Central planning warranting a 're-visit'

May 13, 2020, 12:00 pm

Now as never before, the spectre of famine, disease and starvation is looming over the world and except for the super-wealthy it would be casting an ominous shadow over all. By the end of this year several million people the world over will be on the brink of starvation, the UNWFP is on record as stating.

'An estimated 265 million people could be pushed to the brink of starvation by the end of 2020...Already 135 million people had been facing acute food shortages, but now with the pandemic 130 million more people could go hungry by end 2020, Chief Economist UNWFP Arif Husain said. Needless to say, it will be the poorest sections of society who would be thus grievously affected but analysts would need to penetrate the surface of things to consider how the lot of the poor could be alleviated best. The issues call for more than superficial readings of current developments.

While it ought to be obvious that the pandemic has compounded the hardships of vulnerable sections, such as those in dire poverty and those engaged in the informal sector, the commentator is obliged to delve into the less obvious reasons for the suffering of these afflicted sections at this juncture, since myths have abounded over the decades in relation to the material hardships of 'ordinary citizens'.This needs to be stressed because some sections of influential opinion find it all too easy to attribute the sole reasons for the general suffering of the people to 'natural causes', such as disease and ill-health.

It is to that memorable classic of the seventies, 'How the Other Half Dies – The Real Reasons for World Hunger' by Susan George that we need to turn to gain some special insights into these questions. Among other things, the authoress states: 'Today as yesterday nature and sometimes governments' policies may produce abundance, but only man can create scarcity. According to the simplest rule of liberal economics, a vital commodity in short supply will be expensive and he who has some to sell will make money. This basic rule is being applied on a global scale, with considerable success.' ('How the Other Half Dies', Penguin Books)

True, the pandemic has brought untold suffering to people, but those with means are in a better position to come by the necessary healthcare, and equally importantly, the food and related requirements to alleviate their lot and even have themselves cured with relative swiftness.

On the other hand, the underprivileged would suffer in crises such as the present one on account of not having the required finances to avail themselves of the means to manage the relevant ill-health and to obtain for themselves food and other needs for sustenance. When it comes to food and medicine, the issue is mainly prices and in times of crisis in particular food prices spiral well out of the reach of the poor. This is 'How the Other Half Dies'.

What was true of the economy decades ago continues to be relevant today and will continue to be relevant in the future as well as long as 'market forces', such as demand and supply, are perceived as shaping our basic economic and material realities. And in this connection perceptions are doubly important.

The question arises, perceptions on the part of whom? On this score, governments and publics are equally at fault. This is on account of the fact that classical economics continues to guide the thinking of decision and policy-makers as well as that of influential opinion among the public, in respect of both North and South. Even if the shortcomings of classical economics are realized by these sections they would prefer to 'play at' being classicists on account of the political costs of pursuing policies that do not take for their base the basics of classical economics.

For example, if governments come to acknowledge that the high prices of essentials are not determined by 'market forces', such as demand and supply, but by businessmen and traders with an avaricious eye on extortionate profits, they would be compelled to intervene in the market and resort to central planning to ensure that all sections of society are treated with a high degree of equity and justice.

This would amount to a complete overhauling of state economic policy. It would be a total reversal of the state allowing 'market forces' alone to determine prices. Instead, the state would be meeting the needs of the public in accordance with a central plan; that is, on the basis of a socialist model of economic management. Needless to say, such policy thinking is out of the question in the 'Brave New World' that came into being in post Cold War times.

However, the pandemic is bound to have the effect of prompting governments and ruling strata the world over to reassess the effectiveness and the consequences for re-distributive justice of the 'open economy' model that roared to the centre of economic thinking in post-Cold War times. The enormity of human suffering currently is such that governments and other purportedly responsible sections will be compelled to 'revisit' state centric economic planning and give it another try. It ought to be clear to those endowed with a social conscience that abandoning the disadvantaged to 'market forces' would be tantamount to throwing them to the wolves.

The question is: are governments equal to this task of changing or modifying the market-centric economic model that has proved their darling and of their support bases that are constitutive of extortionate business interests in the main, over the past three decades? This issue would need to be grappled with by the world community as it faces up to the devastating consequences of the pandemic. Of prime importance is a social conscience. If governments and other influential sections prove accommodative of the core principles of re-distributive justice and equity, the disadvantaged of the world could be saved. If not they would be allowed to languish in misery and this would be a huge black mark on the world's conscience.

However, in the case of the latter scenario, the powerful would be unwittingly undermining their own cherished interests because the poor would rise in furious revolt against them. This is a vital lesson of history.