Is economics passé? On Wahiduddin Mahmud’s new book, ‘Markets, Morals and Development’

As the world nears the second quarter of the 21st century, some of the nagging questions we still face in the world of socio-economic development are: will the influence of economists increase or wane? Will economics be successful in eradicating extreme poverty, or will we continue to live with extreme inequities in the distribution of income and wealth, unhinged consumption, and rapid depletion of Earth's meager resources, nearing the edge of social, political and environmental catastrophe? These are big questions, which should concern all economists and world leaders, and the answers depend a great deal on economists themselves.

One of Bangladesh's most prominent economic thinkers, Professor Wahiduddin Mahmud, has resolved to do so in his book, Markets, Morals and Development: Rethinking Economics from a Developing Country Perspective (Routledge, 2021). In less than 100 pages and over six fascinating chapters, Mahmud asks and provides answers to a number of complex questions which confront humanity today, especially the residents of the "less developed" or developing nations.

Professor Mahmud, who studied Economics at Dhaka University, earned top honors in his undergraduate and graduate degrees. He then went to Cambridge, England, to pursue a PhD in Economics and upon returning, joined Dhaka University as a professor. Besides publishing a myriad of articles and books on a wide range of topics, Mahmud has taught as a guest professor in a number of esteemed institutions, including Cambridge, and has conducted research in a few global institutions, including the World Bank and IFPRI. In 1996 he published The Theory and Practice of Microcredit (Routledge), co-authored with SR Osmani.

In this new book, which is short but densely argued, Professor Mahmud makes a number of important points. First, he recognises that modern economics, developed primarily in American and British universities, has attracted criticism for the perceived failures of capitalism and free-market across the world—persistent poverty and growing inequality in income and wealth rampant between the North and the South. Second, pointing to the issue of unprincipled consumption, especially in developed countries that endanger Mother Earth, he demonstrates society's utter disregard for the environment, ethics, and morality.

Modern economic theory—developed in the West—the writer believes, has much to gain and nothing to lose by focusing on the problems of developing nations, where millions of poor reside and have yet to enjoy the fruits of modern civilization; this, he posits, is a win-win proposition. A focus on development economics will yield results that will benefit economic theory and practice and help improve the welfare of the citizens in resource-poor countries. He illustrates a few examples of how ideas developed in the context of problems faced by least developed countries (LDCs) have, in fact, enriched theory and policy in mainstream economics. He mentions the work of Joseph Stiglitz and George Akerlof, both Nobel laureates of 2001, along with Michael Spence, whose work was informed by rural credit markets in South Asia, and the market for milk in Delhi—problems one can find in all developing economies.

The reason behind his optimism, he points out, is that economists have developed a set of analytical tools over centuries that can be wielded to solve developed nations' problems, especially in developing countries. For example, the concepts of opportunity cost, sunk cost, or comparative (vs absolute) advantage are not just clever intellectual gimmicks but powerful concepts which can lead to clear-eyed and often unexpected findings and solutions to real-world problems.

In chapter five of his book, "Amartya Sen's ideas and the Bangladesh Story", Mahmud reviews and focuses on a fraction of Sen's writings which deal with human development and social inequalities, including the concept of freedom and public reasoning. Mahmud writes to understand the application of these concepts to achievements and challenges Bangladesh has faced in its 50-year long journey. Sen has written influential books on subjects such as famines and the measurement of poverty, making foundational contributions. These are all highly relevant issues with many moral dimensions. The writer highlights that Sen is among the few economists who have effortlessly straddled the divide between the problems faced by the developing economies and those faced by policymakers in high-income wealthy nations.

Mahmud also addresses the question of social business (SB)—a term reportedly coined by his colleague, Professor Mohammed Yunus, to describe a mission-driven organization, which is a business, but one that does not only focus on profits, ignoring human welfare. The writer draws attention to the idea that to exist and perpetuate to serve humanity is business-like in ensuring that all of its fixed and operational costs are fully covered, leaving a surplus, which is, however, reinvested instead of enriching the initial investors and shareholders.

As Bangladesh celebrates its semi centennial anniversary in 2021, this book by Professor Wahid Mahmud is a reminder that the flow of ideas from the West to the East can be reversed. Intellectuals and practitioners in the East are already contributing new ideas to improve disciplines such as economics, especially through the study and practice of economic development. Practices such as micro-finance, or micro-lending, were born and perfected in a resource-poor nation like Bangladesh, but are today practiced across the world.

Munir Quddus, PhD, is a professor of economics and dean, College of Business at Prairie View A&M University. He can be reached at [email protected].