Untold Economics

Western Economic Systems:

Western economic systems have produced great improvements in many areas including technology, medicine and the provision of essential and non-essential goods and services. However, as industrial economies continue to grow in a finite world the overall impact is increasingly negative. Inefficient use of resources, high levels of pollution and numerous social disruptions resulting from industrialization have caused human society to be grossly unsustainable.

The world’s current economic growth model – characterized by extreme production and consumption, slashed forests, and polluted air and water supplies — was operating at nature’s expense and, while it was not too late to change course and improve our relationship with Mother Earth.

The world was undergoing a “tremendous change”.  While hundreds of millions of people had risen from poverty, it was necessary to bring those benefits to millions more — a goal could not be achieved unless the human and natural capacity that was the foundation for prosperity was respected.

By our very own activities and assumptions, we risk profound and potentially irreversible changes in the planet’s ability to sustain our progress. However, the decline in the earth’s natural capital was rarely reflected when the sum of a country’s total annual production was calculated.  It was essential to revise accounting methods and to embrace a low-carbon, resource-efficient, pro-poor economic model.

In 2002, world leaders had agreed to substantially reduce the rate of biodiversity loss by 2010 — a goal that had not been met.

The benefits of economic progress had come at great costs to the natural world and humankind.  The irreversible degradation of the natural resource base was a tragic loss.  Having reached the limits of the planet’s capacity.

Indeed, consumerism was “consuming” those in the developed world, while many in the developing world could not even consume enough to meet their basic needs. The current growth model had not yielded better conditions, but rather had succeeded in threatening all forms of life.

The magnitude of recent natural disasters had not been confined to national boundaries. Extreme patterns of production and consumption have led to extreme responses from nature.

Living at nature’s expense was not sustainable, and that current values and commitments made must be re conceived in order for sustainable development to succeed. Capitalism’s mistake is not having fully incorporated nature as part of capital.

Only by identifying the specific functions of those ecosystems and biodiversity, assigning them a monetary value, and defining their limits and the cost of their conservation in economic terms could a realistic market for environmental services.capitalism — and its predatory patterns — for the current situation, underscoring the need for a new economic paradigm that was in harmony with nature.  Drastic changes in the Arctic, an area that had been stable for millions of years, only underscored the urgency of that point.  Humanity should not be allowed to put such strain on nature.  Biodiversity loss, desertification and the disruption of natural cycles were other indications of the irreparable costs of the ongoing disregard for nature.

Present governmental systems were flawed in that respect, reflecting as they did the idea that nature existed only for human benefit.  Nearly all legal systems, for example, defined anything that was not a human or a corporation as “property” — or objects incapable of holding rights.  That belief had entrenched a relationship between humans and nature that was akin to that of a slaveholder and a slave.  That “colonial” attitude was not sustainable on a global scale, Equity had not been well served by market forces.

United States Federal Reserve Board Chairman Ben Bernanke noted that economic indicators did not adequately capture the economy in relation to the Earth’s natural systems.  “This is like flying a very large airplane with no map,”

Nice study published from CATO Institute in Washington (edited by Doug Bandow and Ian Vasquez), entitled Perpetuating Poverty, wherein the authors have systematically shown how the World Bank and the International Monetary Fund have promoted poverty in the developing world for the ultimate good of the big powers, so that they could keep the former under their thumb perpetually.

Leading Harvard economist Dani Rodrik in his book In One Economics, Many Recipes argues that neither globalizers nor antiglobalizers have got it right. While economic globalization can be a boon for countries that are trying to dig out of poverty, success usually requires following policies that are tailored to local economic and political realities rather than obeying the dictates of the international globalization establishment. A definitive statement of Rodrik's original and influential perspective on economic growth and globalization, One Economics, Many Recipes shows how successful countries craft their own unique strategies--and what other countries can learn from them.

To most proglobalizers, globalization is a source of economic salvation for developing nations, and to fully benefit from it nations must follow a universal set of rules designed by organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization and enforced by international investors and capital markets. But to most antiglobalizers, such global rules spell nothing but trouble, and the more poor nations shield themselves from them, the better off they are. Rodrik rejects the simplifications of both sides, showing that poor countries get rich not by copying what Washington technocrats preach or what others have done, but by overcoming their own highly specific constraints. And, far from conflicting with economic science, this is exactly what good economics teaches.

Mr Martin Khor, an economist trained in Cambridge University

Mr. KHOR said much of the world’s resources had been used to produce goods and services that were not required, while too little had been left for the poor.

Big wave of deregulation, in the electricity sector, was a different story. Just as Japan’s slump in the 1990s showed that Keynesian worries about the effectiveness of monetary policy were no myth, the California electricity crisis of 2000– 2001—in which power companies and energy traders created an artificial shortage to drive up prices—reminded us of the reality that lay behind tales of the robber barons and their depredations. While other states didn’t suffer as severely as California, across the nation electricity deregulation led to higher, not lower, prices, with huge windfall profits for power companies.

Developing countries rushed to open up their capital markets, despite warnings that this might expose them to financial crises; then, when the crises duly arrived, many observers blamed the countries’ governments, not the instability of international capital flows.

If Homogenous economic system in the name of Globalization is function or fulfill its so called global welfare then What is fit for Indian Economy? Which is totally different in all aspects, whether cultural, geographical, socially etc., in this respect, we have to look towards our own economist rather looking towards western economist, who never visited this country and gave their opinion for our development.

Shri SP Shukla (Former Finance Secretary, Ambassador to GATT) on WTO & its policies.

From all accounts, we are experiencing a deep agrarian crisis. The manifestations are ubiquitous and unmistakable. Agriculture has stopped absorbing additions to rural labour force. The struggles for occupying available land and for securing a living wage for landless labour have become more intense and violent. The phenomenon of reverse tenancy is on the rise. The exodus to urban centres in search of employment has accentuated, resulting in ever-increasing outgrowth of slums around all urban centres. The situation is explosive and threatens to destabilise the social and political fabric. Public investment in agricultural sector has declined sharply leading to deceleration in output growth and even negative growth. The lack of employment opportunities and income have resulted in an unprecedented reduction in the per capita availability of food- grains for the rural poor, pushing as large as three quarters of the rural population below “ the poverty line”. The condition of even the relatively better off sections of farmers seeking higher returns by raising cash crops/ generating marketable surplus of staple food-grains has deteriorated sharply thanks to their exposure to the volatile world agriculture market, particularly in the period of a deep cyclical downturn, on the one hand, and the policy –induced sharp rise in the cost of inputs, drastic reduction in the availability of credit and declining state procurement at remunerative price, on the other. Widespread phenomenon of farmers’ suicides constitutes a cruel testimony to this state of affairs.

Surprisingly, the official policy level response continues to be insensitive to this reality. The recent initiative of rural employment programme has been reduced to a limited gesture totally inadequate to meet the enormity of the crisis. The virtues of the other initiative , namely, the projected enhancement of agricultural credit, are exaggerated. By itself, it offers no solution to the problem of the chronic indebtedness of small and medium peasants and the heavy debt -burden recently incurred by the relatively better off farmers who had to turn to usurious moneylenders. The inadequacy of the initiative is apparent in the context of the policy environment of withdrawal/ reduction of minimum support price programmes. The broad definition of its potential beneficiaries which includes the big agri-businesses further reduces its utility as far as the vast sections of peasantry facing the crisis.

The syndrome of corporate agriculture systematically promoted by IFIs and WTO continues to govern the policy making. The so-called “agricultural reforms” have long substituted the theme of “land reforms”. The opening up of the agriculture sector to the corporate capital is the cornerstone of the policy. It is sought to be done directly, facilitating the corporate ownership by abolishing the ceiling laws and/or indirectly, through contract farming and encouraging dependence of the peasants on the corporate sector for both procurement of inputs and marketing of output. Infusion of capital and modern technology, diversification of cropping pattern, value addition through better storage , processing and marketing constitute the professed rationale of this policy. Further more, the arena of operation of the corporate sector is situated in the context of integration with the world agriculture markets within the framework of the WTO’s Agreement on Agriculture (AoA) whose paradigm is biased in favour of temperate - zone, capital -intensive , corporate agribusiness- driven, export- oriented, peasant - insensitive and mass –livelihood- threatening agriculture. The route to this “grand transition” of the Indian agriculture from its present stage where it constitutes the sole means of survival for the two-thirds of the total population, is marked by the predominance of small and marginal peasants and continues to retain its largely rain-fed character, has not been worked out. Nor have the enormous implications been explicated.

The agrarian crisis is rooted in the inability of the present agrarian system to absorb the additions to labour force in the rural sector traditionally and inevitably dependent on agriculture, the resultant involuntary displacement of large masses of labour force out of the rural, agricultural hinterland , and the near absence of alternative means of survival with dignity.

But even there,as Samir Amin has pointed out, the absolute number of the Chinese population dependent on agriculture is unlikely to decline in the coming decades, even assuming that China’s dazzling performance in GDP rate of growth continues unabated. What is our contemporary alternative? Palliatives such as enhanced credit, debt-relief, food –for- work, may provide temporary help but can hardly constitute a solution to the agrarian crisis.

Approaching the problem from the other end, that is to say, ruling out approaches and policies that are aggravating the crisis, one can perhaps say that the rejection of the AoA paradigm and the State Policy that accepts it is the first step towards the solution of the agrarian question. But only the first step.

Experiments such as self- reliant dry farming; organic, non-capital intensive farming; rural economy based on bio-mass based energy; movements such as water-shed development; equal access to water to all irrespective of the size of land holdings; and militant struggles for land redistribution and remunerative wages for the landless are perhaps some of the possible elements of the solution, responding to the differentiated agrarian scene. The differentiation is significant for historical, geographical, climatic and demographic reasons. Notwithstanding such differentiation, the inappropriateness of the policy based on the Corporate agriculture and AoA paradigm seems unquestionable. On the other hand, there appears an underlying unity of causation calling for an egalitarian structural transformation.

There are two levels at which the task needs to be elaborated, analytical as well as mobilisational. Taking the analytical aspect first , there appear to be three main lines of reasoning. It is argued that enhanced investment in the agriculture sector(irrigation, R&D, enhanced credit, assured state procurement at remunerative prices)coupled with massive employment generation programmes in rural areas constitute the key element in the solution. The other line of reasoning emphasises the need to deliberately tilt the terms of trade in favour of the agriculture sector and substantial state subsidisation of inputs of farming. Both these approaches recognise the deleterious effects of the ongoing integration with the world agriculture market., but they do not explicitly argue for de- linking of the Indian agriculture from the AoA paradigm.

The third approach emphasises the structural transformation of the agrarian system with corresponding transformation in the rest of the economy/polity. One pre-condition for bringing about such transformation , it is believed, is the de-linking of our agriculture from the AoA paradigm.

JC Kumarappa

I am here stating another name of great Indian Economist, JC Kumarappa, one of the tallest and most original thinkers is a sadly neglected activist scholar.

He said, Any nation that wishes to be independent has to have an economy based on self sufficiency in food, clothing and shelter, and has to build up a social order that will be self contained. No independance purely of a political type can ever be lasting. Our country is primarily an agricultural economy. Here we have to build up an economy that will be sound from point of view of wealth production to meet that everyday needs of the people.

Such a program will involve a careful planning of both our agricultural economy as well as of our rural industries, so that people can have enough to eat and sustain themselves, to clothe them against weather and provide shelter over their heads. This can be ensured by empowering or organizing village panchayats. India's finances cannot be moulded to fit into India's needs, until the power that are to be goaded on by motives which are identical with India' interests.

Taxation has to be such as will increase production and encourage activity. When taxation nurtures infant industries; when the revenue are drawn, without injuring the sources; when starving masses are not called upon to support an extravagant and luxurious administration; when India's revenues are spent in such way as bring full returns to the people; when government undertakings needed by the poor are operated in the principle of service, channels chosen do not run counter to those of National interest; when the choice of alternatives is determined by the needs of India; then and only then can India be expected to progress economically, and tgia cannot be until India wins fiscal autonomy.

This negligence is deliberate and is starkly shown by the fact that the post-1947 political leadership of the country never bothered to collect and publish his writings and document his activities.

The Kumarappa papers in the manuscript section of the Nehru Memorial Museum and Library in New Delhi are in a deplorable condition and there is an urgent need to preserve them and bring out his collected works. The relevance of Kumarappa and his political leader, Gandhiji, in the present national and world situation is a growing phenomenon. What they said and wrote about such vital topics as peace and self-reliance are proving true in an uncannily prophetic sense.

All those who are genuinely interested in the survival of the human race and the planet can no longer ignore the thoughts of J C Kumarappa, because his is a sane voice that articulated the serious maladies that confront the modern man and seriously tried to evolve solutions. Though no conscious efforts were made by the new rulers after 1947 to popularise the writings of Kumarappa due to obvious reasons of his sharp divergences from the official policies and programmes of the new government, he did influence many thinkers in India and abroad. Conscious efforts were made to keep those ideas alive and point out their continuing relevance. Also, presently there is again a growing awareness of his relevance to contemporary issues that are day-by-day becoming more and more threatening.

NEHRUVIAN MODEL

Kumarappa was an incisive critic of what has come to be known as Nehruvian economics. He could clearly see that the economic policies promoted at the central and State levels would lead only to increasing dependency on imperialist forces, a far cry from genuine freedom, increasing the misery of the common man. Nehruvian economics was one of emphasis on heavy industry based on borrowed high technology, advisers, capital and unequal international trade. This policy was bound to generate lopsidedness and distortions and Kumarappa pointed this out at the very outset.

Nehruvian economics was in direct opposition to Gandhian economics and in post-'47 India, especially after the assassination of Gandhi, those who advocated self-reliance and village-centred development programmes were deliberately sidelined, while hypocritically invoking Gandhi and his thoughts.

Kumarappa was one such thinker who was cast aside by Nehru and his followers and that is why there is no official interest shown in what he said and wrote. At one point, when Nehru simply could not stomach the criticisms of Kumarappa on the question of development, he neurotically reacted by calling the most able lieutenant of Gandhi "a mad man". That was how much of a Gandhian Nehru was.

Kumarappa foresaw during the early years of 'independence' that the economic policies adopted by the Nehru government will bring forth devastation to the vast majority of the people and deepen the dependency of the national economy on external more powerful forces.

One finds now that this prediction has been concretized during the decades that followed. The dependency on imperialist powers has become a highly complex web entangling every aspect of the economy and life of the people and even the smallest ripple in the imperialist financial centres has come to have immediate repercussions on the national economy. When the British colonised India the country had sustainable agriculture and developing village industries as well as growing commercial towns with ancient trading histories, which the colonizers systematically proceeded to destroy. This ruthless process of destruction was based on the needs of British capital and industries which needed raw materials and markets for finished products. When raw materials are exported under discriminatory tax and tariff systems, or when finished products are imported without any protective duties, it is invariably at the cost of the national economies which are colonised. In fact, this is the very purpose and rationale of colonisation. They did it with efficiency using the social/political basis of parasitic local chieftains and landlords, and commission agents otherwise called comprador bourgeoisie.

Unsustainable revenue farming drove the peasantry to levels of utter destitution. It is not at all surprising that the whole British period, especially the 19th and first half of the 20th centuries has gone down in Indian history as the age of famines. Millions of people starved to death during this period and the impact was obviously more in the rural areas. Kumarappa and Gandhi understood the genesis of the dynamics of this destitution of the masses very well and that is why they were always harping on a village centred development planning once the colonialists left the country. Such a vision had sound economic rationale that went back to the traditional concepts of democracy and freedom adapted to suit the changed conditions nationally and internationally. Sustainability was taken as the cornerstone of development schemes and it was this cardinal principle that was thrown overboard by the national level dispensers after 1947.

Whatever may be the imperfections and lacunae in this perspective of sustainability and self-reliance the intrinsic validity of these principles is clear. Subsequent developments have clearly brought this forth. He could clearly see that the economic policies promoted at the central and state levels would lead only to increasing the misery of the common man.

"Socialism" of the Russian variety in the 1950s, despite the fact that Mahatma Gandhi had strongly advocated the cottage industry and village development as the need of hour. Now even the champions of the "mega things" in the development are convinced that "small is beautiful".

The country is suffering from the fall out of that sin every aspect of the comman man's life, starting from transport, electricity, water supply, food distribution, industry, healthcare, hotel, and what you have. None of them function properly even after half a century!.

After Nehruvian Model, we adopted capitalist model, what was new in this model!!

Nothing but earlier controlled by Government now controlling by few corporates. After half of half century of the adoption of capital model, nothing has been changed... except improvement in consumer durable goods density..... which is unwanted. State Economy should be function based on need that is natural economy not on production based, where artificial hunger created by TV & Media through cheap level movie stars and sportspersons... who are working as marketing agents of the company but people used to call them hero... Real heroes are unknown like farmers and army man, without them we can not imagine our survival but they are not popular although their deed for people. International agencies funded by Giant corporates promoting these movie stars and sportsperson as now entire activities in the name of global welfare is funding based not on need base.

Globalization is not good for our globe, where its meaning is limited for global connectivity through transportation and communication and it is for few corporate to access global market. It is happening but media is silent in this part, intellectual have no time for its scrutiny.

Globalization means for few giant corporates every country is opening their door to exploit their people and natural resources, which is serious threat for entire world and leads to imbalance of world economy. Let’s see, how globalization penetrates in another country’s boundary for economic activity and its harmful impact on domestic industry of host country. As we have also cited above repercussions at global level.

In our context, we can also see how Chinese products dumping in the Indian market in the name of Globalization:

Be it anything from needle to toys, electronic gadgets, hot water bottles, Diwali crackers you will find the Chinese version of the same in India at much cheaper price. The price of Chinese goods is 10-70% lower than that of Indian goods. Low price, bulk availability, and variety are some of the favorable features of the Chinese goods in India. Chinese products in huge quantity are put into Indian market and adversely affecting the Indian units. Chinese goods are not only affecting the domestic business and Indian market but also affecting the export market of our country. Indian goods are being replaced by ‘Made in China’ label both in India as well as abroad. Made in China label is slowly capturing the every segment of Indian market such as electronic goods, textile and garment industry, toys, medicines, car components etc.

Chinese products are mostly low on quality. Such as last year, on Diwali, Indian market had been flooded with Chinese crackers containing Sulphur. Sulphur is dangerous than Nitrate used by Indian cracker makers. Their low price attracted lots of buyers which really affected the revenue of the Indian cracker industry.

Another industry that has been affected so badly by the Chinese version is the toy industry in India. As per the reports of the ASSOCHAM there are so many Chinese toys in the market that Indian toy industry is finding very hard to survive. In the last 5 years near about 40% of the Indian toy companies have been shut down. Rest 20% are on the verge of closing down. In the last 4-5 years near about 2000 SMEs have been closed down. The ASSOCHAM has also revealed that China has the largest toy market in the world and enjoys 45% of the total share whereas India has a very little part in this and enjoys just 0.51% share. Indian manufacturers serve 20% of the market and the rest is served by China and Italy. In the period between 2001-2012, the total import of the Indian toy industry has increased by 25.21%. It is expected that toy industry will grow further. Chinese products have also led to the shutdown of 60% of industrial units in Thane and Bhivandi. Hence there are many industries and manufacturers who are facing the heat of Chinese competition.

Chinese works on the strategy of mass production and mass consumption. Main reason of their low cost is the low capital investment and export friendly policies of the Government in China. China is buying raw material from all across the world and selling the end product back to the world. China is the second largest exporter in the world after Germany. It has been predicted that China will also cross Germany in the export by the World Trade Organization (WTO).

Chinese goods are relatively cheaper, widely available and give huge profit to the dealers. But on the other hand Chinese electronic goods are not safe, of inferior quality and come without guarantee or service. These do not last for a long period of time, Chinese goods in India has resulted in the closure of many manufacturing units. Chinese manufacturers are generally bulk manufacturers and have a very structured vendor base. Also the supply chain cost in China is very less as compared to India making the products further cheap. In addition to this low cost of raw material, high productivity per person, and less indirect taxes and import duties make their good further cheap. Incentives to boost export and subsidies further boost the production.

Some manufacturers in India are even importing Chinese goods and selling these under their label. Indian manufacturers are especially importing the non-branded smartphones from China and selling these with warranty and service. In order to sell dual-SIM smartphones in India China Wireless Technologies tied up with Reliance Communications, India’s second-largest telecommunications service provider.

India must look into its administration to reduce the import of Chinese goods. Our economy is agriculture based and slowly service sector is also getting into it. But the most important contributor to our economy is agriculture. Labour force is available in huge number but ways to earn money are reducing. This is happening because natural resources are reducing which is leading to a significant reduction in agriculture. Government should encourage local small business enterprises to reduce the foreign goods in the market.

To safeguard the domestic manufacturers from the Chinese goods there is a dire need to change the policies and add duties. Apart from this India seriously needs to work on its infrastructure and efficient use of energy and other natural resources to compete at cost level and quality.

Do you prefer Chinese goods over Indian goods?

  

The vow of swadeshi is master key for attaining the Gandhian ideal of economic swaraj. Our guiding principle should be “think globally and act locally”. We have to move from gram swaraj to the idea of vasudhaiv kutumbakam. This will lead us to an ideal global economic order based on ethics and morality. Only through such a radical restructuring of present economic order we can overcome the crisis which is plaguing the economies all over the world.

Swaraj & Suraaj

Gandhi explained his vision in 1946:

Independence begins at the bottom... A society must be built in which every village has to be self sustained and capable of managing its own affairs... It will be trained and prepared to perish in the attempt to defend itself against any onslaught from without... This does not exclude dependence on and willing help from neighbours or from the world. It will be a free and voluntary play of mutual forces... In this structure composed of innumerable villages, there will be ever widening, never ascending circles. Growth will not be a pyramid with the apex sustained by the bottom. But it will be an oceanic circle whose center will be the individual. Therefore the outermost circumference will not wield power to crush the inner circle but will give strength to all within and derive its own strength from it."

Gandhi's model of Swaraj was almost entirely discarded by the Indian government. He had wanted a system of a classless, stateless direct democracy.

Additionally, modern India has kept in place many aspects of British (and Western) influence, including widespread use of the English language, the common law, industrialisation, liberal democracy, and bureaucracy.

Even it was also realized by great another Gandhian economist E F Schumacher and he said:

Towards smallness rather than giantism;

Towards simplication rather than growing complexity;

Towards capital saving rather than labour saving; and towards non violence, in a rather generalised sense.

Small is Beautiful: A Study of Economics As If People Mattered is a collection of essays by British economist E. F. Schumacher

Small is Beautiful brought Schumacher's critiques of Western economics to a wider audience during the 1973 energy crisis and emergence of globalization.

Schumacher argues that the modern economy is unsustainable. Natural resources (like fossil fuels), are treated as expendable income, when in fact they should be treated as capital, since they are not renewable, and thus subject to eventual depletion. He further argues that nature's resistance to pollution is limited as well. He concludes that government effort must be concentrated on sustainable development, because relatively minor improvements, for example, technology transfer to Third World countries, will not solve the underlying problem of an unsustainable economy.

Schumacher's philosophy is one of "enoughness", appreciating both human needs and limitations, and appropriate use of technology. It grew out of his study of village-based economics, which he later termed Buddhist economics, which is the subject of the book's fourth chapter.

He faults conventional economic thinking for failing to consider the most appropriate scale for an activity, blasts notions that "growth is good", and that "bigger is better", and questions the appropriateness of using mass production in developing countries, promoting instead "production by the masses". Schumacher was one of the first economists to question the appropriateness of using gross national product to measure human well-being, emphasizing that "the aim ought to be to obtain the maximum amount of well being with the minimum amount of consumption". In the epilogue he emphasizes the need for the "philosophy of materialism" to take second place to ideals such as justice, harmony, beauty, and health.

The power of the global multinational and the financial institutions was beginning to become apparent in the early 70s, but it has grown exponentially since, unaccountable to national governments. Schumacher warned that a city's population should not rise above 500,000, but we are now living in an era of the megapolis and several cities around the world are heading towards 20m.

Schumacher warned against exactly the issues we are now dealing with as levels of mental illness – depression, anxiety, panic attacks, stress – rise and the World Health Organisation predicts that depression will be the second most common health problem in western developed nations by 2020. This was what Schumacher feared, and his answer was "small is beautiful". Go back to the human scale: human needs and human relationships, and from that springs the ethical response of stewardship to the environment.

New sustainable economic development concept, where entire globe can think and weaved with globalization:

Gross National Happiness index (GNH) by FRANK DIXON

Frank Dixon is the founder of Global Systems Change and the former Managing Director of Research for Innovest Strategic Value Advisors, which is the largest corporate sustainability research company in the world. His perspective on corporate thought and sustainability is that flaws in our economic and political systems make it impossible for any company to become sustainable.

In fact, Mr. Dixon managed to shake my belief in many of the fundamental “sacred cows” I learned in business school! Frank discusses the concept of Global National Happiness to illustrate how Bhutan is seeking to develop a better measure of social well-being than GDP.

Frank’s point is that whatever we focus on tends to become the most important.  In other words, what gets measured, gets managed.  GDP essentially measures the well-being of capital,  which generally does very well.  But the well-being of society is not measured well.  As a result, society is declining in many ways in developed and developing countries. From Frank’s paper entitled Global National Happiness.

Improving Unsustainable Western Economic Systems:

Bhutan’s interest in developing a Gross National Happiness index (GNH) reflects great wisdom. GNH is intended to be a more accurate measure of social well-being than Gross National Product (GNP), the primary indicator of social well-being in Western nations. GNP is a crude measure that counts many social negatives as positive (incarceration, etc.). It also fails to count services that enhance social well-being (parents caring for children, etc.), degradation of critical assets (forests, water, air, etc.) and intangible factors, such as happiness (the ultimate goal of many people). It probably is no coincidence that Western economies are rapidly degrading environmental life support systems and making many unhappy (as indicated by growing obesity, anti-depressant drug use and other factors). What doesn’t get measured doesn’t get managed.

Developing GNH provides an opportunity for Bhutan to clarify economic and social priorities as it considers greater use of Western products and technologies. Developing countries often pay a high price for integrating with Western economies. Bhutan has many social strengths. It is one of the few regions where humans live in a sustainable or near sustainable manner.

It also appears to have a high level of happiness (as indicated by lack of violence and other factors). The process of developing GNH can help Bhutan protect its strong culture by clarifying trade offs involved with Western integration. This clarification can show which development actions may or may not be worth it. In addition to maximizing the social well-being of Bhutan, GNH will provide a more sophisticated and effective economic development and measurement model for other regions. To help guide development of the GNH, this paper analyzes Western economic systems. Drivers of environmental and social problems will be discussed with the goal of helping Bhutan avoid these pitfalls.

 

Ref:

1. Perpetuating Poverty; CATO Institute in Washington (edited by Doug Bandow and Ian Vasquez).

2. Reports of the ASSOCHAM 

3. In One Economics, Many Recipes by Dani Rodrik - Economist at Harvard

4. Report by Mr Martin Khor, an economist trained in Cambridge University

5. Note by Shri SP Shukla (Former Finance Secretary, Ambassador to GATT)  

6. Kumarappa papers in the manuscript section of the Nehru Memorial Museum and Library 

7. Gandhian Economics

8. Small is Beautiful: A Study of Economics As essays by British economist E. F. Schumacher  

9.  Gross National Happiness index (GNH) by FRANK DIXON