[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

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