Textbook and Mindset
In a major way Economics is responsible for creating the world that we live in. Interrelationships among individuals, nations and institutions, day to day activities of all people, are in fact shaped largely by the role assigned to them by Economics.
Economics as a discipline not only attempts to explain what goes on in the sphere of economic activities of people and organizations, but it has also vastly influenced these activities by making people believe in what Economics says about who they are, and what they should do. Economics text-books create the mindsets, mindsets create the world.
I think Economics has miscreated this world. It got us into a lot of trouble and many human tragedies. For one thing, seeds of poverty are planted firmly in the pages of Economics text books.
Labour or Human Beings?
Economics has committed a strategic mistake in conceptualizing a human being. It has abstracted away from the very essence of a human being. All human beings are creative beings. Each human being has great potential buried into him/her. Economics has reduced human beings to lesser beings than what they are, and consequently still lesser beings than what they could be.
Economics paid no attention to this creative aspect of human beings. It created a category called labour and put all human beings, except the few entrepreneurs, under this category. Labour, as they appear in the text-books, look more like draught animals than human beings. They have no creativity, no ambition, no sense of sacrifice, pride or accomplishment; worst of all, they have no gender. If you have to squeeze out the very essence of a human being to build a social science theory, who needs that social science? By not incorporating the difference between man and woman in them, and the basic institutions they come from, the family, Economics also missed out important analytical opportunities as a social science.
Economics assigned creativity only to a select, rather rare, category of people, called entrepreneurs. Entrepreneurs are treated as royalty in Economics. Economics has persuaded the world that all other human beings are born to serve under them. This idea was introduced in Economics as an innocent piece of abstraction. Yet it has done very serious damage to the human society by making an individual believe that he/she is fated to serve others. It has influenced the design of institutions, framing of legislation and policies and shaping politics. Because of this misconstrued vision of the human beings, wage employment emerged as the only legitimate source of employment.
Today we would have lived in a different kind of world if Economics started out with the premise that all human beings are potential entrepreneurs (which they are). All that an individual needed was an opportunity. With this premise in place world would have paid attention to creating those opportunities, because text-books would have required them.
As wage-employment became the only logical source of employment, Economics text book never had any use for the term self-employment. Since the concept does not find a place in the Economics text books, it does not find a place in our thinking and policies. All human beings suffer for it. Women suffer the most.
If Economics could imagine human beings with more options than what the labour has, it would have created a theory of self-employment which would have made it easy to address the issues of poverty, development, family, population and gender. It could have enriched itself with other socially powerful theories on credit, banking and entitlement.
There has been a major failure of Economics in understanding the poor. Poverty is not created by the poor, it is created by the theoretical framework that we work with, institutions that we built, policies that we pursued, and the norms that we created. Economics never had a chance to reflect on the poverty of an individual person. Because it never had an individual human being in its mind. All it had in mind was, labour.
In many of the third world countries the overwhelming majority of people make a living through self-employment. Because theoretical framework of Economics does not have any room for self-employment, it lumped this in a category called the informal sector. Just because it does not have analytical tools to cope with this situation it concluded that this is not a desirable situation; this is a symptom of primitiveness of an economy.
The informal sector is the creation of the people, not of any economic theory. This is people's effort to create their own livelihood, own enterprise. Anyone with a minimum understanding of people and society would have come forward with the hope and excitement to build upon what exists, take it to higher levels, bring more vitality into it, rather than pull the rug under it.
What a shame! Instead of supporting the creativity and energy of the people by creating enabling and empowering policies and institutions, Economics becomes eager to fit people into boxes it created.
Credit Empowers the Poor
Economics completely disqualifies itself as a social science when it comes to its treatment of credit. It is very surprising that Economics never understood the social power of credit. The fact that credit creates entitlement to resources could have immediately triggered the thought that in the social context it could surely play a very significant and sensitive role. Amazingly, Economics failed to grasp it.
Since credit creates economic, and hence, social power, the institution responsible for deciding who should and should not get credit, who should get how much credit and at what terms, becomes very important socially.
That's exactly what has happened. Those institutions by deciding that they can do business only with the rich, literally have created a financial apartheid. When they announced that the poor are not creditworthy, it almost amounted to pronouncing a death sentence on the poor, for no fault of their own. Economics went along with it.
As a social science Economics should have recognized credit as a human right and promoted creative efforts to deliver credit to all. If we can redesign Economics as a genuine social science, we can be firmly on our way to creating a poverty-free world.
Social Consciousness-driven Enterprises
Somehow we have persuaded ourselves that the capitalist economy must be fueled only by greed. Since Economics persuaded us that way, we all believe that way. As a result it became a self-fulfilling prophesy. Only personal gain-seekers go into the market place and try their talent. Those who are not interested in accumulating personal wealth and income do not find the market place very attractive. They use their talents elsewhere.
Market place is open for everyone, even for those who are not interested in personal gain, such as, people who get inspired by the prospect of social changes for betterment of the world. Social goals can replace greed as a powerful motivational force. Social-consciousness driven enterprises can be formidable competitors against the greed-based enterprises. Social consciousness and the urge to do good things to people and the planet, can be as burning, even more burning, a desire than personal gain in an individual. Why not encourage socially motivated people to come and play in the market place? Instead of grumbling about how a pharmaceutical company makes filthy money by charging unreasonable prices, why don't we create our own companies and sell good quality medicine at profit-free prices, or at prices with low profits? I think social consciousness driven entrepreneurs can be an effective force in the market place.
Before the world surrenders itself to the current interpretation of free-market, that is, recognizing market as the play-ground of the greedy business people only, we must seriously engage in examining the strength of social-consciousness-driven enterprises as players in the same market. Social consciousness does exist in people. But it can be further promoted through creating supportive legislation and social reward system. If we leave no room for this human quality in our theoretical framework, as we have done in present day Economics, we'll be transforming ourselves into the human beings that we imagined, i.e. human beings without social values. Economics must incorporate within itself that the market place is not an exclusive playground for the blood-thirsty profit-seekers, it is a challenging field for all good people who want to set the world in the right course.
Let Us Write New Economics Text-Books
If we can create a right framework with right conceptualization, I see no reason why anybody should remain a poor person. Poverty should be a matter which will find its place in the poverty museum. It will be a part of the history of human indifference to their fellow human beings, and human arrogance about their so-called knowledge. The sooner we can write new Economics text-books, the closer will be the day when we'll have a poverty-free world.
This is the text of the address presented at the
Bangladesh Economic Association
and International Economic Association Conference
held in Dhaka, on March 30-April 1, 1998.