Humanity in search of a new narrative
Economics must be redesigned to produce a better society, rather than society being redesigned to produce a larger economy
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The peace that followed “the end of history” in 1989 (according to Francis Fukuyama) with the victory of democracy and capitalism over authoritarianism and communism has ended. Geopolitics is back on the global stage. Globalization is in retreat. Within the victors of the Cold War—the US, Britain and the rest of Europe—the people are rising against the establishments that have ruled them. History has returned. There is war between a liberal order on one side and authoritarianism and populism on the other. As in Leo Tolstoy’s War And Peace, a narrative composed of many stories, many stories are inter-woven into this global narrative of rising tensions.
There is the story about the bottom-line struggling for attention from the top-line. The story of gross domestic product (GDP) is about the progress of the top-line. It corresponds to reports of the top-line revenue of a company, whereas accounts of corporate profits and human well-being are stories about the progress of the bottom-line. In the last 20 years, too much attention has been given to GDP—checked every quarter and in decimal points, to track the progress of countries, whereas creation of more jobs and livelihoods, and improvement of general well-being did not receive the same attention. At the end of the day, the bottom-line is what matters to shareholders and citizens. And just as chief executive officers are fired by shareholders if they do not produce profits (even if the revenue is rising), leaders of nations with high GDP growth, such as India, are coming under pressure to create livelihoods and to improve citizens’ well-being.
There is another story—a story of nations seeking “greatness” and respect in the world—competing with the story of economic growth. Authoritarian leaders obtain passionate support from citizens when they tantalize them with visions of their nation’s historical glory and its future greatness, even if their policies will damage their countries’ economies. Indeed, this emotional passion is what troubles rational economists, who find themselves on the back-foot when defending free trade and the balancing of national budgets.
The rational economist’s narrative of competition and efficiency as necessary shapers of a healthy economy is being confronted by a counter-narrative of equity, cooperation, and solidarity as the forces that shape good societies. In the economists’ story, freedom for capital, and flexibility for employers and investors, are the principal protagonists. In the other story, freedom for humans, and fairness for workers, are the heroes.
A deeper conflict is the war between two ideologies: the ideology of capitalism and the ideology of democracy. Capitalism runs on the principle of property rights. Democracy runs on the principle of human rights. In governance by capitalist principles, one dollar equals one vote. Therefore, in the governance of capitalist institutions, such as joint stock companies, voting rights must be proportional to how much the voters own. On the other hand, in democracies, all human beings have equal votes, whether they own a billion dollars or none.
An old story of the people versus the establishment in the king’s court, which appears in many revolutions in human affairs, has returned, with mistrust increasing for both governments and big businesses. More troubling for citizens is the collusion between big businesses and their governments. In the US, Bernie Sanders and Donald Trump, both outsiders to the establishment, rode up on an anti-establishment wave. An anti-establishment movement has risen in Europe too. It also helped the Leave side win the Brexit referendum.
The people are rising against experts. Brexiteer Michael Grove declared, “People in the country have had enough of experts.” Narendra Modi said, “Hard work is more powerful than Harvard,” to counter the economists who had demonized his demonetisation of high-value currency notes. Whereas, economists framed demonetisation as a story about the condition of the economy, Modi framed it as a story about the condition of society—of an uncaring and greedy rich class and suffering people.
Underlying these competing stories is a chasm between the prevalent paradigm of economics and the reality of human society. Economists say that free trade, globalization, freedom for movement of capital, and protection of investor rights will lift global growth again. They are concerned about the stagnant top-line. Surely, a bigger pie must benefit everyone, they say. Whereas, the bottom-line reality is that people are experiencing a widening gap between the incomes and wealth of people at the very top and the rest. The people in the middle and at the bottom are not getting enough of the pie. Automation technologies are advancing. They will produce more returns for their owners and fewer opportunities for human workers. Ultimately technology always benefits everyone, people are told. It is the further churning of their livelihoods in the meantime that they fear.
The ultimate purposes of economic development and technological progress must be to create a better world for human beings. Economics must be redesigned to produce a better society rather than society being redesigned to produce a larger economy. Capital must serve people; rather than people serving capital. People want governance systems they can trust. Capitalist and democratic institutions must evolve to serve the people better. The inherent tensions amongst them must be resolved too.
A new narrative of progress that is fair and inclusive must be written. It must be created collaboratively by many stakeholders. Experts must listen more to the people and less to themselves. Hard facts and soft hearts must talk to each other. The ability to listen to others, and especially to those who have different views of the world—to “people not like us”—is critical for shaping a narrative of inclusion in human progress and peace. The other competing narrative, on stage already, is violence within and between countries.
Arun Maira served in the erstwhile Planning Commission.