It’s the time to look back at the year that has passed, and to look ahead to a new one. A time for reflections about regrets and satisfactions; also, the time for new resolutions. “Which are the three best books you read in 2020?” Anil Dharker, the director of the Tata Literature Festival, asked me during a discussion of my book, The Learning Factory: How the Leaders of Tata Became Nation-Builders. I took the liberty of offering four.
2020 will be recorded in history as the year the world was upended by the Covid-19 virus. Last December, before the virus had appeared, I had selected two books on economics for the annual ritual of which books would I recommend.
Ever since the previous global economic crisis in 2008, which had been caused by a financial virus that spread around the world from the US, economists have been searching for a ‘new normal’—a new theory to explain how economies really function. Last year, in my essay, Who Do Economists Serve Really? I had reviewed two books written by Nobel laureates in economics who pointed to limitations in their professions’ knowledge. These were: Measuring What Counts: The Global Movement for Well-Being by Joseph Stiglitz (who won the Nobel prize in 2001), Jean-Paul Fitoussi and Martine Durand, and Good Economics for Hard Times—Better Answers to Our Biggest Problems by Abhijit Banerjee and Esther Duflo (who won the Nobel prize in 2019).
A core message from these books was that economics, with its enamour for quantification and equations, is unable to appreciate the qualities of human lives and the relationships that shape societal realities.
The shock of Covid-19 in the first months of 2020 stopped economic growth around the world. The fault lines in economies which had been visible for many years before, and to which the Nobel laureates had drawn attention in 2019, became glaringly wide, with the stresses Covid-19 caused. Hundreds of millions of people, who had been precariously holding onto the global growth bandwagon before Covid-19, lost their jobs and incomes. Governments geared themselves up to provide relief. There was anxiety about when economies could be restarted. There was also resolve that, this time, unlike the post financial crisis recovery, economies should not be merely restarted and growth as usual restored. This time, we must create a new, more resilient, and more just, economic architecture.
The long months of lockdown, not yet over at the end of 2020, have provided a gift of time to pause and reflect; to meet many more people than one used to, on Zoom and in webinars because no time was lost in travel; and to read of course—new books as well as some older ones. I asked Anil if my selection of books has to be restricted to books published in 2020. His only condition was that the books should not have gone out of print so that those interested could read them. So I selected four that I found most relevant for the systemic problems that we must solve for creating more resilient economies and a more just society.
Four systemic and epistemic challenges
The variety of systemic challenges for which solutions are essential have been described in the 17 Sustainable Development Goals which were adopted by all countries in 2015. They cover a wide range of environmental, economic, and social issues—climate change, environmental degradation, poverty, inequality, inadequate public health and education, persistent human indignities, etc. All are interrelated. None can be solved in separate silos. Because narrow solutions to some can harm others, e.g. faster growth to solve poverty problems can exacerbate inequalities and environmental degradation as it has, whereas poorer people do need more incomes and count on economic growth to provide them opportunities to earn. Therefore, the 17th SDG emphasises the needs for strong partnerships among stakeholders, and among diverse experts in their fields too, to achieve all the SDGs. They also call for new thinking because, as Albert Einstein is reputed to have said, one cannot solve intractable-seeming problems with the same type of thinking that has caused them.
The shutdown of the Indian economy by Covid-19 provided some relief on the environmental front. Pollution levels reduced, highlighting again that the country’s pattern of economic growth is not environmentally sustainable. The shutdown also highlighted four systemic socioeconomic problems that require new solutions. The books I recommend relate to these challenges.
Trade, Industry, and Employment
One is the chronic problem of unemployment (and underemployment). Inadequacies of employment and fragilities of incomes were revealed with millions of migrant workers who fell out of the economy as soon as the economic engine stopped. The need for a more robust industrial policy to create more secure employment within the country was highlighted. However, the solution was resisted by trade economists who berated the Indian government, when it hesitated to join the Regional Comprehensive Economic Partnership (RCEP), for ‘thinking local’ when they felt the country must become ‘more global’. Others pointed out that it is a matter of sequencing, and unless enterprises within India become competitive by skilling and employing more people, the country cannot participate equitably in global supply chains.
Small and informal enterprises
The chronic problems of the Indian economy, according to mainstream economists, are the large size of the informal sector of the economy and the paucity of large-scale enterprises. They would like to formalise the informal sector quickly and they would like larger enterprises to be formed to create more employment. Whereas, other economists, as well as people who work closer to the ground, point out that informal and small enterprises are essential for spreading around more opportunities for people to climb up the economic ladder from the bottom, and to contribute to the progress of economic growth.
In fact, the informal sector is an essential feature of a resilient economy. It accounts for 60% of the global economy. Within developing countries it is 90%. India is not an outlier. Therefore, rather than looking down upon it, policymakers must listen to it and learn to nurture it, rather than to surgically distort it with schemes to convert its forms.
The divide between experts and the common man
Around the world, common people have become mistrustful of experts in public policy who decide what is good for the people—whether they are the EU’s experts in Brussels, or India’s central planners in Delhi, or federal government experts in Washington. Brexit was English citizens’ vote for freedom from Brussels’ experts. Indian citizens’ mistrust has become poignantly evident in the scenes of farmers camping around Delhi in the bitter winter cold demanding that agricultural reforms devised by the government’s scientific advisers must be withdrawn. Experts say the people don’t get it. The people say the experts don’t understand their realities. Moreover, how can experts in the old ‘normal’ way of thinking be expected to come up with substantially new solutions, they wonder?
The ethics of technology
Technology, especially technology of the digital variety, seems to have become a panacea for almost all problems. Science-based technologies can have transformative impacts in many fields—in health, education, financial services, logistics, etc no doubt. However, they can often have harmful side-effects too, and therefore must be restrained in their applications. This is a challenge whenever transformative technologies are developed.
Nuclear energy—clean and abundant—could have provided an alternative to dirty and exhaustible fossil fuels. However, ever since its discovery, mankind has been struggling to put the genie back in the bottle, to prevent its proliferation. During the extended lockdowns in the Covid pandemic, virtual education seemed to be a good solution. However, it has exacerbated differences between those who have access to digital modes of communication and those who do not. Further, social media, which was supposed to be a means to bring the world together has turned out to be a dangerous divider, spreading hate and propaganda, and forcing people into groups who do not like each other.
Fortunes are often made by private investors in new technologies, as they have been made by investors in the four largest global companies that dominate the internet. Controlling them now has become a huge political problem for governments. When considerations of the public good clash with the pursuit of private profit, the debate is confounded by an ideological belief that interference by governments with a free market, in which people can pursue their private interests, is always bad. The debate divides economists into two camps. On one side are the capitalist free marketers; on the other side the so-called ‘socialists’.
It is dawning now that more technology is not the solution. More wisdom is required also to create a more sustainable and equitable new normal.
The books
Global trade and local markets
The first book on my list, Empire of Cotton: A Global History, by Sven Beckert, is a masterly history of global trade and its impact on societies. Beckert, a professor of history at Harvard University and a fellow of the American Council of Learned Societies, has researched the growth of trade in cotton and cotton textiles over many centuries. Cotton-related trade is the most global sector of the global economy touching all countries—all as consumers, a majority as processors of cotton and its textiles, and many, in almost all continents, as growers of cotton. The volume of global trade has been growing consistently, but its patterns have changed.
For example, India was the largest exporter of cotton textiles until the British took over the global trade. Thereafter, India remained a large participant in the trade, but as an exporter of raw cotton, and an importer of finished fabrics. Its own value adding manufacturing sector in between the two ends of trade was squeezed out. With this shift, incomes reduced in India, while investors in industry and trade in Britain became very wealthy. Beckert explains how British merchants persuaded the British government to create regulations governing trade—and even for the management of cotton farming in India—that suited British industry.
In chapters titled, The Wages of War Capitalism; Capturing Labor, Conquering Land; and Slavery Takes Command, Beckert explains with facts and figures how the ownership of, and trade in, slaves changed the pattern of global trade, making US cotton producers the largest suppliers by displacing Indian farmers, and also made British merchants very wealthy. In a later chapter, The New Cotton Imperialism, he explains how large US retail corporations subsequently took over the power to control global supply chains and fixation of standards and prices around the world.
Beckert’s analysis looks at global trade through a broader lens than conventional trade experts do, who focus on volumes, tariffs, and prices. He reveals the sources of political power that cause shifts in trade patterns, as well as the shifts in political power that accompany changing trade patterns. His account of how small, independent farmers and village producers of textiles in India lost their sources of livelihoods, as well as their political power, provides insights into larger, and deeper forces that should be seen by advocates of free trade and global supply chains who, in their pursuit of more globality and large volumes of trade, lose sight of who the winners and losers are, and what they gain and lose beyond incomes.
From a long and wide history of global trade, Beckert provides insights into its effects on local systems. Let me sneak in another recommendation. James C. Scott’s seminal account, Weapons of the Weak: Everyday Forms of Peasant Resistance, which I am reading now, gives deeper, local, insights into the social and political changes that corporatization of agriculture, along with the opening of agriculture markets, can cause. Scott studied the impacts of the ‘green revolution’ in Malaysia in the 1970s, while the green revolution was underway in Northern India too. Insights specific to Malaysia will not apply to India. However, both Scott’s and Beckert’s books are worth reading now when Indian farmers are fearing the imposition of free markets and the power of capitalist corporations into their traditional worlds. They provide evidence of social realities that makers of policies must consider, which graphs of incomes and prices and the sizes and productivity of farms cannot.
Dig Deeper
- Watch: The Empire of Cotton: A Conversation between Sven Beckert and Patrick French, JLF, Jan 2019
- Watch: How Grains Domesticated Us: James C Scott, SOAS University of London, 2015
- Read: Rural America Doesn’t Have to Starve to Death
Building Communities; Local Solutions
The Web of Freedom: J.C. Kumurappa and Gandhi’s Struggle for Economic Justice by Venu Madhav Govindu and Deepak Malghan (academics with the Indian Institute of Science and the Indian Institute of Management in Bangalore), is an eye-opener on the structures of economic systems operating in India. J.C. Kumurappa was sometimes referred to as Gandhi’s ‘planning commission’. Gandhi’s ideas about village communities are generally considered a romantic vision. Govindu and Malghan present Kumurappa’s analysis of why local systems solutions developed and implemented by local communities are the only practical way to make systemic changes for inclusive and environmentally sustainable growth.
Kumurappa studied financial accounting in England and public finance in Columbia University. He set up the Davar’s College of Commerce in Mumbai with Sorab Davar in the 1920s. It was one of India’s earliest schools of ‘business management’, long before the first Indian institutes of Management were founded in the 1960s.
Kumurappa gave up his accountancy practice and his partnership with Davar, at Gandhi’s behest to take up the larger national cause of developing economic solutions for India. He lived among people in rural India for the rest of his life. He listened to them and studied the economics of India, while also developing policies for the Congress party and representing the party in national economic commissions. Like Gandhi, he was also a man of action. He set up the national village industries movement and cooperatives to improve incomes in rural India. (Tragically, the Indian economy is suffering now from policymakers’ neglect of village industries and cooperatives which Kumurappa and Gandhi had advocated).
In the chapter titled India Adrift the authors record how Kumurappa and Gandhi’s strategy for bottom-up development of India’s economy was rejected by Jawaharlal Nehru’s government which adopted, instead, a strategy of developing the economy top-down from the ‘commanding heights’, with big factories, big dams, and large organizations. Kumurappa pointed out that both, the Soviet model as well as the Western capitalist model, were top-down models in which the means of production are owned by people at the top—in one case capitalists and in the other bureaucrats. Workers have little room for exercising enterprise in both systems. Moreover, they remain wage workers: the wealth created by their work accumulates elsewhere. Whereas in Gandhi’s and his model, the workers would be the owners of their own enterprises and wealth creators for themselves.
Sadly, “Kumurappa has suffered from neglect both during his lifetime and for many decades since, primarily due to the dominance of the ideologies he had vehemently opposed. Mainstream economists can scarcely countenance an upstart who sought to inject moral arguments into economic thought,” Govindu and Malghan say.
Dig Deeper:
Economics, experts, and ethics
Michael Sandel, professor of political philosophy and government theory at Harvard University, makes compelling arguments for introducing ethics into the governance of economies. His latest book, The Tyranny of Merit: What’s Become of the Common Good? is the third book I recommend. (Sandel’s earlier books, What Money Can’t Buy: The Moral Limits of Markets and Justice: What’s the Right Thing to Do? have been bestsellers too.)
Sandel explains in his latest book why there is a justifiable reaction against educated elites and experts around the world, leading to the rise of popular, illiberal and conservative, governments. (Narendra Modi, India’s Prime Minister, said, “India needs less Harvard and more hard work.”)
Sandel takes apart the liberal idea that every person is a master of her own fate, and that if she is not successful it must be due to some weakness in her. The myth in liberal societies, particularly in the US, is that everyone has an equal opportunity to get an education, to become an entrepreneur, and to become wealthy. Therefore, a person’s lack of education and poverty are seen as shortcomings in the person, not flaws in the economic system.
This simplistic view does not see how a person’s freedoms are constrained by social and economic structures. Like a bird in an invisible cage, the person has some room to move, but soon hits those invisible walls, and must struggle very hard to break through them. Social and economic systems create such invisible walls, like those for black people in the US, and for Dalits in India. Presuming that everyone has equal freedoms in the economy, economists can prove with their numbers, which show that more black people and Dalits are poor, that they are inherently inferior to others and get what they deserve. The exceptions who do break out are used to prove that if some can do it, everyone can. Therefore, once again, the fault lies with those who do not succeed.
Education systems are more accessible to the elites in the US and are becoming even more so Sandel points out. Those who pass out of the best schools believe they are more meritorious, and therefore their opinions should matter more than of those of the other people who did not get to the top. They look down on ‘less qualified’ citizens. This is the tyranny of a false merit which, Sandel says, is exacerbating social and political divisions. ‘People like us’ are not listening to ‘people like them’.
The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous, is a recent book by Joseph Heinrich, professor of human evolutionary biology at Harvard University. (WEIRD is Western, educated, industrial, rich, and democratic.) Heinrich supplements Sandel’s arguments. He explains how the elite in the West have acquired their beliefs in the essentiality of individual agency and their denigration of traditional norms of social solidarity.
Dig Deeper:
- Watch: JLF New York 2020 | Michael Sandel in conversation with Anand Giridhardas | Tyranny of Merit (the session starts from 30 min mark to 1:20 min)
Ethics in science and technology
The ‘scientific’ Enlightenment arose in Europe in the seventeenth century. From where it has spread around the world, along with Western arms, and Western technologies with the expansion of global trade, as Beckert explains in The Empire of Cotton.
Technology has given men great power over other people, and Man great power over Nature. It has created a hubris that, with science and technology, Man can overcome all obstacles to economic progress, including the damage to the natural environment that economic growth with technologies has caused. However, technology has run far ahead of wisdom. It does not understand that all men are sustained by the society around them, and that Man is a part of a large, complex system. Any harm caused to others, and any harm done to Nature by economic growth and technology, harms Man himself.
His Holiness the Dalai Lama calls for a revival of this Eastern wisdom, in The Universe in a Single Atom: The Convergence of Science and Spirituality, an analysis of the progress of science and technology. This was the fourth book that Anil let me add to my quota of three.
The Dalai Lama, a keen life-long learner, has been discussing matters of science and spirituality with eminent scientists in the West for decades. Many scientists have also travelled to his home in Dharamshala.
In the conclusion of his book, he writes:
“Scientific knowledge, as it stands today, is not complete. Recognizing this fact, and clearly recognizing the limits of scientific knowledge, I believe is essential…. A full human understanding must not only offer a coherent account of reality, our means of apprehending it, and the place of consciousness but also include a clear awareness of how we should act…. How we view ourselves and the world around us cannot help but affect our attitudes and our relations with our fellow human beings and the world we live in. This in essence a question of ethics.”
My conclusion is, our collective resolution for the New Year must be to recouple the economy with humanity, and technology with ethics.
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