Growth now, equitable distribution later
Can economics be separated from politics? This is an age-old desire of economists yet to be realised. Politics is not just about contesting elections. Healthy politics is competition for scarce resources at not just the macro level but also at the micro-organisational levels. Scarce resources cannot be deployed for productive purposes without a competition for them that is perfectly legitimate.
Unless there is a healthy competition for scarce resources, there cannot be a vibrant thriving economy and society. Healthy competitive spirit is a sign of collective vitality without which inanimate financial and economic resources cannot be turned over into benefit for humankind. Economics per se does not exist for its own sake.
It is about allocation, production, and distribution of scarce resources for the benefit of the society. If all of these functions are being carried out and the end of these functions is not being achieved for all but for only a few, then competition for scarce resources will intensify, giving rise to a demand for representation in decision-making at the highest levels.
You may call it politics that it actually is and should be. But, you cannot call it undesirable as without a true representation of the people, they will not get their just share from Gods bounties that are actually abundant but made scarce because of mal-distributive human intervention.
That is, there already is competition for resources but the more powerful prevail to get a disproportionately high share. So, what appears like neat economics is actually dominated by big political interests. If power is already influencing the functions of economics, economics is not in the driving seat ala the PMs advisor on finance. There already is an interplay of economics and politics which is why growth rates remain on the high side but not distributive justice.
It is this political economy that needs to be seen, addressed, and redressed. The process of redressal may be temporarily sobering somewhat but what good is a surface calm beneath which discontent simmers and may continue to do so eventually to destabilising levels. Or, have we not reached that level already as is evident from the surging numbers of the discontented seeking refuge in isolation from, inter alia, domestic and global systems that have not distributed in their favour at all? For them, this is an alternative away from a world dominated by economics that could never take charge even by remaining in the driving seat.
Alternate radical drivers are, therefore, emerging to hijack all to their worldview. One solution is in equitable distribution. But, who will distribute? Will they be the ones who do not have the true mandate of the people and may include those from the worlds top class universities who, in turn, owe their positions to the countrys social and political glitterati? Or, the ones who are voted into office by the people and who owe their re-election to the same downtrodden ignored lot.
The reality on the ground is that as the growth rates soared, people of all shades felt poorer. The price levels have risen to unprecedented levels of nearly all goods and services that have adversely affected the consumption patterns of even the middle classes. One can well imagine how much more poor the poor must have become if the prices of staples such as flour, pulses, and even basic vegetables increased manifold.
One really needs to determine if this growth has given more food to the poor or less. If the poor now have less on their plate, must we not shed the hang-up of growth now, distribution later? This obsession will not be shed because this is what the evaluation criterion is for the policy makers from without and, therefore, from within. As they keep getting more and more pats on their backs, the poor have to cut back on their food intake.
So, people in general and the poor in particular long for the times when their popularly elected PM would hold weekly meetings to keep the prices of kitchen items contained and they were effective in doing so. Prices were a major item on their agenda or else the electorate would not return them to office. So, if the PM comes via the general publics choice route, the PM will be concerned about their aspirations not otherwise.
This is the significance of electoral politics on the economics without which economy may take-off but the people are left scrounging for food. It is a meaningless take-off for a plane that can fly with its crew but cannot fly with passengers on board. It is through elected political representatives that at least some aspirations are factored into economic decision-making. Economy first is a debunked economic view as none of the late developers developed minus the people at any stage. Development is not development of the physical landscape, mountains, and buildings unless people develop first and foremost and not the last.
It is naïve to think that the entire emphasis thus far has been on economy first. This emphasis requires a second reading. Economy first meant what and why? It meant economic growth rates that were achieved through ways known to most country nationals. Why? Because, this was a quick, sure, fine way of gaining legitimacy and showing performance on the economic front to the world that does not look beneath the surface nor is interested in doing so as they only want support on the front of terror. If support gets eroded because people generally are worse off, the society can be only more politicised and not less.
There is no harm in being politicised if it is in the sense already discussed in this article. However, if politics is to get an unjust share of the resources through power play, it is certainly undesirable. Was the economy first emphasis effective in getting rid of undesirable influence peddling which is what is generally meant by politics in the country and, therefore, considered bad?
It did not as is evident from the sugar pricing issues faced not too long ago. Were the policy makers able to place economy first then? They did not. Did they say that undue increase in sugar prices might feed into a wage spiral and thereby into cost of production and exports and growth and so on? They did not. They have been unable to depoliticise when depoliticisation was badly needed.
The point is that politics and economics are inextricably interlinked. Adam Smith tried to isolate economics from the then political influences but warned of the tendencies to monopolise and hoard. A visible hand of the government was soon needed. Since then visible hands of governments in varying proportions have been essential features in countries economics all over the world.
To ensure that this visible hand guards the interest of all and not of a few, it is imperative that governments come somewhere near to being of the people and for the people. Only then can headway be made in societies, still grappling with the meaning of socio-economic justice, towards the eventually desired end of development for all now and not for a few now and for the multitude later.
Growth now, equitable distribution later -DAWN - Business; September 10, 2007
