IASbhai Editorial Hunt
The most common way people give up their power is by thinking they don’t have any.– Alice Walker
EDITORIAL 69:“Pathways to a more resilient economy“
SOURCES: THE HINDU EDITORIAL/EDITORIALS FOR UPSC CSE MAINS 2020
Arun Maira is Former Member, Planning Commission and the author of ‘Redesigning the Aeroplane While Flying: Reforming Institutions’
Pathways to a more resilient economy
Following the pandemic, the redesign of economies, businesses, and lives must begin with questions about purpose
SYLLABUS COVERED: GS 3: Economy
The COVID-19 global pandemic is a catastrophe, both for human lives and for economies. How can we develop more resilient future with redefining the current structural weaknesses of the system .Elucidate -(GS 3)
- What are the challenging principles of redesigning an Economic System ?
- What are the hurdles in scientific approach when innovation is a key?
- How justice plays a important role in redefining the society.
- Economists cannot predict in what form the economy will emerge from it.
- Machines do not have the capacity for emergence.
- On the other hand, living systems evolve and acquire new capabilities over time.
A Unifying Vision that among all living species, humans have a special ability:–Fritjof Capra and Pier Luigi Luisi point out in The Systems View of Life
- Only humans consciously develop new concepts, new scientific ideas, and new language in their search for new visions.
- Thomas S. Kuhn explained in The Structure of Scientific Revolutions why new ideas are invariably resisted by prevalent power structures in societies.
- Therefore, fundamental reforms of ideas and institutions in human societies are always difficult, until a crisis.
- The COVID-19 catastrophe has challenged the tenets of economics that have dominated public policy for the past 50 years.
- Here are seven radical ideas emerging as pathways to build a more resilient economy and a more just society.
- The obsession with GDP as the supreme goal of progress has been challenged often, but its challengers were dismissed as a loony fringe.
- Now, Nobel laureates in economics (Joseph Stiglitz, Amartya Sen, Abhijit Banerjee, Esther Duflo and others) are calling upon their profession to rethink the fundamentals of economics, especially the purpose of GDP.
- Goals for human progress must be reset.
II) BOUNDARIES BETWEEN COUNTRIES ARE GOOD.
- Boundary-lessness is a mantra for hyper-globalisers.
- Boundaries, they say, impede flows of trade, finance, and people.
- Therefore, removing boundaries is good for global growth.
III) GOVERNMENT IS GOOD.
- Ronald Reagan’s dictum, “Government is not the solution…Government is the problem”, has been up-ended by COVID-19.
- Even capitalist corporations who wanted governments out of the way to make it easy for them to do business are lining up for government bailouts.
IV) THE “MARKET” IS NOT THE BEST SOLUTION.
- Money is a convenient currency for managing markets and for conducting transactions.
- Whenever goods and services are left to markets, the dice is loaded against those who do not have money to obtain what they need.
- The “marketization” of economies has contributed to the increasing inequalities in wealth over the last 50 years, which Thomas Piketty and others have documented.
JUSTICE AND DIGNITY
V) PROGRESS : “CITIZEN” WELFARE, NOT “CONSUMER” WELFARE
- In economies, human beings are consumers and producers.
- Citizens have a broader set of needs than consumers.
- Citizens’ needs cannot be fulfilled merely by enabling them to consume more goods and services.
- They value justice, dignity, and societal harmony too.
- Economists’ evaluations of the benefits of free trade, and competition policy too, which are based on consumer welfare alone, fail to account for negative impacts on what citizens value.
VI) COMPETITION MUST BE RESTRAINED: COLLABORATION IS ESSENTIAL FOR PROGRESS.
- Faith in “Darwinian competition”, with the survival of only the fittest, underlies many pathologies of modern societies and economies.
- Blind faith in competition misses the reality that human capabilities have advanced more than other species’ have, by evolving institutions for collective action.
- Further progress, to achieve the Sustainable Development Goals for example, will require collaboration among scientists in different disciplines, and among diverse stakeholders, and collaboration among sovereign countries.
- Improvement in abilities to share and govern common resources have become essential for human survival in the 21st century.
VII) INTELLECTUAL PROPERTY BELONGS TO THE PUBLIC.
- The earth’s resources must be conserved.
- We are living in an era of knowledge.
- Moreover, powerful technologies can be used for benign or malign purposes.
- It is imperative to evolve new institutions for public ownership of technologies and for the regulation of their use.
REDEFINE AND REDESIGN :
- The financial crisis of 2008 was a crisis of liquidity in the system.
- Recovery was achieved by putting more fuel into the system.
- The system then moved on; in basically the same shape it was before.
- COVID-19 has revealed structural weaknesses in the global economy.
- Putting fuel in the tank will not be sufficient.
- The vehicle must be redesigned too.
RESILENCE KUTUMBAKAM :
- While global attention understandably is focused on relief and recovery, this is the time to design for resilience.
- The economic system cannot be redesigned by domain experts devising solutions within their silos. Such as, trade experts recommending new trade policies, intellectual property experts recommending reforms of intellectual property rights, and industry experts recommending industry policies.
- All the pieces must fit together.
INNOVATION IS THE KEY :
- Changes will also be necessary in our life patterns, our work and consumption habits, and in our personal priorities.
- Innovations will be required in business models too, not just for business survival but also to move businesses out of the 20th century paradigm that
“THE BUSINESS OF BUSINESS MUST BE ONLY BUSINESS”.