You are here: Home » Opinion » Columns
Business Standard

Vivek Dehejia: The 'what if' question

The 'counterfactual' scenario is central to reasoning in the sciences and social sciences, yet it remains poorly understood outside these disciplines

Vivek Dehejia 

Vivek Dehejia

Take an obvious example, the stagnation of economic activity in India after British colonisation, as extensively documented by economic historians such as the late Angus Maddison.

Is this not prima facie evidence that British rule was harmful to India?

Many respected commentators appear to believe so. At one public lecture, a noted scholar observed that the anaemic rate of gross domestic product growth during the period of British rule decisively disproves the contention by the controversial and flamboyant historian, Niall Ferguson, that the British Empire was good for its colonies, most notably in its latter, more "enlightened" phase.

Yet, if one probes this assertion, it begs the question, to what hypothetical ("counterfactual") scenario is the actual experience of India being compared? Those who argue that the drop-off in economic growth under the British clinches the case against them, are implicitly assuming that growth would have been higher otherwise - let us say under a resurgent Mughal Empire that modernised the economy, as was to happen in the middle of the nineteenth century in Meiji Japan.

But this is only one of several plausible alternative situations. If British rule had somehow been staved off, but the Mughal Empire had continued to disintegrate, India might have ended up as another Afghanistan, ruled by warring chieftains who managed to keep foreign rulers (largely) at bay, but who failed to ignite economic development within their territories and, worse still, allowed the polity to turn atavistically back to feudalism.

Compared to this apocalyptic scenario, British rule seems rather less minatory, doesn't it?


As it happens, and as I explore in greater depth in my recent book, just such a debate played out in the pages of the august American magazine, New Republic, back in 2007, when Ferguson and Amartya Sen traded salvos on whether British rule was largely beneficial or harmful for India (as you might expect, Sen was arguing against Ferguson's benign view of Empire).

The larger point is, merely observing the stagnation of Indian economic activity during the period of British rule doesn't, logically, allow us to conclude anything about whether British rule was good or bad for India. That further claim requires that we posit a counterfactual scenario against which the actual course of Indian history is compared. Thus, how plausible is our claim will depend, in large measure, on how sensible the counterfactual scenario we postulate.

Counterfactuals in history are difficult for just this reason: history took one particular course, and we can only speculate on how things might have turned out differently if it had taken a different course.

By contrast, in economics, for instance, counterfactual reasoning is central to economic analysis - indeed, normative economic claims, that one policy is better than another, for instance, are logically inconceivable without the presence of a counterfactual alternative.

Take the most basic proposition from first year economics: that, in a competitive market, price will equilibrate demand and supply, in such a fashion as to eliminate any scarcity or surplus, and to ensure that buyers and sellers both achieve a maximum level of satisfaction.

The counterfactual here involves a process that Leon Walras, one of the architects of classical economics, dubbed "tâtonnement", an activity wherein the market "gropes" itself toward equilibrium. For instance, if the price in the market is too low, there will be a shortage, and too many buyers will chase too few sellers. As a consequence, buyers eager to get their hands on this scarce commodity will drive up its price, inducing sellers to offer more of it on the market. This process continues, evidently, until demand once again equals supply, and the market comes to a point of rest.

While Walras' story is one of only several alternatives, it should be clear that economists' contention that market equilibrium is achieved where price causes demand and supply to be equated must be predicated upon a plausible counterfactual scenario depicting what the market does when it's not in equilibrium and trying to grope its way back.

More broadly, quantitative economic models - whether of the statistical or mathematical simulation varieties - build into their very structure the possibility of asking counterfactual questions. The concept of a "partial derivative" in differential calculus - that tells us what happens to the value of a function when one of its arguments changes infinitesimally, while the others are held constant - is in itself asking a counterfactual or "what if" question.

The counterfactual scenario, once the province of dusty academic study and dry mathematical equations, is now fully part of our current political discourse in India.

Far from esoteric, when a politician such as Narendra Modi pointedly asks, "What would have happened if Sardar Patel rather than Pandit Nehru had become India's first prime minister?", the question invites us to think through an alternative course that Indian history might have taken, much as the debate between Ferguson and Sen allows us to interrogate contrary opinions about the impact of British rule on India.



The author is an economics professor at Carleton University in Ottawa, Canada, and is co-author of Indianomix: Making Sense of Modern India (Random House India, 2012)
Marginalia makes research from the academic world accessible to all our readers

First Published: Mon, November 25 2013. 21:48 IST
RECOMMENDED FOR YOU