Managing the market

AT the height of popular discontent, when the French people were agitating for bread, Queen Marie Antionette of France had haughtily suggested that if the people could net get bread then they should eat cake. Such indifference, among other causes, led Marie Antionette, the daughter of Holy Roman Emperor and Maria Theresa of Austria, to the gallows.
One of the lessons of history is that leaders do not learn from history. It is, therefore, not surprising to read the statement of an adviser that the government does not have any role to play in controlling the abnormal profit extorted by the retailers from the captive public by charging a price that has little connection between the wholesale price and retail price of essentials.
Besides, the down-slide of international price of some commodities does not appear to have any significant impact on domestic price level. Despite daily coverage in the media of international, wholesale, and retail price of essentials, the Marie Antionettesque indifference shown by the honourable adviser, his reluctance to intervene in the "free market" mechanism, and his confidence in the inherent honesty of some of the traders is nothing but "impressive."
One wonders why Adam Smith and Karl Marx, being worlds apart in their economic philosophies, were unanimous in their belief that the principal objective of the capitalists was to maximise profit. It would be prudent to remind the readers that "for a capitalist system to evolve in an effective developmental sense through time, it must have two hands and not one: an invisible hand that is implicit in the pricing mechanism and a visible hand that is explicitly managed by the government through a legislature and a bureaucracy."
True, Adam Smith had advocated a minimalist role for the government because of his conviction that "little else is required to carry a state to its highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice."
But Smith's assumptions lose validity if costs and benefits are not fully reflected in the market mechanism. Imperfections have to be regulated by a political authority i.e. government. To deny governmental role in providing legal and regularity framework on the basis of Adam Smith's assumption that little is needed except "peace, easy taxes, and tolerable administration of justice" takes away the logic of people electing their representatives.
The ultimate goal of any government is to provide comfortable living standard and the social goods to the people along with security in developing countries and national security as demanded by the voters in the upcoming presidential election in the US (and also in countries like Pakistan which is being continuously assaulted by Taliban to destabilise the country).
It is saddening that our policy-makers, for the sake of political expediency, have not only compromised with their popularly supported campaign against corruption that has eaten away about three percent of our GDP, but have also disregarded World Bank's caution that an additional four million people have been pushed below the poverty line because of abnormal price hike, and the process of greater poverty looms large.
In this dismal scenario Bangladesh Rifles' opening of fair price shops to ameliorate the misery of the people must be commended. Unlike the Scandinavian countries, for example, our leaders rarely go to the shops (unless surrounded by cameras) and get market information either from their domestic help or those supplied by the Commerce Ministry.
Presumably they claim lack of security preventing their visits to the shops where ordinary people go. Little do they realise that Anna Lindt and Olaf Palme were killed when one went to a departmental store and the other went to a movie with his wife. Despite these tragedies, the Swedish leaders refused police protection lest they lose touch with the people.
It is equally forgotten that when Tony Blair's son was hauled up by the British police for a minor infraction of the law, the then British prime minister and his wife had to go to the police station to get the son released after due process of law was observed.
Nearer home, the chief minister of West Bengal reportedly lives in a modest apartment and not in a palace as our leaders are used to live in. Unfortunately, both the leading political parties found bipartisan support in the allocation and fixing a ridiculously low rent for the Nam apartments and in the purchase of duty free vehicles that some of the members of parliament promptly sold off at a profit. The reason behind the recapitulation of these known facts is to demonstrate how our leaders stray away from the people once they get elected on false promises.
Since a debate appears to be simmering about the efficacy of governmental intervention in the functioning of the market, one could recall the Office of Price Administration (OPA) instituted during the Second World War (John Kenneth Galbraith was chosen to administer OPA till 1943) to ration automobiles, sugar, typewriters, gasoline, coffee, shoes, meat, processed food, etc.
Two renowned economists reviewed Asian experiences in food grain price stabilisation in Bangladesh, Indonesia, the Philippines, Pakistan, and Thailand. They found buffer stock, price band, and export and import of food grains being commonly used as price stabilisation measures.
For Bangladesh, widely accepted to be one of the worst affected countries by climate change leading to decrease in cultivable land and increase in "environmental refugees," Wordsworth's poetic lines of "life is short and time is fleeting" would be most appropriate.
Undeniably with the demise of the Soviet Union and China's economic transformation, capitalism is the order of the day. Since laissez-faire economic system has fallen into disuse, capitalism designed to promote productive use of societal resources in order to meet the consumers' demand in the short term and to raise the living standard in the long run must have a regulatory framework to keep the greed of the businessmen in check.
If the authorities fail to do so, then agitations like Kansat and Phulbari may not be far away. If an army marches on its belly, so do the people. One hopes that the continuing inequity between the halves and the have-nots will be done away with by timely governmental intervention.

Kazi Anwarul Masud is a former Secretary and Ambassador.