Is the economy outdated? | The Daily Star

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As the world approaches the second quarter of the 21st century, some of the nagging questions we still face in the world of socio-economic development are: Will the influence of economists increase or decrease? Will the economy succeed in eradicating extreme poverty, or will we continue to live with extreme inequalities in the distribution of income and wealth, disorderly consumption and rapid depletion of the Earth’s meager resources, at the edge? a social, political and environmental disaster? These are big questions, which should concern all economists and world leaders, and the answers depend very much on the economists themselves.

One of Bangladesh’s foremost economic thinkers, Professor Wahiduddin Mahmud, decided to do so in his book, Markets, Morals and Development: Rethinking Economics from a Developing Country Perspective (Routledge, 2021). In less than 100 pages and over six fascinating chapters, Mahmud poses and provides answers to a number of complex questions facing humanity today, especially people in “less developed” or developing countries.

Professor Mahmud, who studied economics at Dhaka University, achieved top honors in his undergraduate and graduate degrees. He then went to Cambridge, England to pursue a doctorate in economics and upon his return joined the University of Dhaka as a professor. In addition to publishing a myriad of articles and books on a wide range of subjects, Mahmud has taught as a visiting professor at a number of renowned institutions, including Cambridge, and has conducted research at a few global institutions, including the World Bank and IFPRI. In 1996 he published The Theory and Practice of Microcredit (Routledge), co-authored with SR Osmani.

In this new book, which is short but very argued, Professor Mahmud makes a number of important points. First, it recognizes that the modern economy, developed primarily in American and British universities, has drawn criticism for the perceived failures of capitalism and free trade around the world – persistent poverty and growing inequalities in income and wealth that are rife between North and South. Second, highlighting the problem of unscrupulous consumption, especially in developed countries that endanger Mother Earth, it demonstrates the total disregard of society for the environment, ethics and morals.

Modern economic theory, developed in the West, the author believes, has much to gain and nothing to lose by focusing on the problems of developing countries, where millions of poor reside and have yet to enjoy the fruits of poverty. modern civilization; it is, according to him, a win-win proposition. The focus on development economics will produce results that benefit economic theory and practice and help improve the well-being of citizens in resource-poor countries. It illustrates some examples of how ideas developed in the context of the problems faced by least developed countries (LDCs) have, in fact, enriched traditional economics theory and policy. He mentions the work of Joseph Stiglitz and George Akerlof, both 2001 Nobel Laureates, as well as Michael Spence, whose work was inspired by the rural credit markets in South Asia and the milk market in Delhi – problems that can be found in all developing economies.

The reason for his optimism, he points out, is that economists over the centuries have developed a set of analytical tools that can be used to solve problems in developed countries, especially in developing countries. For example, the concepts of opportunity cost, sunk cost, or comparative advantage (vs absolute) are not just smart intellectual gadgets, but powerful concepts that can lead to lucid and often unexpected discoveries and solutions to real world problems.

In chapter five of his book, “Amartya Sen’s Ideas and the History of Bangladesh,” Mahmud reviews and focuses on a fraction of Sen’s writings that deal with human development and social inequalities, including concept of freedom and public reasoning. Mahmud writes to understand the application of these concepts to the achievements and challenges that Bangladesh has faced on its 50-year long journey. Sen has written influential books on topics such as famines and the measurement of poverty, making fundamental contributions. These are all very relevant questions with many moral dimensions. The author points out that Sen is one of the few economists to have effortlessly bridged the gap between the challenges faced by developing economies and those faced by policymakers in rich, high-income countries.

Mahmud also addresses the issue of social business (SB) – a term allegedly coined by his colleague Professor Mohammed Yunus to describe a mission-driven organization, which is a business, but which does not focus solely on people. profits, ignoring human welfare. . The author draws attention to the idea that existing and perpetuating in the service of humanity is like a business by ensuring that all its fixed and operational costs are fully covered, leaving a surplus, which is however reinvested. instead of enriching initial investors and shareholders.

As Bangladesh celebrates its half-century in 2021, this book by Professor Wahid Mahmud is a reminder that the flow of ideas from West to East can be reversed. Intellectuals and practitioners in the East are already bringing new ideas to improve disciplines such as economics, especially through the study and practice of economic development. Practices such as micro-finance or micro-lending were born and perfected in a resource-poor country like Bangladesh, but are now practiced all over the world.

Munir Quddus, PhD, is Professor of Economics and Dean of the College of Business at Prairie View A&M University. He can be contacted at muquddus@pvamu.edu.

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