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RBI Issues Circular On Levying Unfair Interest Charges On Customers

Recently, global productivity has declined, which means that the pace of innovation has taken a hit. Innovations such as mobile phones, internet and AI are incremental improvements to existing technologies and ideas. Generally, groundbreaking ideas originate from great thinkers.

Take economists like Keynes, Friedman, and Schumpeter; physicists like Hawking, Einstein, and Richard Feynman; and philosophers like Gandhi, Swami Vivekananda, Bertrand Russell and Max Weber. Unfortunately, the last notable pedigree of thinkers originated around 70 years ago. To understand the reason let’s take a trip down the memory lane.

The ideas of these modern thinkers were inspired by the Renaissance period, which emphasized scientific and logical methods of thinking, requiring evidence to support conclusions.

These ideas, were based on the contributions of the Golden Age of Islam and ancient Western philosophers like Aristotle, Plato, and Socrates

Which in turn, seem to have stemmed from Indian philosophy, particularly Nyaya (focused on logic and epistemology) and Vaisheshika (concerned with metaphysics).

There is a common pattern underlying the development of ideas in these civilizations: the prevalence of various small power centers (sometimes emerging after the fall of one great, consolidated superpower). However, there is an outlier.

Indian Vedic philosophy (including Nyaya and Vaisheshika)  is said to have been developed between 6 to 2 centuries BCE, possibly in universities like Takshashila. At that time, there were 16 “Mahajanapadas” (implying various power centers). Eventually, Magadh conquered all of them to become a superpower.

During the same period, Socrates laid the foundation of modern Western thinking by advocating for logic and argumentation. Plato, his student, outlined the features of an ideal state in ‘The Republic,’ while his student Aristotle, is known as the father of logic. Aristotle also served as a teacher to Alexander.

Now, older thinking in Greece (prior to Socrates) was based on heroic verses like Homer’s Iliad and Odyssey, but there was no focus on formal logic.

However, in India, even mythological texts like Upanishads have logical arguments. The Gita is a logical treatise, where Arjun questions Lord Krishna about the need to fight, while Lord Krishna gives him logic for the same.

Hence, it is possible that Greek citizens who came to India studied this logic and took it back to Greece.

During that period, the biggest empire in the world was the Persian Empire (Achaemenid Empire). It encompassed the whole region between India and Greece.

Alexander defeated it to establish the Macedonian Empire, another huge power center.

Post Alexander’s death, different power centers began developing again. As a result, we witnessed the Hellenistic period.

In the Hellenistic period, Greek thinkers interacted significantly with Indian thinkers. In conjunction, both might have learnt from and influenced each other, leading to the further development of logic and scientific thinking.

After a few years, the world again witnessed the establishment of huge empires, like the Mauryan Empire, Roman Empire and Persian Empires.

The Roman Empire was in constant conflict with the Persian Empires like Parthian Empire and Sassanid empire.

The Sassanid Empire ended between the 600s and 700s AD, and for the next few centuries, the world witnessed the Golden Age of Islam. In this age, fields such as logic, mathematics, and literature flourished, among others.

This is an outlier because instead of various different power centers, the golden Islamic age majorly took place under one single power center, the Abbasid Caliphate, which was one of the biggest empires in history.

Then, the Crusade war engulfed the Middle East and Europe. After the Crusade war, Europeans took knowledge from the Middle East back to Europe, mainly to Italian cities like Venice. This is because Venice provided infrastructure for business at the time. It set up a foundation for the modern banking, financial system, intellectual property rights as well as innovation.

During that period, Europe had various power centers. At the same time, corruption and hypocrisy in Church’s practises were also exposed, breaking the public’s blind trust in clergy. This made people question everything and in the process they started adopting logic to find the truth.

Hence, a combination of various power centers and diminishing trust in the Church, laid a strong foundation for Renaissance.

Then, Guttenberg invented the printing press (in essence, the first ever social media of the world) and accelerated the adoption of logical thinking.

The Church was the 1st target but then it also engulfed monarchy.

Thomas Hobbes, in his book ‘Leviathan,’ laid the foundation of modern society by describing an individual’s behavior as a blend of desires, consequences, and aversions. He emphasized the necessity of sovereign authority to prevent chaos. Subsequently, John Locke, in his ‘Two Treatises of Government’ hinted that people are inherently good natured but need government for protection of property rights. He even advocated for the separation of powers to prevent rulers’ abuse. These 17th-century British thinkers employed concepts of individualistic behavior to elucidate social structures.

In the 18th century, Montesquieu further refined separation of powers concept by introducing the legislative, executive, and judicial branches of governance. Jean-Jacques Rousseau, in his seminal work ‘The Social Contract,’ emphasized the importance of majority consent in formation of government. These two French thinkers adopted a collectivist view of social structure, focusing on the ‘general will’ of society.

These four thinkers are so foundational that their ideas inspired the work of Adam Smith(father of capitalism); Jeremy Bentham and John Stuart Mill (founders of utilitarianism); Karl Marx (founder of communism); and even Sigmund Freud (father of psychoanalysis).

It was an era of enlightenment all around. In hard science, Newton published Principia Mathematica in the late 17th century. Thus dividing the scientific world as pre-Newtonian and post-Newtonian. The steam engine and electricity are perhaps two biggest innovations of the post-Newtonian era.

So, flourishing philosophy of science promoted new thinking across all disciplines. This instigated both democratic as well as industrial revolution across Europe. At the same time wars among European nations further catalyzed these developments.

Even though countries like England, France, Prussia, Denmark, and Spain created huge empires through colonization, there was constant conflict among them.

At one time, Napoleon brought France to the forefront. Then Britain took over, while Hitler tried to make Germany into a major power center. Simply put, all this meant constant battles.

It continued until World War 2. Post that, the US established the current western systems for the whole world, which majorly came out of the Bretton Woods Conference (IMF, World Bank).

Even though Russia was also a major player, the US gained stronghold by making the dollar a global currency and by maintaining its control over global institutions. Also, US’s pop culture gave it enormous soft power. And then, with the demise of the USSR, the US gained complete hegemony.

In conclusion, journey through history depicted there is grand cycle of innovation with 6 stages.

In stage 1, various conflicting power centers exist during turbulent times. These tough times fuel the need for change, leading to new innovations and growth frontiers. Once an innovation is developed, there is a desire to capitalize on it by promoting it worldwide. This leads to the second stage of innovation, where it gets diffused across the globe as different countries try to adopt it. This creates interconnection and globalization, with cohesion among different power centers and no power struggles. In the third stage, the world starts reaping the benefits of existing innovations. As people enjoy a good life, there is less focus on new innovative ideas, resulting in lower productivity and growth in the standard of living. In stage 4, as the standard of living stalls, people feel aggravated and start blaming foreign elements for taking their share of the pie. This sows the seeds for populism and deglobalization. In stage 5, political leaders assess the aggravation of the general public and start taking populist measures. In stage 6, as a result, cohesion among different power centers starts breaking, and we again move towards various conflicting power centers.

Currently we seem to be in stage 5 and gradually moving towards stage 6. The US is pulling back its global presence, populism is spreading globally, Europe is trying to revive its relevance, and China is aiming to shift the balance in its favor. Meanwhile, India is also bidding for Global South’s leadership. Global MNCs like Google, Microsoft, Meta, and Amazon have become power centers in their own right. Currently, we’re even witnessing two major conflicts: between Israel-Hamas, and between Russia-Ukraine.

So if history is a reliable guide, we might witness tough times ahead but it might also bring a new age of great thinkers in fields ranging from art and science to social science.

References:

https://www.newworldencyclopedia.org/entry/Nyaya

https://www.worldhistory.org/article/208/cultural-links-between-india–the-greco-roman-worl/

https://greekreporter.com/2023/08/08/ancient-greeks-india-hellenism/

https://www.frontiercsd.org/cms/lib/NY19000265/Centricity/Domain/167/Abbasid%20Golden%20Age.pdf

https://www.nber.org/system/files/working_papers/w18288/w18288.pdf

https://www.britannica.com/topic/Leviathan-by-Hobbes

Published: April 30, 2024, 15:00 IST
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