportunities that have confronted mankind for the last few years. The articles offer a sustained and scholarly analysis of significant developments of the day in the country and abroad over the last few years.

Section one of the book consisting of 30 articles, discusses the specialized contexts of the modern economy with reference to globalisation. In the very first article, “Growth: The Other Side”, the author says that with the advent of globalisation, India is experiencing a boom in the service industry, mainly through the deployment of human capital, which in turn has made India emerge as a hub for Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO). Turning to the vexed issue of reservations, Murty contends that the current increase of reservations in IITs and IIMs, in the backdrop of globalisation, would surely undermine the national interests of the country. However, he asserts that “it is time companies walked beyond resenting reservations and exhibited a sense of social responsibility by undertaking various skills development activities for people in areas around their workplaces and made them employable”. It is not ‘reservations’ that the Government should aim at, “but develop human capital in partnership with corporates”. Furthermore, the author comes up with certain remedies that will reduce the gap between the ‘haves’ and the ‘have-nots’. He suggests the creation of community vocational centres that can retrain those who will or are likely to lose jobs, and make them reemployable. Murty also covers a variety of issues and topics ranging from an obituary of the renowned economist Professor John Kenneth Galbraith to foreign direct investment and the condition of life insurance corporations, etc. 

The theme of Section Two of the book is Capital Markets and it comprises 15 articles. In the very first article “Sense and Sensex”, the author observes that the stock markets are changing every day. He warns the prospective investors to be ever ready to change their investment plans with agility. He argues that volatility would haunt the Indian market so long as it is in the growth phase. While discussing the Indian aviation industry, the author claims that it has at last come of age, through the opening up of Indian skies for private carriers. While discussing the role of culture in the Indian market, the author, in a separate article, pointed out that “It’s not the economics that matters in making a country investment-worthy but its very fabric of culture—values, ethics, and morals”(p. 160). The author further says that in a globalised market no one can afford to ignore the fact that money moves in and out of markets with an exclusive concentration on ‘profit’ and nothing else. Investors do not hesitate from shifting their savings from one locale to another to earn more profit. Murty seeks to reconceptualise economics from a growth orientation to that of stewardship. 

The Third Section of the book dealt with the various features of Banking. The article, “Recent Rise in Undesirable Consumerism: ‘Credit’ to Credit Cards” is particularly contemporary and worth reading. He says that a new philosophy of life has emerged since the launching of economic reforms by India in 1991 and believes this trend may become dangerous sometimes. Murty warns that “living today on tomorrow’s likely earnings is as suicidal as playing with a tiger”, which is giving shape to a new theory of consumer choice. But, at the same time, the credit card culture is blind to the essentially relational aspects of human life. In another article the author opines that in today’s globalised economy, the current ways of doing business in the country are not good enough to stay competitive in tomorrow’s market. Therefore, the organisations have to invent new ways of competing. He has thus tried to establish the importance of ‘synergy theory’, which states that when two banks combine they should be able to produce a greater effect together than what the two could do independently. But, the author also cautions that if the mergers are not successful this may end up with the proverbial farcical result! The underlying theme of the different articles of this section is that wealth sometimes has a negative utility beyond a middle point. At the same time it is obvious from the author’s discussion that there are ample world recourses to secure the three basic rights for all.

Murty with his characteristic aplomb claims that it is not only human beings that have character but also the corporates. It matters most in  corporates because they thrive on the capital of many (p. 226). 

Section Four deals with the Forex Markets, especially convertibility of currency. He discusses the impact of Asian Crisis of late 1990s in the Southeast Asian nations. He surmises that a platform for the free flow of capital should be developed, especially on the fiscal and monetary fronts before opening up for free flow of capital across borders. In a very interesting article, “Who is Great: God or the Economist?” the author pointed out that “history testifies to the fact that prior to the world wars, growth in world economy was abysmally low, since it remained essentially provincial. The cross-border flow of goods was minimal and the capital investments were mostly within sovereign boundaries.” Obviously, this resulted in orderliness in the management of money. But, this inflicted silent suffering on those “who were not endowed with natural resources?” (pp.252-253). Murty asserts that it is time for the Government to take bold initiatives for improving infrastructure and thereby give a boost to economic growth which in turn can generate more employment and arrest ills of poverty to a tolerable level of a civilised society. “Are we not entitled to leverage on the current strengths of the economy?”(p.261) only time could reveal the extent of our success.  

In the Final Section the articles  converge on the theme of Governance. In this section at least two articles analysed the recent Indo-US nuclear deal. The author shows how national interests are integral to good governance and humorously concludes: “In today’s context ‘national interest’ is the only guiding post and everything else becomes secondary to it and the sooner we practice it, the better it would be. God alone save us, if we do not know what is in our interest!”(p.305).  

The book offers a practical agenda for beginning the fundamental reorientation of the new global order. The book evolves in the form of commentaries analysing everything under the sun—from governance to public affairs, from banking to the economy, from capital markets to the forex markets, and from insurance to the latest US-India nuclear deal. The range and sweep of topics and issues covered is extensive indeed. As B. Ramesh Babu puts it in his Foreword to the book: “In this age of specialisation (i.e., to know more and more about less and less till you know everything about nothing!)  and knowledge revolution to find such generalists, as GRK Murty is rather refreshing”(p.11). Undoubtedly, the author is pushing for the welfare of the teeming millions of our countrymen and pleading for common sense in public affairs on a wide variety of issues, challenges and opportunities that threatened the nation over the last few years. The book is thus a valuable addition to the accumulating literature on the study of Economics, Management, International Relations as well as History. However, understanding this book is not every one’s cup of tea. The language is lucid, the sentences are meticulously framed, and every word Murty used has its own metaphorical meaning. The ultimate essence of the book is that in the age of globalisation, it is important to recognise, understand and discuss Indian culture and cultural differences. This canvas is very wide and his brief sketches elucidate almost every subject on earth. Even the titles of the article are very well chosen. The book in general recognises the importance of understanding contemporary India against the global backdrop. Globalisation in the 21st century is a compelling process and no nation, including India can negate. But, the developing nations must adopt to the process in their own positive ways: “One thing that is certain in a globalised economy is that we need to be doubly right in picking up the sounds of flapping wings and be instantaneous in our policy responses to those global sounds (changes); else we may risk being left far behind in the race.” The book conveys two broad ideas. First, a sense of balanced civic nationalism, which is bereft of ethnic or communal overtones. Second, a sense of rationality that warns the nation with characteristic panache bordering on pun.

Reviewing this kind of book is a Herculean task since the range of themes addressed is so very wide and varied; and not directly linked with one another. However, the Management Schools, at the same time the financial institutions and universities will find this book worth reading. Students and teachers alike are recommended to read this book to get an idea about the current economic scenario of the country. The scope of the book is contemporary and its language trendy. The cover of the book is well designed and every care has been taken to avoid errors and omissions, as it is evident from a careful reading of the book. Students of literature will also like to adopt this book as a rapid reader for its lucid prose!

Dr. Tridib Chakraborti,

Head and Professor,

Department of International Relations,

Jadavpur University, Kolkata.

E-mail: Tridibc2001@yahoo.com