by Pranab Bardhan
All of the articles in this series can be found here.
Gérard Roland came to Berkeley only around the turn of this century. He grew up in Belgium, was a radical student, and after the student movements of Europe subsided, he supported himself for a time by operating trams in the city. When he was wooing his girlfriend (later wife), Heddy, she used to get a free ride in his trams. (A few years back when I visited them one summer in their villa in the Italian countryside near Lucca, Heddy told me in jest that those days she was content with a free tram ride, but now she needed a house in Tuscany to be placated). Gérard is also a good cook.
As with Andreu, my special link with Gérard was based on our shared interests in history, politics and culture. In addition, his research involves analyzing institutional rules in the economic development process and issues of comparative economic systems, which have also been part of my own research themes. He comes to this set of issues from his long-run interest in Russia in its process of economic transition after the fall of Berlin wall, and later in China.
At this point I might as well give some perspective for my interest in institutional and comparative-systemic issues in the context of the subsequent developments in the discipline of Economics. By institutions economists do not necessarily mean an establishment or organization. They apply the term to imply general rules and practice and custom in economic arrangements. I have earlier talked about my interest in and detailed empirical work on agrarian relations in Indian villages—these relations are often examples of small-scale economic institutions at the micro-level. Thus sharecropping, that my early work was concerned with, is a prime example of an age-old economic institutional arrangement.
Apart from the theory to understand the basic mechanism, my work also went into various empirical features of such arrangements in land, labor and credit markets in peasant economies. I put together much of my empirical work of the previous decade in this field in a book Land, Labor and Rural Poverty published in 1984. Then, collecting the theoretical aspects of the work in this area by myself and other fellow researchers, I edited a book The Economic Theory of Agrarian Institutions in 1989. This book was meant to give the reader some idea of the theoretical frontier of institutional research in developing countries which had been going on, both at theoretical and empirical levels, for the previous two decades.
In the 1990’s, following Douglass North’s work on institutions in western economic history (and his Nobel Prize on the basis of that work), the literature of institutional economics thrived, mostly using cross-country statistical exercises showing how different performance in different countries in the macro-economic process of growth depends on the importance of the institution of property rights and contract enforcement. It has been widely recognized that this was a major turning-point in economics, as orthodox economics concerned with prices and markets, often used to operate in what looked like an institution-free vacuum.
For us development economists, however, it was unfortunate that these researchers in post-1990 institutional economics were largely oblivious of the substantial theoretical and empirical work in the previous two decades, the 1970’s and 1980’s, by a whole array of people on micro-institutions in agrarian relations in poor countries (including issues of property rights and contract enforcement). In most of the later overviews of the literature on institutional economics there is hardly any trace that this earlier literature even existed. This is another indicator of the exotic/peripheral nature of development economics for the mainstream at least until the 1990’s. Yet as Joe Stiglitz said in a chapter in my aforementioned edited book of 1989:
“A study of less developed countries is to economics what the study of pathology is to medicine; by understanding what happens when things do not work well, we gain insight into how they work when they do function as designed. The difference is that in economics, pathology is the rule: less than a quarter of mankind lives in the developed economies.”
In the last couple of decades this has been somewhat corrected, and some of the younger development economists have now been recognized at the frontier of the discipline.
Gérard and I had a common friend, Masahiko Aoki at Stanford University, who came to the subject of institutional economics from yet another angle. Aoki brought in the perspective of the Japanese corporate governance system, where there is a process of reaching an economic arrangement and understanding among the different stake-holders of a firm (business and long-term employees and suppliers) within mainly a bank-centric, rather than stock market-centric, financial system and aligned with the government as a mediator and coordinator. (Of course, in the last few decades the Japanese system has also changed quite a bit).
I had briefly known Aoki during my MIT days (he was at that time at Harvard); he and his actress wife once came to have dinner with us. (Soon after I left MIT his wife died from a freak accident, electrocution in her bathtub at home; Aoki had talked to her from his office only minutes before).
I came to know him better at Stanford; I have also visited him in Tokyo where he used to spend a significant part of the year. Once he took me to a back room of a posh restaurant in Tokyo, where in the whole room there were only the two of us, then a uniformed chef came, took a bow and started cooking individual dishes in front of us according to our specifications, served them to us, and then onto the next dish and so on—this was a first-time experience for me.
Aoki wrote his memoir, titled Trans-boundary Game of Life, in Japanese which recently, after his death in 2015, has been translated into English. Like Andreu Mas-Colell, Aoki also had an activist student past. He was one of the leaders and theoreticians of a radical Marxist student organization in Japan, and was imprisoned in 1960. In the early part of the memoir he writes about his prison life. The food there was not bad and he adds: “…some dried hijiki seaweed (was) sprinkled on top. Even now, when I eat hijiki, I am reminded of those days, though not quite to the extent of Proust’s madeleine”. But he soon became fed up with the partisan disputes of leftist circles, gave up his activism and went to the University of Minnesota for his Ph.D. (Andreu also went to Minnesota, but later). At Minnesota he was greatly influenced by the distinguished economic theorist Leonid Hurwicz, particularly by his game-theoretic approach to understanding social mechanisms.
I have briefly known Hurwicz. He was one of the most charming as well as polymathic economists I have ever met. He got the much-deserved but much-delayed Nobel Prize at age 90, six months before his death. He was of Polish origin, but born in Moscow in the year of the Revolution, 1917, “after the February Revolution, but before the October Revolution”, as he told me. I met him the first year I joined Berkeley when he came as a visiting professor. He was interested in a whole range of academic disciplines; at different times in his academic life he had taught mathematics, statistics, electronics, meteorology—apart from Economics, a subject in which, by the way, he did not have a degree. He was also a man of infinite intellectual curiosity about most things in life.
Once when I went to give a lecture at Minnesota, after my lecture he took me to his office. We chatted about various things, including my work on sharecropping in which he showed a great deal of theoretical interest. At one point he took me to one of his large file cabinets stuffed with hundreds of newspaper cuttings on Indian news from newspapers. I was amazed to observe his meticulous interest in Indian political and economic issues, which he developed ever since he visited India for a year in the mid-1960’s.
When he visited Berkeley, one weekend he and his wife came and picked us up and took us to see elephant seals at the coast south of San Francisco. In the same trip a Professor of Statistics in Berkeley, David Blackwell, a friend of Leo, accompanied us. I had heard about the Rao-Blackwell theorem, one of the most important theorems in mathematical statistics, named after C. R. Rao (whom I have mentioned before as the Director at ISI when I was there) and David Blackwell, but never met him before. When he joined the faculty in 1955, he was the first African-American to be a tenured faculty member at Berkeley. Now there is a new residential hall for students in Berkeley called Blackwell Hall.
On a cold day under a gray sky near the ocean it was quite a heart-warming sight to watch these old intellectual stalwarts rapt in childlike curiosity and delight in observing a whole colony of giant elephant seals and their cavorting pups.