Economics was developed as a social science nearly exclusively by the British economists, roughly between 1776 and 1930. Earlier it was referred to as Political Economy. Most continental European languages do not have an exact corresponding term for Economics.

The father of modern economics, Adam Smith, who for the first time called it as Economics and a science of wealth, in 1776, all through advocated that Economics is a branch of Ethics, a discipline studying morality and setting norms of moral (responsible) behaviour.

His was the time when Mercantilism was being slowly replaced by the emerging Capitalism, based on industrial production. He was a strong advocate of a market mechanism, free from any government interference, so that the players in the free market mechanism viz. entrepreneurs and buyers, should use the potentials of mechanised large scale productive capacity generated by the Industrial Revolution (1750), furthering one’s own self interest. He believed that, left to itself (laissez faire), the market mechanism will decide that equilibrium price, which will be attractively low enough for buyers to buy and attractively high enough for the sellers to sell, simultaneously.

We can pardon his romantic belief in the market mechanism, because the nascent capitalism that he saw, made him confuse the necessary condition of a free entry in the market, for a sufficient condition of an army of entrepreneurs flooding the market.

Entrepreneurship, particularly industrial entrepreneurship, demanded extraordinary skills and attitudes, which was not every mercantilist entrepreneur’s cup of tea. Hence, the so called ‘thorough going competition’ was only a facade. There were open or tacit agreements among entrepreneurs, who were birds of the same feathers, exploiting both the unorganised labour and consumers, who were not socialised enough to come together and collectively bargain with the entrepreneurs. The legal machinery banned trade unions even in the democratic countries, under the pretext of protecting free competition among workers, under laissez faire. Second, any new entrepreneurs had a tough time in getting an entry in the market, packed with the early starters.

The real witnesses to the domestic industrial capitalism getting converted into an imperial capitalism, were the so called, ‘Neoclassical economists.’ Alfred Marshall (1842-1924) witnessed the British economy of the late 19th century, growing on the capital and captive market provided by the colonies, through the so called ‘economic drain. He took on himself the responsibility of washing the blemish on Economics being a dismal (disgusting, gloomy) science, put by Carlyle (1795-1881), a Victorian thinker.

Carlyle maintained that Economics, being a science of wealth, as defined by Adam Smith, teaches people to be greedy and so it is a dismal science. Marshall tried to defend his discipline by pleading that Economics studies wealth, no doubt, but it also studies human (material) welfare as the end (aim) of the use of wealth and that is the more important part of Economics. His own disciple, Lionel Robbins in the 1920’s, however, completely dissociated Economics from welfare and gave the so called ’scarcity and optimisation’ oriented definition, which clearly reflects the influence of the Cartesian Newtonian conceptual framework. The Marshallian insistence on human welfare being the objective of economic activity put a responsibility on the various economic agents.

With the Robbinsian thrust on ‘optimisation of resource use’, the engineering aspect of economic policies, as Dr. Amartya Sen puts it, became the sole objective of economic activities to the complete exclusion of the ethical aspect. The Homo Economicus syndrome was the inevitable side effect of Neoclassical economists’ world view, based on the Cartesian Newtonian conceptual framework, which fostered the European science, technology and the world view from 18th century. Briey, we can note the distinguishing characteristics of this conceptual framework as follows:

1) René Descartes (1598-1650), a philosopher and a mathematician from France and Sir Isaac Newton (1642-1724), a physicist and mathematician from UK, developed the so called Cartesian Newtonian conceptual frame-work. They never met, but Newton picked up the baton from Descartes.

2) The framework maintains that the universe functions like a machine, strictly according to the laws of deterministic mathematics.

3) The universe is a three dimensional space. Time, which is independent of the space, flows absolutely and unidirectionally from the past to the present and the future.

4) The ‘ultimate building blocks’ of all matter are the atoms, made indivisible by the divine design. (Newton’s ‘Optiks’)

5) The observer of any scientific experiment is totally an outsider to it and so is absolved of the moral responsibility of the results of the scientific experiments.

Economics, particularly after Lionel Robbins, accepted this conceptual framework and developed the so called Homo economicus syndrome. Economic rationality, under this ‘Economic Man’ mindset, was confined to making only the economically optimum and technologically feasible use of the scarce resources, totally ignoring the social, moral and environmental effects of such a ‘rational’ acquisition and use of resources.

The sense of responsibility towards the society and environment, which existed among the pre neoclassical economic thinkers, emanated from the relatively greater dependence of the human society on nature for subsistence. With chemical fertilisers and machinery used for agriculture, it became less and less dependent on the natural factors.

Second, by that time the concept of an exclusive ownership of nature by the human society became much stronger and the environment was looked upon as an inexhaustible source of raw materials and a bottomless pit for all the effluents (wastes) that industries and growing urban population generate.

The growing prosperity of the already privileged classes in the society, enforced by the total absence of a sense of responsibility towards nature and society, provided the necessary booster for what the Bhagawadgeeta refers to as the Asuri Sampat or ‘the diabolic mindset’. We will discuss this in the session V of this series and learn how best does it identify the ‘crisis of extinction’ that the human race today is confronted with.