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I believe India today is potentially poised for another even more stupendous leap on its upward trajectory. India’s relative weight in the global economy and in world affairs in general, is bound to grow for many reasons. By 2030, India is projected to overtake China as the most populous country in the world, with the third largest economy in US dollar terms. Furthermore India is a very young

nation with nearly two thirds of its population below the age of thirty-five.

If free market prices don't give people what they morally deserve, should we try to regulate factor prices so that they do track producers' moral deserts? Hayek offered two compelling arguments against this proposal. First, if you fix prices on a backward-looking standard, they will no longer be able to perform their informational function. Producers will produce for what was demanded last

quarter, even if it isn't demanded today. This creates enormous waste and generates huge opportunity costs. We'd be much poorer in an economy that worked like this. […] Hayek was right. It might sound like a compelling idea, to make sure that people receive the income they morally deserve. But orienting the economy around this goal, assuming it is achievable at all (and there are principled

doubts about that), would doom us to poverty and serfdom. It would abolish capitalism, along with its chief virtues. It isn't worth the draconian costs.

What kind of political order, then, is taking shape in Europe, 15 years after Maastricht? The pioneers of European integration – Monnet and his fellow spirits – envisaged the eventual creation of a federal union that would one day be the supranational equivalent of the nation-states out of which it emerged, anchored in an expanded popular sovereignty, based on universal suffrage, its executive

answerable to an elected legislature, and its economy subject to requirements of social responsibility. In short, a democracy magnified to semi-continental scale (they had only Western Europe in mind). But there was always another way of looking at European unification, which saw it more as a limited pooling of powers by member governments for certain – principally economic – ends, that did

not imply any fundamental derogation of national sovereignty as traditionally understood, but rather the creation of a novel institutional framework for a specified range of transactions. De Gaulle famously represented one version of this outlook; Thatcher another. Between these federalist and inter-governmentalist visions of Europe, there has been a continual tension down to the present.

Not only is it possible to devise complete models of the economy on hypotheses other than rationality, but in fact virtually every practical theory of macroeconomics is partly so based. The price- and wage- rigidity elements of Keynesian theory are hard to fit into a rational framework, though some valiant efforts have been made. … But if the Keynesian model is a natural target of criticism by

the upholders of universal rationality, it must be added that monetarism is no better. I know of no serious derivation of the demand for money from a rational optimization. … The use of rationality in these arguments is ritualistic, not essential.

Our understanding of how markets and businesses operate was passed down to us more than a century ago by a handful of European economists — Alfred Marshall in England and a few of his contemporaries on the continent. It is an understanding based squarely upon the assumption of diminishing returns: products or companies that get ahead in a market eventually run into limitations, so that a

predictable equilibrium of prices and market shares is reached. The theory was roughly valid for the bulk-processing, smokestack economy of Marshall’s day. And it still thrives in today’s economics textbooks. But steadily and continuously in this century, Western economies have undergone a transformation from bulk - material manufacturing to design and use of technology — from processing of

resources to processing of information, from application of raw energy to application of ideas. As this shift has occurred, the underlying mechanisms that determine economic behavior have shifted from ones of diminishing to ones of increasing returns.

This paper has attempted to go beyond the usual static analysis of increasing-returns problems by examining the dynamical process that 'selects' an equilibrium from multiple candidates, by the interaction of economic forces and random 'historical events'. It shows how dynamically, increasing returns can cause the economy gradually to lock itself in to an outcome not necessarily superior to

alternatives, not easily altered, and not entirely predictable in advance.