Free market heal inequality

Reviewing Prof. Suresh Tendulkar paper on “Inequality and Equity during Rapid Growth Process” published in the “India’s Economy: Performance and Challenges: Essays in Honour of Montek Singh Ahluwalia” Mythili Bhusnurmath writes:

• “Tendulkar concludes that equity would be advanced in the normal course of market operations without government intervention for reducing inequalities if technological changes reduce the relative price of one or more necessities of life or by enhancing the supply and consumption of necessities like food. This is what happened in China during the transition from collective farming to individual household responsibility system that generated economic incentives that were instrumental in enhancing the supply and consumption of necessities like food.
• So, contrary to widespread belief, certain types of market outcomes can be equity-enhancing as opposed to the usual intellectual presumption that all market outcomes are necessarily inequitable. Now, if only the rampaging Maoists in central India were enlightened enough to read Tendulkar’s paper, growth might get a chance!”

The paper is worth reading not just Prof rejected the old theory of “Standard measures of inequality such as Gini coefficients” but makes a case to amend the notions of inequality in market and how market create equality in society. You have plenty of examples to count!! Think of tiny mobile phone to small car.