Dr. BR Ambedkar: A Free Market Economist at Heart

“Ambedkar is my Father in Economics. He is true celebrated champion of the underprivileged. He deserves more than what he has achieved today. However he was highly controversial figure in his home country, though it was not the reality. His contribution in the field of economics is marvelous and will be remembered forever..!”

~ Dr. Amartya Sen, Nobel Prize Winner & Economist

Today Dr. Bhimrao Ramji Ambedkar is mostly revered for his key role in drafting the Indian constitution and as an icon of the dalit community across the nation. However, what very few people know is that he was an economist at heart and a proponent of the free market. In fact, most of his most popular publications seem to portray him as being against capitalism and a free market. Possibly, what we need to do is reinterpret Ambedkar’s works in the 21^st century context to fully understand his viewpoints.

Ambedkar and the Problem of the Rupee

Dr. Ambedkar’s masterpiece, The Problem of the Rupee: Its Origins and Solutions, was published for the first time in 1923. It was later republished in 1947 as part of the History of Indian Currency and Banking. In the very first chapter, Ambedkar writes:

“Trade is an important apparatus in a society, based on private property and pursuit of individual gain; without it, it would be difficult for its members to distribute the specialised products of their labour…But a trading society is unavoidably a pecuniary society, a society which of necessity carries on its transactions in terms of money.

In fact, the distribution is not primarily an exchange of products against products, but products against money. In such a society, money therefore necessarily becomes the pivot on which everything revolves.

With money as the focusing-point of all human efforts, interests, desires, and ambitions, a trading society is bound to function in a regime of price, where successes and failures are results of nice calculations of price-outlay as against price-product.”

According to Ambedkar, a “sound system of money” is key to specialization in manufacturing and trade within any society, in the absence of which prosperity would be impossible. Of course, his later works firmly established him in the minds of Indians as a thought leader of public finance and agrarian economics.

Ambedkar: His Early Years

Born in the military cantonment of Mhow in the erstwhile Central Provinces (what is today known as Madhya Pradesh) in 1891, Ambedkar was encourages in his educational pursuits by his father. Although the family belonged to the Mahar caste, a caste that was socially discriminated against as being untouchable, BR Ambedkar’s father used his position in the Indian Army to fight for his children’s right to study at the local government school. On the whole, early life wasn’t easy for Ambedkar, who was segregated and largely ignored by the students and teachers alike due to his caste.

One could already perceive that Ambedkar was gearing up for greater things when he along among the 14 siblings graduated to high school. He was the only untouchable to attend Elphinstone High School, when his family moved to Mumbai in 1897. In 1908, Ambedkar became the first from the untouchable community to enroll in Elphinstone College. Having graduated in 1912, he moved to the United States in 1913 with a scholarship in his pocket for postgraduate education at Columbia University, New York. With economics as one of his majors in MA, Ambedkar went on to complete his PhD in Economics in 1917.

Ambedkar’s search for knowledge did not end here. On returning to India, he continued to study the Indian Rupee and went on to complete a second Masters degree from the London School of Economics in 1921 and a DSc in Economics in 1923. He completed a third and fourth PhD from Columbia and Osmania universities, respectively.

Dr BR Ambedkar launched his political career in 1926, with the founding of the Independent Labour Party, which went on to win the elections for the Bombay legislative assembly in 1927 by a landslide. With India gaining her independence in August 1947, Ambedkar accepted the position of the country’s first Law Minister.

Ambedkar: A Free Thinker on Free Markets

One of the biggest proofs of Ambedkar being an original thinker and proponent of free markets is his advocacy of free banking. He was not only against the government having monopoly on printing legal tender, he also propagated the gold standard, private property rights, decentralized planning, economic freedom, individual liberty and free enterprise as the cornerstones of economic progress for a nation. On the issue of decentralized planning, Ambedkar had written in his PhD thesis:

“By centralisation all progress tends to be retarded, all initiative liable to be checked and the sense of responsibility of Local Authorities greatly impaired… centralisation conflicts with what may be regarded as a cardinal principle of good government.”