Shenoy-Hayek Correspondences, Set II

By B. R. Shenoy, Friedrich Hayek

Summary

Set II of the Shenoy-Hayek archival materials, held in the Friedrich A. von Hayek Collection at the Hoover Institution, documents a 1959 two-way exchange between the Indian economist B. R. Shenoy and Friedrich von Hayek, together with the newspaper writings that occasioned it. The correspondence opens with Shenoy’s 13 October 1959 letter from the School of Social Sciences, Gujarat University, reporting on his visit to Zurich, Beirut and the Oxford meeting of the Mont Pelerin Society, and proposing that the Society hold a panel discussion on Indian economic conditions. Hayek replies on 20 October 1959, expressing delight at hearing from Shenoy and admitting that ‘my own understanding of Indian affairs’ had been transformed; a December 1959 letter, signed ‘F. A. Hayek, President,’ formally invites Shenoy to become a member of the Mont Pelerin Society.

The bulk of the rendered pages are the writings Shenoy enclosed: a typescript essay, ‘Free Market Economy for India,’ and two clipped Times of India items. The essay and the companion newspaper article, ‘Lessons for India in West German Recovery,’ build a sustained case that India should follow Ludwig Erhard’s post-war West German model — dismantling controls, ending inflationary deficit finance, and trusting a self-correcting free market — rather than persisting with ‘democratic planning.’ A ‘Free Social Market’ Readers’ Views letter, replying to correspondents Y. V. Thatte and M. N. Raval, clarifies that Shenoy’s free-market position still permits limited public investment in basic industries where private savings fall short.

Throughout, Shenoy marshals statistics on plan finance, deficit financing and the falling saving rate (a Plan Finance table covering 1956-57 to 1959-60 closes the set), and closes one piece with the warning that foreign aid, by patching over domestic inflation and policy aberrations, ‘may have an element of disservice in disguise.’ The materials capture both Shenoy’s intellectual alliance with Hayek and his role as the chief Indian advocate of the social-market alternative to Nehruvian planning.

Key points

• A 1959 two-way correspondence between B. R. Shenoy and F. A. von Hayek, including Hayek’s invitation for Shenoy to join the Mont Pelerin Society.

• Shenoy reports on the Oxford MPS meeting and proposes an MPS panel discussion on Indian economic conditions (letter of 13 Oct 1959).

• Hayek replies (20 Oct 1959) crediting Shenoy with transforming his understanding of Indian affairs.

• Shenoy’s enclosed essay ‘Free Market Economy for India’ urges India to emulate Ludwig Erhard’s West German recovery.

• Times of India clippings: ‘Free Social Market’ Readers’ Views letters and ‘West German Recovery: Lessons for India.’

• Shenoy concedes limited public-sector investment in basic industries where private savings are insufficient.

• He indicts inflationary deficit finance and warns that foreign aid can be ‘a disservice in disguise.’

• A Plan Finance statistics table (1956-57 to 1959-60) documents deficit financing and the domestic savings shortfall.

Generated by the v1.5 extraction pipeline. Awaiting editorial review.