Sunday, April 21, 2013

Kaushik Basu's groundwork

Almost by chance I recently came across the work of the great Indian economist Kaushik Basu. He has a brilliant trajectory as an economic theorist, having done his PhD with Amartya Sen. He is also a practitioner, as former advisor of the Indian government on economic policy and chief economist of the World Bank. I just finished reading an excellent book of his, "Beyond the Invisible Hand. Groundwork for a New Economics." In this book, Basu is cautiously optimistic that we can build a new economic science for a better world. One building block of a new economics must be the recognition that social norms condition individual behaviour, and that social norms that foster cooperative and distributive behaviour are as possible as the individualistic social norms that have been prevalent for most of the history of capitalism in western societies. Basu is no naive revolutionary, he is perfectly aware of the failures of previous attempts to build a different society. But he says that precisely because we can learn from previous mistakes, and because the evidence of the failure of capitalism to deliver in terms of stability, justice and even efficiency, economists should join the ranks of those who fight for a better world with solvency. As opposed to Dani Rodrik, who argues that it is not even desirable to try to build a global democratic governance, Basu says that there is no other option but to try to do precisely this. To those who believe that this is impossible, he presents the argument of the recent success of governments of big countries, such as China or India, which among both rule over one third of humanity. If such a large chunk of the world is under two governments, making progress towards, if not one single world government, at least a small number of world democratic institutions, should not be impossible.

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