Dr. Ravi Batra

It's been on the New York Times bestseller list for five weeks and was recently in fifth place. MIT economics professor Lester Thurow, the liberal polemicist, says that its argument about cycles is "novel and brilliant." A business magazine made it a cover story. Should you, therefore, rush out and enrich Simon & Schuster by $17.95 for Dr. Ravi Batra's The Great Depression of 1990?

Forget it. Batra's bafflegab is awful, appalling, terrible, no redeeming features whatever. If you want cycles, stick to Wheel of Fortune. Batra's argument is that all societies are composed of four classes of people: warriors, intellectuals, acquistors and laborers. That is an echo of the caste system that prevails in his native India. Each class exercises social dominance in turn in an endless cycle. Right now the U.S. is at the end of the Age of Acquisitors and is about to plunge into an Age of Laborers, with accompanying materialism, crime and immorality.

A characteristic of the Age of Acquisitors, says Batra, is economic cycles. In the U.S. there has been a serious depression every 30 years. If the 30-year depression is avoided, then we have an extra-serious "Great" Depression after 60 years, as in the 1930s. Having avoided the serious depression in the 1960s, Batra says, we are due for a lulu in 1990.

Depressions, he claims, are preceded by peaks in money growth, inflation and government regulation, wich are simultaneous and therefore, Batra asserts without any proof, related. The triggering mechanism is the increasing concentration of wealth. This encourages speculative excess and undermines the banking system by reducing the creditworthiness of its customers, to whom the banks nevertheless blindly continue to lend.

Now we come to the part that probably appeals to people like Lester Thurow. Batra says that the Reagan tax cuts have fatally exacerbated the overconcentration of wealth, and that a Great Depression in the 1990s is now a "90% probability." It's too late to avoid this depression by such otherwise necessary interventionist reforms as restricting the maximum wage earned in industry to ten times the minimum wage and restricting the role of private enterprise to "small corporations or proprietorships."

But there is one consolation. The stock market will continue to boom until late 1989. Of course, this will worsen the concentration of wealth. Even the most amateur historian will read Batra's book with growing astonishment. His ages begin abruptly with the Roman Empire and totally disregards events normally considered at least worth a mention, like the Renaissance, the Reformation and the French and Russian revolutions. The civilizations of the Middle East, India and China are omitted completely. So, oddly, is world communism. The Industrial Revolution in Europe, supposedly ushering in the Age of Acquisitors, is dated to 1860, at least a century too late. But the U.S. is arbitrarily classed as Acquisitive from the first English settlements in 1607.

Batra makes little serious effort to defend his chronology. Asked in a telephone interview why he dates the beginning of Japan's Age of Acquisitors to 1932, he says vaguely that "Japan came into contact with the West in the 1920s." He forgets the name of the 1868 Meiji Restoration, when Japan actually did start westernizing, and makes no reference to the country's post-1945 restructuring under MacArthur.

The astonishment of amateur historians is nothing to the screams of rage uttered by serious academic economists as they learn of Batra's arguments. Although he appears supremely unconscious of it, Batra's assumption that the U.S. economy has long-run tendencies toward concentration and monopoly has been bitterly debated among economists for years.The advantage is currently held by those who think business concentration is unimportant. Similarly, many economists dispute Batra's bald assertion that "wealth" (he does not define the term and cites secondary sources) has been growing more concentrated, even apart from the issue of whether any such concentration matters. The distribution of income, which is easier to measure, is generally thought to have been remarkably stable. Moreover, the 1981 Reagan tax cuts did little more than roll back the effect of the previous few years' Social Security tax hikes and unlegilated income tax increases caused by "bracket creep" - the interaction of inflation and steeply progressive marginal rates.

The thinness of Batra's arguments is more surprising because he is an academic economist himself, albeit a specialist in international trade. Educated in India and with a Ph.D. from Southern Illinois University, Batra now teaches at Dallas' Southern Methodist University. His book's dust jacket describes him as "one of the top trade theorists in the world," but other trade specialists have barely heard of him. Batra says his theory of cycles is derived from the work of Prabhat Ranjan Sarkar.

Who he?

Batra says Sarkar is "a leading scholar from India who has profoundly enriched the literature of many disciplines, including economics, political science, poetry, psychology, linguistics, art and, above all, spirituality." Really? P.R. Sarkar is the leader of a Hindu cult called Ananda Marga. According to press reports, he was sentenced in 1976 to life imprisonment in connection with the murder of six disciples, although his conviction was later overturned. The group has also been accused of arson, child abduction, homosexuality, hijacking and international terrorism. But Ananda Marga has never been accused of Reaganism. And apparently that's all that matters to Batra's U.S. admirers. Maybe the world will end in 1990, but not for any of Batra's reasons. In fact, here's one cycle he hasn't reckoned with. For nearly 20 years, since Adam Smith's The Money Game, financial books have reached the New York Times bestseller list - Howard Ruff's How to Prosper During the Coming Bad Years, Douglas Casey's Crisis Investing, Jerome Smith's The Coming Currency Collapse, William Donoghue's Complete Money Market Guide - only as the trend they celebrate is ceasing to matter. They've been almost perfect negative indicators.

Now, in the fifth year of economic expansion and the thirteenth year of a bull market, a doomsaying book is hot? It seems almost inconceivable - but can there be a "Batra boom" ahead?

(from Forbes, 9/27/87)