Thoughts on economics and liberty

Ambedkar’s key economic views – sadly he was a socialist at heart

I’ve written a lot about Ambedkar on this blog, including calling him a classical liberal. Given the great paucity of any competent thinkers during India’s independence movement, I gave him more credit than he deserved.

Compared with most of the highly regarded “freedom fighters” of India, he is perhaps closest to being classical liberal (Gandhi is close enough, as well). Perhaps that is why India’s Constitution is broadly in the mould of a classical liberal constitution.

But we also know that the Indian Constitution is seriously flawed in crucial aspects. I’ve elaborated in BFN. These flaws derive from the tugs and pressures that arose in the Constituent Assembly from ultra-socialist forces and from ultra-communal (largely Hindutva focused) forces. That’s why we have “directive principles” with absurd things like cow protection and a host of other ridiculous ideas.

But also we have a range of other illiberal things in the Constitution, including the reservations policy which was promoted by Ambedkar. And later, the shelter for land ceiling laws, and other obnoxious interventions in trade.

His degrees: B.A.(Bombay University), MA.(Columbia university), M.Sc.( London School of Economics), PhD (Columbia University), D.Sc.( London School of Economics), L.L.D.(Columbia University), D.Litt.(Osmania University) , Barrister-at Law(Gray’s Inn, London)

I’m linking below a few recent articles/ writeups on Ambedkar’s economic views.

The Practice of Economics by Dr. Ambedkar and its Relevance in Contemporary India – by Padmaja Saxena Bagga, Associate Professor, Dept of Economics, National Defence Academy, Pune, India, published in Journal of Business Management October 2014

Economic ideas of Dr. B.R. Ambedkar and its relevance for Indian economy by Sunil Malkani,  published in KCG-Portal of Journals, October 2016

The economics of Ambedkar – Pramit Bhattacharya April 2016

The summary of these articles is provided below. I have directly quoted the papers.


1. He wanted sound money:

Ambedkar was a believer in the quantity theory of money. In his book, “The Problem of the Rupee”, Ambedkar’s main thrust was the criticism the “reckless issue of rupee currency”. By removing the automatic link between money supply and gold reserves of the country, enormous power was vested with the government to expand money supply, without similar expansion in production of goods and services, leading to an unstable currency value. Ambedkar took the position that an unstable currency could lead to uncontrolled inflation; since a “man­aged currency system” allowed the government to in­dulge in fiscal extravagance and wasteful government expenditure. [Sanjeev: need to study this more, but from the brief description in the articles, this is fine]


1. He wanted “positive” fundamental rights

It was Ambedkar who proposed to the Constituent Assembly that the chapter on fundamental rights in the Constitution should include both negative rights (relating to civil liberties) as well as positive rights (relating to social and economic justice). In a memorandum on this subject, Ambedkar outlined his vision of the rights of citizenship in a free India, and explained why it would entail extensive state control over the economy.

[Sanjeev: This concept – of positive rights -is comprehensively inimical to liberty as I’ve explained at length in DOF.]

2. He wanted State Socialism:

Dr. Narendra Jadhav, in his research paper, ‘Neglected Economic Thought of Babasaheb Ambedkar’, states that, “Ambedkar’s concept of State Socialism is based on three basic tenets: (i) state ownership of agricultural land and key industries to meet the demands of the poorer strata of society; (ii) maintenance of productive resources by the state; and (iii) a just distribution of the common produce among the different people without any distinction of castes or creed.” [Sanjeev: the very idea of the State undertaking business is totally antithetical to liberalism.]

3. He wanted central planning but some private sector:

In his memorandum submitted to the British Government titled “States and Minorities” in 1947, Dr. Ambedkar laid down a strategy for India’s economic development. The strategy placed “an obligation on the State to plan the economic life of the people on lines which would lead to highest point of productivity without closing every avenue to private enterprise and also provide for the equitable distribution of wealth”. He had an “emphasis on the need for industrialization so as to move surplus labour from agriculture to other productive occupations, accompanied by large capital investments in agriculture to raise yields” [Sanjeev: There can be no “mixed” economy – it is nothing but a socialist idea.]

4. He was concerned about economic inequality:

In his speech on the eve of the signing into law of the Indian Constitution, delivered on 25 November 1949, he said: “On the 26th of January 1950, we are going to enter into a life of con­tradictions. In politics we will have equality and in so­cial and economic life we will have inequality. In politics we will be recognizing the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic struc­ture, continue to deny the principle of ‘one man one value’. How long shall we continue to live this life of contradictions? …We must remove this contra­diction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has so laboriously built up.” [Sanjeev: concern for inequality is wasteful and disruptive. All we need is social insurance and elimination of dire poverty]

5. He wanted to nationalise land:

He sees an extremely important role for the state in such transformation of agriculture and advocates the nationalization of land and the leasing out of land to groups of cultivators, who are to be encouraged to form coopera­tives in order to promote agriculture. … During the framing of the Constitution, Ambedkar had visualised that agriculture shall be a State Industry, and be organized by the State taking over all land and letting it out for cultivation in suitable standard sizes to residents of the villages to be cultivated as collective farms by groups of families. The State had the responsibility to supply capital necessary for agriculture as well as for industry.” [Sanjeev: property rights are inviolable. This idea is obnoxious in the extreme]

6. He wanted labour market interventions by government:

In 1936, Dr. Ambedkar founded the Independent Labour Party. As a Labour Member of the Viceroy’s Executive Council from 1942 to 1946, Dr. Ambedkar was instrumental in bringing about several labour reforms including establishment of employment exchanges, generally laying the foundations of Industrial relations in Independent India. [Sanjeev: once again, the focus should be on ensuring freedom in industrial relations]


So what can we say about Ambedkar?

One can say he was trained in economics and that’s a good thing. We, however, note a very strong Marxist influence in his work.

He took on some elements of liberalism but then tried to graft Marxism to it.

That’s something impossible to do.

So what should we conclude?

Ambedkar was a POOR ECONOMIST and did not understand markets or the price system. He was not a classical liberal in the genuine sense. His views are highly distorted and statist.

India is fortunate to have had at least a half-competent person like him to help draft its constitution. But the defects in India’s constitution are just too many and to Ambedkar – in addition to to Nehru and the other socialists – must go the blame for letting India down.

Sad, indeed, that there was virtually no leader at the top in India for the past 100 years who understood (and therefore was able to promote) liberty

Sanjeev Sabhlok

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