“Imagine Leonid Brezhnev on the reviewing stand at Lenin’s Tomb, surrounded by underlings, watching the May Day parade. The Soviet Union’s full military might is there on display. First come battalions of elite troops, impressive soldiers, all six foot two, marching in absolute lockstep. Right behind them are phalanxes of state-of-the-art artillery and tanks. Then come the nuclear missiles – it’s an awesome show of strength. But after the missiles comes a straggle of six or seven civilians, unkempt, shabbily dressed, utterly out of place. An aide rushes up to Brezhnev and begs forgiveness. “Comrade Secretary, my apologies, I do not know who these people are or how they’ve come into our parade.
“Do not be concerned, Comrade,” replies Brezhnev. “I am responsible for them. They are our economists, and you have no idea how much damage they can do.””
American President Ronald Reagan told this story to Alan Greenspan, former head of Federal Reserve Board.
American Army did not defeat the Soviet Union. It collapsed under the weight of its own unsustainable economy. Russian economists should have known that a closed-door centralized economy could be stretched to a certain point and not beyond that.
The same is true about free-market economy. Free-market economy can function within certain parameters. If it is stretched beyond those parameters, it is bound to collapse.
For example, free-market economy is incompatible with democracy. It is the fastest way of creating wealth but it cannot ensure equitable distribution of that wealth by itself. If it is regulated, it won’t be a free-market economy. If unregulated, it is bound to result in a wide gap between the haves and have-nots. In a democracy if the number of have-nots is more than that of haves, they will vote against the government and the result will be either instability or continuous law-and-order problem.
Another drawback of free-market economy is that it cannot function in a global environment at once. One of the basic ingredients of free-market economy is the relationship between supply and demand. In a globalized world you can move capital from one place to another within a short time with the help of internet and tele-communication devices but you cannot move labour easily. Skilled labour needs training and that takes time and money. Then there is the question of integration of people belonging to different social, cultural, lingual, religious and ethnic societies. It is an almost impossible job.
Then there is the question of resources. You do not have oil in all parts of the world. The same applies to agricultural and mineral resources. If those countries, which have these resources, do not have the necessary technology to exploit them or if they demand an unacceptable price for them, nothing happens. Either there should be a world government to ensure equitable distribution of these resources at reasonable prices or it will result in armed conflicts between nations.
The truth is that there is no single economic ideology suitable for all the people of the world at all times; nor is there any possibility of a world government in the near future. Therefore, what we require is a secular economic approach, depending upon the needs of a particular section of society, taking into consideration the social, economic and geographical condition of that part of society at any period of time.
Let us hope that our economists will not prove to be modern Weapons of Mass Destruction but Desirable Tools of Construction