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Business Commentary/Dilip Thakore

Amartya Sen's Nobel: Unwarranted Left euphoria

The award of the 1998 Nobel prize for economic sciences to the Cambridge (United Kingdom)-based Dr Amartya Sen is undoubtedly a watershed even in the history of development economics.

The award puts the seal of the Swedish Royal Academy of Sciences and in effect the new emerging establishment in the crystallising global economy, upon 'welfare economics' and signals a shift away in public opinion from the Chicago school of technician economists who advocate the 'invisible hand' of free markets as the panacea for all economic ills and ailments.

Given that half a century after India wrested its independence from foreign rule, the largest number of the absolutely poor in the contemporary world scratch out a wretched existence in this country, the triumph of the Gandhian philosophy behind welfare economics -- that the primary purpose of economic development is to enrich and enable the poor -- is particularly welcome news.

The outburst of national pride and the encomiums heaped upon Sen by the leaders of all political parties and citizens from all walks of life are appropriate and justified. That Sen has been anointed a prophet with honour in his own country is an indication that the two-steps-forward, one-step-back economic liberalisation and deregulation effort being essayed in socialist India is likely to acquire a human face.

But though the euphoria with which the award of the Nobel to Dr Sen has been greeted in this bottom of the economic league nation is understandable and seemly, there is something disquieting about the glee with which the leaders of this country's two communist parties and sundry Left and socialist intellectuals are broadcasting the event as a vindication of their comprehensively discredited brand of state-driven development economics.

So for policy formulators as well as the informed public, it is important to separate the wheat from the chaff and to clarify Sen's basic position and message.

For a start there is little comfort for communists in Sen's basic postulates because he is a great votary of the bourgeois system of democracy. Indeed one of his most well-known arguments is that in democratic nations characterised by a fearless opposition and a free press, the great Russian, Chinese and latterly North Korean style famines which decimated tens of millions of hapless peasants are an impossibility.

In one of his best known treatises Poverty and Famines: An Essay on Entitlement and Deprivation published in 1981, Sen persuasively argued that famines are caused by maldistribution rather than by crop failures and that distribution inefficiencies are more likely in societies governed by dictatorial regimes than in democracies.

And since then Sen has gone on record as stating that the great Russian famines of the twenties and the Chinese famine of 1958-61 in which an estimated 29 million starved to death in the aftermath of Mao's disastrous Great Leap Forward experiment, could not have happened in a bourgeois democracy with its in-built checks and balances.

Of course it can be argued that communist parties the world over have travelled a long way down the road to democracy during the past decade or so after the collapse of the Soviet empire and the fall of the Berlin Wall. But the huge portraits of Lenin, Stalin and other torch-bearers of Soviet-style communism which festooned the central podium at the recently concluded 16th Congress of the Communist Marxist Party in Calcutta is a chilling reminder that Indian communists' commitment to democracy is mere lip-service and that they regard Stalin -- provenly one of the most unrelenting mass murders in human history -- as one of their tutors and mentors.

Yet to a greater extent than among hardcore communists, the award of the Nobel to Dr Sen has generated euphoria within the ranks of pink (rather than red) socialists and Leftists. They seem to have gone to town interpreting Sen's call for greater state (government) participation in the social sector -- education, healthcare and gender egalitarianism -- as an endorsement of the neta-babu, socialism which has dragged resource-rich and high-potential post-Independence India to the bottom of the international economic development league tables. They tend to gloss over Sen's pro-market and liberalisation utterances while propagating his advocacy of a more activist government role in a social development.

But though Sen undoubtedly advocates greater state involvement and participation in furthering education and healthcare as a sine qua non of meaningful and sustainable economic development, it is doubtful that he envisages a greater hands-on role for government in the critical social sector. It is nonsensical to believe that a rational economist like Sen would ignore the mountain of empirical evidence which proves that the Indian state lacks the system, motivated personnel and regulatory mechanisms to positively impact the social welfare sector.

There is just too much accumulated evidence of millions of schools without buildings, blackboards, toilets and even teachers and of ghost primary health centres lacking bare minimum amenities, to sustain the argument for a greater hands-on role for central or state governments in the social welfare sector. To accept the socialist misinterpretation of Senomics' is to condone the loot, plunder and calculated maladministration which characterises post-Independence India's pathetic socio-economic development effort.

Nevertheless, if one accepts Sen's basic postulate that the development of a nation's human resources are a prerequisite of meaningful and sustainable economic growth, it follows that state patronage of such a development drive is essential. For the simple reason that it is impossible to expect private initiatives to extend into each one of India's 700,000 villages and into every nook and corner of its benighted cities within a reasonable time frame. Only the state with its 20 million employees, huge tax revenue and legislative powers has this reach and capability.

But there is a strong argument in favour of qualifying government involvement and participation in the mammoth social development effort which is the desirable fallout of the award of the economics Nobel Prize to Dr Sen. One of the few positive developments of post-Independence India is the mushrooming of a large number of motivated and relatively well-administered non-government social welfare organisations all over the country.

It would be in the national interest if the hands-on management job of administering and managing elementary education institutions were to be entrusted to proven NGOs. Government's role should be restricted to providing finance and governance characterised by strict audit.

The economic development of a nation is shaped by its ability to optimally utilise its factor endowment. One of India's factor endowment is the growth of a large number of committed NGOs managed by competent professionals. Their skill-sets and expertise need to be utilised to give shape and content to the vision and message of Asia's first economics Nobel laureate.

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Dilip Thakore