[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
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MORE MARKETS, LESS GOVERNMENT<br />
mental economist, Herman Daly in his<br />
writings points to the current dilemmas<br />
of economic planning under globalization<br />
wherein comparative advantage has<br />
become absolute advantage, in a situation<br />
of greater integration of economies<br />
and the attempts by powerful countries<br />
to have absolute advantage as regards<br />
trade and investment. Sukhamoy Chakravarty,<br />
with great perspicacity already in<br />
the 1980s pointed to two necessary directions<br />
of theoretical efforts for development<br />
economics in developing countries.<br />
Firstly he had called for “a deeper study<br />
of economic organization from the point<br />
of view of ensuring creativity, growth and<br />
equity” and went on to add that “earlier<br />
discussion of the market versus the Plan<br />
was much too crude”. Secondly and<br />
which is very relevant to our discussion<br />
here, is that “we should possibly reorient<br />
the study of international economics<br />
from its preoccupation with problems of<br />
comparative advantage based on internationally-immobile<br />
primary factors,<br />
towards a study of processes based on<br />
internationalization of capital, changes<br />
in income distribution and the resulting<br />
variations in sectoral productivity levels<br />
which give rise to the emergence of a<br />
process of uneven world economic<br />
growth”. Sukhamoy Chakravarty’s reference<br />
to uneven growth on a world scale<br />
has much relevance even within our<br />
country, in the context of current economic<br />
growth patterns and growth models<br />
dependent and unleashed by globalization,<br />
which in turn are producing very<br />
uneven growth across the country. Thus,<br />
producing income inequalities not only<br />
between groups and individuals but also<br />
between states and regions as a whole<br />
and which has serious implications for<br />
national growth as a whole.<br />
Amartya Sen, similarly has argued (including<br />
in his joint book with Dreze),<br />
“that the success of liberalization and<br />
closer integration with the world economy<br />
may be severely impaired by India’s<br />
backwardness in basic education, elementary<br />
health care, gender inequality<br />
and limitations of land reforms”. He goes<br />
on to say, “While Manmohan Singh (previously<br />
as Finance Minister) did initiate<br />
the correction of governmental over-activity<br />
in some fields, the need to correct<br />
governmental under-activity in other areas<br />
has not really been addressed”. Amartya<br />
Sen’s states that Manmohan Singh,<br />
considered to be the architect of India’s<br />
economic reforms, “stood solidly for<br />
critical scrutiny of the empirical picture,<br />
rather than a large reliance on theory”<br />
and adds that “it would be in the tradition<br />
of his (Manmohan Singh’s) research<br />
to point out that the relevant picture includes<br />
– in the context of the east and<br />
south-east Asian success stories – not<br />
just an orientation towards exports but<br />
also widespread public efforts in basic<br />
education, public health care, female independence,<br />
land reforms, and other<br />
components of social infrastructure”.<br />
Amartya Sen points out that the South-<br />
East Asian and East Asian countries<br />
share conditions “that are particularly<br />
favourable to widespread participation<br />
of the population in economic change.<br />
<strong>The</strong> relevant features include high rates<br />
of literacy, a fair degree of female empowerment,<br />
and quite radical land reforms”.<br />
He then goes to ask the basic<br />
questions that many market-oriented<br />
economists have not had the courage or<br />
honesty to ask, or have even been deeply<br />
uncomfortable when faced with these<br />
questions. Amartya Sen asks, “Can we<br />
expect in India results similar to those<br />
that the more socially egalitarian countries<br />
have achieved, given that half of the<br />
Indian population (and two-thirds of the<br />
women) are still illiterate, that the female<br />
empowerment is very little achieved in<br />
most parts of India, that credit is very<br />
hard to secure by the rural poor, and that<br />
land reforms remain only partially and<br />
We need to seriously study ‘comparative development’<br />
between us and other economies especially in East and<br />
South East Asia to make the correct conclusions<br />
about the role of state and markets<br />
unevenly executed?”<br />
In the foregoing arguments that I have<br />
put forward buttressed by the views of<br />
eminent economists like Amartya Sen,<br />
the point I am emphasizing is that<br />
progress in economic development and<br />
growth cannot be achieved just by putting<br />
up the state against the market, both have<br />
a role and in many instances have even a<br />
synergetic role to play. I go further and<br />
advocate that we need to seriously study<br />
‘comparative development’ between us<br />
and other economies especially in East<br />
THE INDIA ECONOMY REVIEW<br />
21