Tuesday, December 15, 2015

The Superhero Theory of Economic Development

We have our ideas about how a society becomes prosperous. There are some great examples for us at hand - from England of the Industrial Revolution, Psot-War United States, China in the new millennium, and host of other countries in between. Explanations are aplenty too - there are technological, demographic, social-cultural, political and now even spiritual and astrological justifications available why prosperity happens. But, even within the variety of explanations, there are some overarching assumptions, two in particular, that can be seen in every theory. They are Paradigms, in the sense Thomas Kuhn originally used the term, frames of reference that we fit every available evidence into. Whatever explanation we seem to pursue, we seem to accept one or the other paradigm about how a society functions. 

First of these two is the Planning paradigm, primarily positing that human societies can be planned from above. This may seem out of fashion now, with the terrible mess that Soviet Union turned out to be, but this was extraordinarily popular at the time of the longest uninterrupted run of prosperity, after the war and through the mid-sixties, where every country, rich and poor, embraced some form of planning. There were miracles then, which were ascribed to Planning, though they did not last. The Planning paradigm had an important use, though, that it did free us from the racial assumptions - that some people can develop while others can not - and gave everyone hope. 

But, then, it failed. It is not because the efforts given to planning was inadequate, but rather that we trusted planning too much. In varying degrees, societies believed that an enlightened elite can know everything and design the path to good life for the masses. It failed, because enlightened elite failed. Designing things from above did not work, because the elite did not understand the realities. Their actions caused miseries, rather than prosperity. 

The second paradigm, under whose spell we live now, is the paradigm of the market. Rising from the rubble of the Soviet Union, and primarily powered by the mythologies (which are historically inaccurate) of American development, that of a free people shaping their destiny through agency, we came to trust the invisible hand of the market allowing the survival of the fittest and the prosperity driven by a few smart individuals. These agents of development, wealth creators, are to drive thinking and doing in the societies, leading innovation, building enterprises and finding opportunities. 

In its current form, though, even this Market paradigm depends on a small elite, well-educated, privileged and enterprising. The fundamental goals of the state policy is to create opportunities for them at the expense of everything else. Accordingly, the old ways of running government, taxes with the aim of redistribution of wealth, welfare provisions, regulations, have been cast aside in favour of ever lower tax rates (which is easy to avoid), minimal welfare to drive benefit scroungers to work, non-intrusive state etc. 

The two paradigms may be at two different ends of the political spectrum, but they are essentially similar in their reliance on a small elite - the Superheroes - in driving economic development. The difference might be in who these people are - sons of party bosses or sons of businessmen - but it was never assumed that the common people can do much. But there is perhaps another way of reading history, all history, that it is common people, through spontaneous action, bring about all development. Instead of elites leading development, all elite, hereditary, bureaucratic or commercial, are anti-development, as the state of change threaten privileges. Development is the imperative of the common people, as only their quest of well-being leads to the challenge of status quo, and it is they, taking charge of their development, can bring about sustained change, which we call development.

At this point, I can fully prepared for being called a Socialist, because any argument that talks about people as the driving force of development is labelled as such. It did not matter that I find the planning and state-sponsored ideas equally ineffective. Mythologies need the kind of one or the other approach, and I am guilty of pursuing a shade of grey. The history of development though perhaps bears this argument out. Often, we define progress in terms of one or the other particular invention. But, a closer look, as we look at the life cycle of development, when that invention truly gains traction and results in perceptible change in the society, we generally see that it has become commonplace through education, that even the common people are able to use it and employ it to productive purposes. So, we may put our faith on brilliant inventors to change society, and they do have an important function, but it is little people, through education, actually make development happen. 

This may be obvious, but this gets missed all too often. Talking about this people dynamic of development is not socialism, but just a common reading of history. However, we must talk about this to counter all superhero theories of development, particularly of the current variety where we expect a Larry Page or Elon Musk to deliver the future. It is us, through education, engagement and improvisation, who would have to bring change about.


 

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