The flaws of modern economic system

Even with immense wealth accumulation and growth, the modern economic system has failed to resolve the crises of health, population and individual living standards, highlighted speakers on Thursday, as they discussed critiques and possible solutions at the third session of the fourth Post-Colonial Higher Education Conference, hosted by Habib University (HU).

Opening the panel discussion titled 'Repairing Economies', HU's Professor Aqdas Afzal introduced discussants Sanjay Reddy from the New School for Social Research and Giorgios Kallis from the Institute of Environmental Science and Technology, Barcelona.

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The panel started with discussions on the discipline of economics in terms of the age-old 'iron law of wages'- a principle that asserts that real wages are capable of catering to subsistent living. The only time, as Prof Afzal explained, this principle was violated was during the pandemic of the bubonic plague. Circling back to the current time, the academic posed the question, "Does this principle, in the age of Covid, remain true?

Following that, Kallis explained his works on the economic concept of degrowth.

"When I talk about degrowth or negative GDP [gross domestic product], I am often accused of speaking from a place of privilege," he said. "The concept is not in support of slowing down progress, but to understand why indicators like GDP are accepted universally. We must understand economic development in terms of its colonial inventors."

He pointed out that even when past colonies were freed, the movement of labour and resources did not stop.

"It merely took the form of development and growth," he added.

Critiquing the idea, he explained how growth and development were terms of the Western imagination.

The term GDP was coined in the 1930s and 40s by economists after the Great Depression in America, he said, adding that to say that the European and American economies would be thrice the size they were today by this century's end, was, in fact, akin to condemning the rest of the world that was yet to develop economically.

Discussing the ever growing economies of Europe, he proposed certain measures to slow down the massive wealth accumulation by the past colonial masters. Shorter work weeks, a universal basic income and carbon tax were some of the more radical policies he proposed.

Joining his fellow academic from New York, Dr Sanjay Reddy moved the discussion towards practical steps needed to slow down the economic imbalance in the world.

Ecological strains must be kept at the centre of any discourse on economics, he said.

The professor explained the need to realise the planet's limits in terms of capitalist developments.

Furthermore he stressed on the economic concept of discounting - an economic principle that says the present progress of societies can discount the future implications of growth.

As professor Sanjay explained, it was perfectly fine for capitalists to dump nuclear waste and participate in catastrophic climate change, as they discounted what the future implications of those actions were.

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Concluding the session, the professor touched upon the issue of linguistics.

"We have a list of words to explain the concepts of economic deceleration. Growth with distribution, community development, inclusive development, and now degrowth. We must move in the direction of practical actions," he stressed.

The professor also emphasised understanding economies in political and collective perspectives and the need for slowing down already prospering economies.

Published in The Express Tribune, March 26^th, 2021.