Can we make this U turn?

29/06/1992

"ECONOMICS is the science of studying people's behaviour in their ordinary day-to-day life." That is how undergraduate textbooks define the subject. The book under review, however, talks about an economic revolution. But it is not clear who this revolution is being waged against. After reading the book, one learns that Willem Hoogendijk is talking less about a revolution and more about a U-turn in contemporary economic thought. This is what makes the book interesting.

The book is divided into three parts. The first deals with the implications of present economic thinking. The "money-must-grow-system", to use the author's own phrase, dictates continuous production and growth. It also gives rise to a narrow-minded, lopsided production, geared towards yielding quick profits. This very thesis creates its own antithesis, namely, environmental degradation and human suffering.

The second part of the book introduces the new concept of "freeing production, freeing enterprise" as against the idea of free enterprise. This U-turn requires a reversal of work-leisure ethics, production priorities, patterns of responsibilities, organisational restructuring and cultural change.

The third part of the book presents a basket of dos and don'ts to be bracketed as misconducts. The author takes recourse to George Bernard Shaw's Maxims for Revolutionists, where he said, "All evolution in thought and conduct must at first appear as heresy and misconduct."

The author first states, rather dramatically, that economics is an attempt at heresy. I find the underlying logic and the overstatement of the heresies of economics a bit ill-conceived. Hoogendijk finds that a number of economic propositions don't emerge from a human perspective. But he does not explain what perspectives form these economic ideas.

Actually, economics argues for attaching price tags to everything, whether it be a capital resource or an environmental one. Nor is economics an ethical science. It can only say that the "polluter must pay" (perhaps as high a price as to dissuade him/her from polluting the environment), but it cannot say "pollution must stop". Otherwise, one can end up with a whole string of moral and ethical dictums which cannot be put into practice. Can we, for instance, say that there should be no children for the next 50 years, and that they should be killed if born?

In any case, economic theory did not preach individualism nor did it make money the basic factor of production or an end-use power. It is the scientific solutions to human problems which have proved false. For instance, instead of thinking about reducing wastes, the world seems to be concentrating on recycling them.

Two gaps have resulted from all these interventions -- one between private and social costs and another between the individual and society. Economic theory cannot also be blamed for all the ills of market-based prescriptions. After all, in 1776, Adam Smith, the father of free enterprise, had warned that "without moral sentiments a market economy would degenerate". In 1857, John Stuart Mill predicted that the stationary state was inevitable; at best it could be postponed. Economists since the 1930s have stressed the importance of social costs over private costs. The concept of Green GNP is not new to economists.

The second part of the book reasserts the need for a complete U-turn. Hoogendijk finds many recent economically sound, but environment-friendly, development options encouraging: making labour cheaper but energy and natural resources more expensive, eco-taxes, soft-technology options and use of renewable energy, for instance. He argues for markets in which citizens have more say in the production of goods and services.

The author makes important suggestions to achieve the U-turn. He feels that enterprises should have the freedom to slow down, or even stop. He advocates greater planning, making business more socially responsible, social and organisational reforms to strengthen collectivisation, empowering people and a change in work ethics. He emphasises that the North should learn from the South, instead of preaching economic morality to it.

The author's operational suggestions add novelty to the concept of reversal, expressed earlier in documents like the Brundtland Report (1987). In the last part of the book, he identifies the responsibilities of individuals, business houses, trade unions, the corporate elite, local and central governments, the media and community workers in the revolution of "greening the planet". But where should we begin? At Rio de Janeiro in 1992?

Gopal K Kadekodi teaches at the Institute of Economic Growth, New Delhi.

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