An eminent liberal Professor Jagdish Bhagwati argues in his article in the Business Standard that the capitalism causes prosperity provided appropriate policy reform. What is ‘appropriate’ is however a broad question one has to grasp the history of economic system and understand that what is appropriate given the condition of ideas and diagnosis. The book “In Defense of Globalization” is certainly one to start.
Some interesting paragraphs:
Some interesting paragraphs:
- “This is none other than my
colleague Joe Stiglitz. He made a much-cited claim that the current crisis was for capitalism (and markets) the equivalent of the collapse of the Berlin Wall. Now, we know that all analogies are imperfect. But this one is particularly fatuous. Columbia
- When the Berlin Wall collapsed, we saw the intellectual bankruptcy of both the authoritarian politics of communism and the economics of extensive, almost universal, ownership of the means of production and of central planning. We saw a wasteland.
- After the liberal economic reforms, they did register accelerated growth rates; and finally this did pull up nearly 500 million above the poverty line during the last twenty years. However grim the current crisis has been, it cannot be used to deny and destroy this elemental truth.
- But has the fate of the poor in the rich countries been less comforting? The labour unions such as the AFL-CIO in the
are convinced that trade with the poor countries has produced paupers in the rich countries by depressing real wages. But this dire conclusion is unsupported by empirical analysis. My own analysis, dating back at least a decade (and extended in my 2004 Oxford book, In Defense of Globalization), argued that, if anything, the fall in wages which labour-saving technical change and other domestic institutional factors would have brought about, had been moderated by trade with the poor countries. This benign conclusion has been re-asserted by Robert Lawrence of Harvard’s US in recent years. Kennedy School
- But the critics also argue that the crisis spells the end of “market fundamentalism”. But the presumption from which these critics start is that we were in the pragmatic centre and have moved to the market fundamentalist right, letting markets rip and rip us apart. But this is totally wrong for much of the world, certainly for the developing countries. Many of the developing countries had been into “anti-market fundamentalism” — there was extreme hostility towards markets and much knee-jerk interventionism such that Adam Smith’s Invisible Hand was nowhere to be seen. When they realised that this model was not working and had cost them dearly, they moved to the pragmatic centre. So, the reality is that we shifted in recent years, not from pragmatism to market fundamentalism as Stiglitz and Soros would have us believe, but from anti-market fundamentalism to the centre.
- None of these reformers cared, however, what Bretton Woods institutions, or
more generally, thought and felt. Washington Consensus is therefore little more than Washington Conceit, spread by Western media at first and then by the anti-market fundamentalists and the anti-globalists who find that the phrase, and the anti-Americanism which it invokes, gets them greater mileage than the content of their critique actually merits.” Washington