Honouring Mahbubul Haq
Mahbubul Haq was radically revising his theories when confronted with adverse experiences
The writer is vice-chancellor of the Pakistan Institute of Development Economics. He holds a PhD in Economics from Stanford University
The anniversary of his birth on February 24 is an appropriate occasion to remember Mahbubul Haq, our unsung national hero. The depth of his achievements remains vastly under-appreciated, especially in his own country. Virtually single-handedly, he changed the direction of the development discourse from a single-minded and harmful focus on wealth production, towards attention to the human beings who are both the drivers and beneficiaries of the process of growth. One of the greatest strengths of Mahbubul Haq was his ability to learn from experience. Unlike many others whose ideological commitments blind them to the facts, Mahbubul Haq was a lifelong learner, radically revising and sharpening his theories when confronted with adverse experiences. He also had the rare ability to translate idealistic and visionary ideas to the practical realm of the real world. In this article, we will trace his intellectual trajectory and legacy, which remains of great practical importance. Even today, most policymakers throughout the world are following practices which Mahbubul Haq tried and rejected as he moved on to a deeper and more sophisticated understanding of the complexities of the growth process.
During his PhD at Yale, and post-doc at Harvard, Mahbubul Haq imbibed the same simple-minded and misleading economic models of growth which continue to be taught today at universities all over the world. Across the board, economics textbooks equate growth with the accumulation of capital. According to these theories, policymakers are faced with a cruel choice: either they can feed the population, or they can accumulate capital and achieve rapid growth by starving them. Under the influence of these disastrously wrong theories, planners throughout the world continue to sacrifice the social welfare of the public at the altar of economic growth. In the 1960s, the young Mahbubul Haq implemented these policies as Chief Economist at the newly established Planning Commission, and achieved a startling seven per cent growth. While the government was celebrating the Decade of Development, and offering him accolades, Mahbubul Haq did something which shows his rare qualities and character. He embarrassed the government and tarnished his own achievements by showing that the so-called development was superficial, and had enriched 22 families without bringing about significant reductions in poverty.
With characteristic courage, Mahbubul Haq used his experience to challenge the deeply imbedded orthodoxy that GNP growth was the all-important goal of development. His powerful arguments for provision of basic needs, earned him the label of a ‘heretic among economists’. He started the trend towards attention to human development which has now established firm roots as an alternative to orthodoxy. World Bank President Wolfensohn, who carried on his legacy, acknowledged his contributions in the following words: “… more than anyone else, (Mahbub) provided the intellectual impetus for the Bank's commitment to poverty reduction in the early 1970s.[...]His unique contributions were trend setters for the world and focused attention on the South Asian social realities, urging all of us to look at the dark corners of our social milieus.”
The breakdown of the Bretton-Woods agreement in the 1970s led to an obviously unfair international monetary regime, where dollar replaced gold as the reserve currency, effectively enabling producers of dollars to purchase third world resources (including politicians) by printing money. Mahbubul Haq played a leading role as an exponent of the New International Economic Order in the 1980s, which was an attempt by the Third World to counter the financial power of the first world. His forceful advocacy earned him the title of "the most articulate and persuasive spokesman" for the developing world. Lacking leaders of his stature, the third world today has quietly acquiesced to a financial system which enables yearly transfers of about $600 billion in debt service from the poorest countries to the richest, plus an even greater amount in the form of capital flight via multinationals.
It is impossible to cover the rich legacy of Mahbubul Haq within the scope of a brief article. The Human Development Index and the Human Development Report are the most well-known reminders of his human centered approach. Economists and planners have not yet absorbed his central insight that instead of sacrificing people to achieve growth, provision of social services is the best route to growth. If we just provide sufficient social support, our people will prove to be far more efficient drivers of growth than the false gods of capital accumulation currently at the centre of economics textbooks. Unfortunately, planners continue to rely on primitive and obsolete Ivory tower theories, and ignore the advanced lessons learned by Mahbubul Haq based on a lifetime of experience. Greater recognition of Mahbubul Haq and his achievements would go a long way towards providing us guidance on the architecture of domestic and international policies desperately needed today.
Published in The Express Tribune, February 22nd, 2016.
During his PhD at Yale, and post-doc at Harvard, Mahbubul Haq imbibed the same simple-minded and misleading economic models of growth which continue to be taught today at universities all over the world. Across the board, economics textbooks equate growth with the accumulation of capital. According to these theories, policymakers are faced with a cruel choice: either they can feed the population, or they can accumulate capital and achieve rapid growth by starving them. Under the influence of these disastrously wrong theories, planners throughout the world continue to sacrifice the social welfare of the public at the altar of economic growth. In the 1960s, the young Mahbubul Haq implemented these policies as Chief Economist at the newly established Planning Commission, and achieved a startling seven per cent growth. While the government was celebrating the Decade of Development, and offering him accolades, Mahbubul Haq did something which shows his rare qualities and character. He embarrassed the government and tarnished his own achievements by showing that the so-called development was superficial, and had enriched 22 families without bringing about significant reductions in poverty.
With characteristic courage, Mahbubul Haq used his experience to challenge the deeply imbedded orthodoxy that GNP growth was the all-important goal of development. His powerful arguments for provision of basic needs, earned him the label of a ‘heretic among economists’. He started the trend towards attention to human development which has now established firm roots as an alternative to orthodoxy. World Bank President Wolfensohn, who carried on his legacy, acknowledged his contributions in the following words: “… more than anyone else, (Mahbub) provided the intellectual impetus for the Bank's commitment to poverty reduction in the early 1970s.[...]His unique contributions were trend setters for the world and focused attention on the South Asian social realities, urging all of us to look at the dark corners of our social milieus.”
The breakdown of the Bretton-Woods agreement in the 1970s led to an obviously unfair international monetary regime, where dollar replaced gold as the reserve currency, effectively enabling producers of dollars to purchase third world resources (including politicians) by printing money. Mahbubul Haq played a leading role as an exponent of the New International Economic Order in the 1980s, which was an attempt by the Third World to counter the financial power of the first world. His forceful advocacy earned him the title of "the most articulate and persuasive spokesman" for the developing world. Lacking leaders of his stature, the third world today has quietly acquiesced to a financial system which enables yearly transfers of about $600 billion in debt service from the poorest countries to the richest, plus an even greater amount in the form of capital flight via multinationals.
It is impossible to cover the rich legacy of Mahbubul Haq within the scope of a brief article. The Human Development Index and the Human Development Report are the most well-known reminders of his human centered approach. Economists and planners have not yet absorbed his central insight that instead of sacrificing people to achieve growth, provision of social services is the best route to growth. If we just provide sufficient social support, our people will prove to be far more efficient drivers of growth than the false gods of capital accumulation currently at the centre of economics textbooks. Unfortunately, planners continue to rely on primitive and obsolete Ivory tower theories, and ignore the advanced lessons learned by Mahbubul Haq based on a lifetime of experience. Greater recognition of Mahbubul Haq and his achievements would go a long way towards providing us guidance on the architecture of domestic and international policies desperately needed today.
Published in The Express Tribune, February 22nd, 2016.