Half a century gone! My hope would be that the debate triggers a new thinking to face the next fifty years.
The humanity journey of our small island in the past, now and in the future has been, is being and will always be led by the policymakers, technicians, entrepreneurs, lecturers, journalists, the civil society, voters and many others. One thing is very clear today. The economic theory has played a defining role on how all these people have tried to tackle the interwoven challenges of our country since its independence, so will it be in the future. Economics is the mother tongue of the public policy, the language of public life but also the suppressed voice of the vast majority of people. It is the mindset that shapes the society, economic beliefs, values and assumptions on how the policymakers think, feel and act. Under the belts of all these economists from the past to now, I learnt that there has been only one common introductory economic course – the “ECON 101” which originated from the US. It has shaped the way that all think about economy, what is for and how it works. Interesting but worrying! The result is that we are being guided by an economic mindset that is rooted in the textbooks of 1950s built on theories of 1850s. That does not mean that there has not been any ground-breaking new economic thinking. Keynes theory in 1930 is one of them but he himself admitted – I quote “a struggle of escape from habitual modes of thoughts and expression… the difficulty is not in the new ideas but the old ones which ramify, for those of us brought up as most of us have been, into every corner of our minds” – the old thinking has been dominantly prevailing.
The first challenge for us is to re-think our economic model; a fundamental change in the way we think about economics is necessary. We need to admit that the neoclassical vision of capitalism offers no solution to the problems that we face. The Free market has freed neither the world nor our country from its miseries despite its promises. It may have produced technological advances and huge wealth accumulation but just in the hands of few creating massive inequality all along. “Rethinking economics is not about finding the correct one but it’s about choosing or creating the ones that will best serve our purpose now and in the future. As the humanity context, the values, the challenges and the aims continue to evolve, so too should be the economic vision of a country.” *
We should abandon this faith that the economist so unquestioningly put in front of us – that the invisible hand of the free market would solve our problems – Fallacy!! It has not and will not. One thing is for sure with the invisible hands; it has been heavily biased towards the richest of the society and will continue if the actual structure doesn’t change. As of 2015 the world richest 1% now own more wealth than the 99% put together – In parallel stating that the 2% of the richest Mauritians own more wealth than the 98% is not far from reality. Moreover, the actual conceptual framework of economics has been, is, and will still remain very indifferent to the human nature. It is built on the assumption that maximizing personal wealth and profits is the core of economic rationality and it has generated “indifferences, greed, exploitation and selfishness”. The deeper problem of our economic theory is that it is sharply divorced from the reality. There is a complete disconnect in the mainstream economic theory, the financial sector and the real challenges such as growing inequality and climate change.
Rethink the economic model requires reviewing the way we calculate progress away from the most controversial icon of Statistics –GDP. For over 70 years economics have been fixated on GDP as a primary measure of progress. Its main purpose so far has been to justify extreme inequalities of income and wealth and the destruction of the living world. The PM, the MPs, governments, the private sector and probably a lot of people swear by it and will be the key word in the coming budget. What is the GDP? – The market value of goods and services produced within the country in a year. The “P” stands for products, yet the human society is an integrated whole not only products. The progress of a country is much more than the economic activity measured by GDP. The success or failure of a country should be measured in a more consolidated way not purely on the basis of a single, narrow economic metric. GDP does not tell the whole story, it will not tell the number of deaths on our roads, it will tell the number of young people dying due to synthetic drugs, the number of school leavers failing at the primary level, the ecological damage caused by coal ash, the loss of biodiversity both marine and terrestrial. Many of the things that we Mauritians as human beings cherish most, including “life of people” are being treated as having no value. GDP measures income not equality, it measures growth but not destruction… (OECD Observer) It completely ignores values like social cohesion and the environment. GDP is a misleading measurement system of our already flawed economic thinking.
What would a GDP growth of “say” 7 % mean to a government if everyday people are dying on the roads, with synthetic drugs, as an island we are losing our unique biodiversity, public beaches are being converted for the big capital and people are continuously losing trust. This is no progress and no PM or government should be proud of such an achievement. All the leaders seem to forget one thing, the warning of Simon Kuznets when he first developed the concept of GDP in 1930 – “GDP is not a welfare measure, it is not a measure of how well we are all doing. It counts the things that we’re buying and selling, but it’s quite possible for GDP to go in the opposite direction of welfare”. (Professor Erik Brynjolfsson)
GDP cannot measure the progress of our country – a new thinking is needed. Are we ready to take the challenge?
* Some of these issues are ongoing debates within Greenpeace which I’m happy to share