Spotlight: Market Nirvana

"I'm the only Buddhist Whig in existence," says Sudha Shenoy. Actually, the statement is a mocking of orthodox Hinduism by a member of the Gauda Sarasvat Brahmin caste and a pioneer in the dissemination of Austrian economics. Sudha Shenoy is an articulate critic of government interference in economic activity and an authority on the damage done to Third World countries by well-intentioned economic aid.

Shenoy dresses and looks Indian, even to the bindi on her forehead, but she says, "If I'm anything, it is British." She is currently a visiting fellow at the Institute for Humane Studies in Menlo Park, California, but she hails from Australia, where she teaches economics at the University of Newcastle. Her husband, an archivist, is also at Newcastle.

About Australia, she says, "Australian anti-intellectualism has saved the country from going too far down the path that Great Britain has taken, but in the end, it will go the same way as the United States and Great Britain. That is the fate of all small countries." The reason, she says, lies in the economics taught in American and English universities 20 years ago. It is at those schools that the leaders of small countries are educated, and it is there they get their ideas.

Shenoy calls herself an anarchist or, jokingly, a monarcho-anarchist. Her fondness of royalty seems inconsistent with her well-known individualism. The Indian woman also has good things to say about the caste system.

The virtue of monarchy in England, she believes, was that the upper classes "have always been rather stupid, allowing the middle class to rule the land." This brought untold benefits to the general population. Now, Britain is only nominally a monarchy and in reality a welfare state. "As bad as the old system was," she says, "the new English system is infinitely worse, and social mobility is infinitely more difficult."

The caste system, too, she views in perspective. Although horrible in many respects, it is a way, she observes, of institutionalizing tolerance. "Americans expect people to be much more uniform than Indians do. We expect to see fundamental differences in values and lifestyles. For thousands of years, India has been invaded, but the conquerors are eventually just integrated as another subcaste."

This gives her hope for the Third World's survival. "Throughout Asian history, government has always been a predator. There's never been any of this humbug about government being for your welfare or your benefit. There is a sharp distinction between politics and society that is not so apparent in the Western world. Social institutions have survived numerous governments."

In the caste tradition, Shenoy followed in her father's footsteps. An economist, he was studying in England when F.A. Hayek delivered his famous speech on prices and production at the University of London in 1931. "He wandered into the lecture hall," she recounts, "and somehow penetrated Hayek's thick Viennese accent and immediately recognized the Austrian framework as the only proper economic model." B.R. Shenoy was the only real critic in the 1950s of Nehru's economic policies, and in the mid-'70s, under Indira Gandhi, he achieved the dubious honor of having laws passed simply to silence his continuing criticism of Indian economic policies.

Sudha Shenoy entered the London School of Economics 33 years to the day after her father enrolled. She has continued his work in Austrian economics and exposing the ill effects of foreign aid. Her 1971 book, India: Progress or Poverty? published by London's Institute of Economic Affairs (IEA), is an articulate attack on so-called aid dumped on that Third World nation.

In 1972 she helped bring to publication F.A. Hayek's A Tiger by the Tail: The Keynesian Legacy of Inflation. She says that the book came out at "a psychologically critical moment in British economic thinking, if you will." In fact, the financial press was full of it. Britain's leading economic reporter, Samuel Brittan, publicly repented his previous Keynesianism and credited the book for his conversion.

Shenoy is a good-humored, quick-witted woman whose belief in economic freedom makes many American advocates of the free market look liberal in contrast. Perhaps the most striking thing about her is the way she has incorporated into her own distinctly Indian point of view values held dear by Western free-marketeers. She believes in reincarnation, is a strict vegetarian, and likes to quote Tao Teh Ching on social policies.

She sees no contradiction between the Austrian economic framework and her own Buddhist Hinduism. "The connection," she explains, "is Hayek's concept of law: people acting spontaneously—not randomly, but with implicit rules. Like the spontaneous order of language, there are rules, and it's the same in the moral sphere. Law is built into the universe." So Shenoy works to understand the implicit rules governing the economic sphere.

Does she think the human race is making progress through the chain of reincarnation? I asked her. "Now you're thinking like a Christian," she corrected me. "It's not reward or punishment if you walk off a cliff. It's simply the return of what you've done.

"When the history of thought has been written," she says, "this time will probably be seen as a great flowering and expansion. Whether or not it becomes crystallized or institutionalized, we cannot know. We are all incipient Buddhas. We all have the opportunity to learn the laws of the universe if we choose to take it."

Patrick Cox is a free-lance writer, a frequent guest columnist for USA Today, and public affairs director of the Pacific Institute for Public Policy Research.