Incredible inertness

Ever seen an irrational person who is also tenacious? Well, when the two combine - the irrational and the tenacious - we have a rigid system that is difficult to change and the core values become a burden to the economy. That there are intellectual inconsistencies in the fundamentals of economics are accepted, but the rigid people will neither accept it, nor they will accept that the core values are no longer core values. In that flexible sense the economics of developing countries is poorly organised.
For one the WB/ADB and the Western economists never understood the implications of their unsound and rigid manner of implementation of structural reforms and conditionalities imposed on the developing countries. These conditionalities were based on a theoretical agenda that may have been based on the theories meant for the West. If the gaps in the thinking were so serious for the developed countries these would be obviously catastrophic for the developing countries. They have managed to purchase sanity at the cost of a few dollars from the trained economists that have studied in the Western countries. They have never seriously taken theoretical critique and never faced factual evidence that is contrary to their assumptions.
The conversation is generally in the first language of the foreign economists, and therefore, the ease of language is with them. Very early some basic equations were questioned and the answer came: what really matters is that your countrymen will not listen to you. The reason being that in the face of hard dollars that we provide for your powerful elites to waste by spending on junket tours gives us an edge over what the country's personnel say. I agreed. The equation has never been corrected. In fact that has gone from bad to worse as spendthrift habits die-hard and the demand for the resource gap keeps on increasing.
The military regimes are as bad as the civilian regimes. Both think that the route to heaven is through the policies of the economists. The Food and Agriculture Ministry was for ever harping on every economist as 'internationally renowned' meaning thereby that interventions will be provided by the 'renowned economist'. In the process they had removed themselves from any responsibility. It was the same for the 'renowned world agriculture scientist' and all that the renowned scientist did was to siphon off resources. Nothing has come off his activity, having wasted financial resources that could have been used elsewhere, thanks to recalcitrant attitude in the ministry. It is insurance of a kind I suppose!
The other physical sciences kept on questioning and kept on modifying their core values and so much so that they are now even questioning some of these values. There was never any hard and fast theory as the system kept on a critique course that enabled them to change thinking. The Keynesian revolution was the only one that came to the subject matter in the 20th Century. That was it! The physical sciences have processed new factors at an alarming speed. Consider from Newton to Einstein physics from Mandelism to DNA and the human gnome, from human determinism to chaos theory. The question then arises as to why economists are so determined to resist change just and almost as the farmers and agriculturists in Pakistan.
Is it because the experiments that the farmer refuses to undertake is also the reason why economists do not want to take the risk lest what has been gained should be lost? Is their averseness at risk and losing what has been gained in the past? Was it also that countrywide experiments could not be taken in economics while these could be taken in physics and in any case, the social impact of physical sciences was much less than that of any social science? Does this mean that the determinism that one seeks in social sciences can never come about? The culture aspect was never in ascendancy in these reforms that were undertaken by the other physical sciences. Pakistan has never understood the role of the psychologist in the formulation of economic policies and in the role that this subject can play in the formation of experiments. There is growing knowledge on the human behaviour aspect in economics. This had and continues to be ignored. Some of the economists notably Ronald Coase has done work on this and this still is an area for much work. (See Psychology of Economics)
The concept that self-interest was all that was needed prevented governments to intervene for the sake of experimentation. The equilibrium would be provided by the market system and self-interest would also lead to community welfare. We now understand at our own peril that no such equilibrium existed. The order and chaos that came about as a result of the market meant that those that were economically powerful could manipulate the markets, as they desire.
Mafia economics came in to being. Pakistan and other developing countries have been subjected to this mafia culture in a big way and the fact that the private sector has been able to make heavy duty against the social order goes on unchecked. It is very difficult, nay impossible, to manage [what to speak of control] the MNCs. The FDI policies that have been activated by the international agencies are not a panacea for economic well-being of the host country but a means to siphon off resources from the developing countries in a much more suave way than what the East India Company did.
Economists kept on harping that the market would provide equilibrium without understanding that this was not happening and that there was ample evidence to the contrary. The correction(s) never came. Musharraf and his henchmen kept on harping about the free-market system (see the various speeches of Shaukat Aziz and Musharraf while on tour to the US). To give it a colour of different sort the equilibrium factor is still being touted around as a powerful tool against the mafia without realising that the mafias thus created were even worse than the previous feudal order that it was replacing. As a defence of capitalism market equilibrium was the main instrument. As poodles we followed suit to whatever was told us by these mafia-ridden international agencies.
The ideology that they professed was not in keeping with the requirements of the member-states of the UN but served the interest of the developed countries. The interventions sought for the economy were serving the demand structure of the West. Take the railway track out, remove the cheap sources of travel - make expensive roads and make them for the elites (Chak Shahzad). Build a motorway for the poor to travel on his donkey cart. Make expensive interventions for the energy workouts so that Pakistan goes deeper in debt and deeper in crisis. Give Karachi over and under passes and do the same in Islamabad and Multan. That is development and that will serve the poorest of the poor. Words that say something and convey differently and is that the way to cover deficit financing or increasing the deficits?
Psychologists could have provided the guidelines for an adequate understanding to stimulus and response. That would require a different kind of mindset. A nation that seeks handouts is unable to comprehend the requirements of a new and independent mindset that will take the burden of a job seriously and will accept the responsibility to make definitive changes to the existing economic system.
Was there complete breakdown of the market system or did it provide any relief to the poor? The jokers in the system would say that the self-employed hawker is evidence enough to suggest that the equilibrium practices of the market were working. Pope John's famous quote about unemployment in the third world still stands out for he said that in developing countries the poor are always badly employed.
Why this new attitude? The economists now talk of positive economics (that is) as against normative economics (that will be) and hope that ideology would not play a part in economic thinking. Why the economists look for allegations and accusations for, if they are to perform then a more risky attitude has to be undertaken. For one the market is not the trend-setter that is for sure. How this will pan out and what kind of social pressures were built, as a result of lack of social and psychological understanding is something that has to be developed. Remember East Pakistan and the economic policies that ruined a state. The political consequences are also to be countered and catered for. Take care for economic inconsistencies will remain.