Theory is not and cannot be a true picture of life. “Because of this unavoidable lack of correspondence between theory and the reality it represents, there is always the possibility that theory can lead to misunderstanding or misinterpretation,” said economist CT Kurien.

Delivering the Founder’s Day Lecture at the Madras Institute of Development Studies, organised on the birth anniversary of Prof Malcolm Adiseshiah here on Saturday, Kurien re-visited the works of original marginalists.

Kurien said while they may have a theory of prices, their treatment of the market is highly questionable, mainly because the market as an institution is the playground of merchants who mediate between producers and consumers; neoclassical theory does not recognise their role.

He argued that merchants, money and markets constitute a triad and as neoclassical theorists do not recognise merchants at all and their treatment of money is shallow, their claims about the functioning of the market economy and the central role of the consumer in a regime of free markets are without foundation.

Kurien contended that “in the economics of the Anglo-American variety, there is no theory of the market”.

“If a sweeping generalisation may be made of the 18th century writers on political economy, hardly any of them claimed to be concerned with theory as such.

“They were trying to understand and interpret the economic reality that they saw around them. Adam Smith’s writings on trade and markets must be seen against the mercantilists’ restrictions on domestic trade.”

The lecture event was chaired by KL Krishna, Chairperson of MIDS.

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