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

Anindo Banerjee,
Head, Programme Initiatives, Praxis -
Institute for Participatory Practices,
Patna
Accountable Governance And Pro-poor Markets
For Effective Poverty Reduction
"Adam Smith, the father of modern economics,
is often cited as arguing for the “invisible hand”
and free markets: fi rms, in the pursuit of profi ts,
are led, as if by an invisible hand, to do what is
best for the world. But unlike his followers, Adam
Smith was aware of some of the limitations of
free markets, and research since then has further
clarifi ed why free markets, by themselves, often
do not lead to what is best. As I put it in my
new book, Making Globalization Work, the
reason that the invisible hand often seems invisible
is that it is often not there."
ALTMAN Daniel, Managing Globalization.
In: Q & A with Joseph E. Stiglitz,
Columbia University and The International
Herald Tribune (IHT),
October 11, 2006
In the month of October, when
over twenty five thousand landless
agricultural labourers hailing
from various dalit 1 and tribal communities
of India marched to New Delhi
to press for their land rights and succeeded
in securing a vital policy decision
towards constitution of a highpowered
‘National Land Reforms
Council’ headed by the Prime Minister,
they heralded a historic assertion
against increasing market-led appropriation
of vital resources like land,
water, mines and forests. Given that
the last two decades have witnessed
countless instances of dispossession of
the poor in developing economies
from critical life-support systems,
mostly at the behest of market-forces
actively aided by agencies of the State,
the issues concerning the role and obligations
of market forces and agencies
of the State towards poverty reduction
need to be examined cautiously, with
an eye on the impacts of contemporary
trends and policies on the well-being
of poor communities.
Markets And The Poor
The experiences of several African
governments during the eighties and
the nineties relating to policies aimed
at overcoming acute fiscal imbalances
are a good pointer to the potential impact
of ungoverned market forces on
critical sectors such as agriculture.
Measures administered to this effect
on the advice of international financial
institutions like the World Bank included
withdrawal of the public sector
from sectors like agriculture, de-control
of prices, reduction of farm subsidies
and increased privatization. The
outcomes were equally radical: the
drastic steps immediately affected
over seventy percent of the poor in the
region by drastically suppressing food
production. A recently concluded evaluation
2 of World Bank’s role in African
agriculture attributed the crisis to the
68 THE IIPM THINK TANK