Decoding the economic history and thought process behind Raghunath Nageswaran's macroeconomic webinar at SSE, Dakshita Srinivasan writes an appealing article.
We live in a fast-paced world where things keep changing constantly. The world economy has been at the forefront of this change. Raghunath Nageswaran, an independent researcher who writes articles related to political economy gave the students of SSE his worldview of the macroeconomy. This webinar was his understanding of economic phenomena through the lens of history. Economics is believed to be understood by looking at past trends or what we call history. Hence, it is necessary to know the series of important economic events that took place in the 20th century. Around the 1930s the world experienced the greatest economic crisis ever, the Great Depression. This crisis initiated the progress of the general theory of employment, interest, and money and hence brought about the Keynesian Revolution in Economics. Keynesian economic ideas were essentially focused to prevent wars, and the tragic irony of the second world war validated Keynes’ economic thinking on the world stage. The repercussion of both the world wars was the mountain of debts that it left with countries, which the countries repaid by issuing increasing amounts of government bonds.
Governments started printing more money to help improve their respective country’s economy, but this had a conflicting effect. This led to the emergence of financial entanglement in different economies all over the world. There was a dire need for a solution to decrease the amount of cash flow in the economy. The Gold Standard was introduced later to deal with the aftermath of war. The Gold Standard meant to place limits on the issue of paper currency and convert the existing paper currency into gold. It imposed discipline on countries and anchored the first era of economic liberalism. While this did sound good in theory, there was an immense lack of cooperation among national governments in Europe, and according to Keynes, the Gold Standard proved to be a barbarous relic and quite a fetish. A financial merry-go-round was created circling constant American protectionism and Europe’s desperation to find a way to earn dollars/gold. Raghunath goes on to reiterate his narrative by forming a triangle of war debt that was created in the 20th century which primarily revolved around war debt payments, German reparations, and the Gold Standard. National economic fortunes got interlocked and trapped within this water-tight triangle. This gave birth to the era of international financial cooperation. It helped build strong monetary foundations for economic systems all over the world.
We must understand that the purpose of any historic theory is to bring forward hidden mechanisms and relationships of the economy to the surface. This webinar sharpened the understanding and will help us, as students, to have a three-sixty-degree view of the future in designing policies and building institutions that are better for society.