The Human Development Revolution
Because of Western dominance, brilliant thinkers from the East get very little attention in global media. Even though brilliant economists from East Asia and China have created globally acknowledged economic miracles in their countries, none of them have received a Nobel Prize. On the other hand, Western economists whose theories were demonstrably in conflict with the events that took place in the global financial crisis – like Lucas, and Fama – have received Nobels. One of our greatest unsung Eastern Heroes is Mahbubul Haq. My recently published article  describes the revolution he created in economic thought.
Goethe starts his famous East-West Divan with a poem about the journey (Hegire), both physical and spiritual, from the West to the East. In this essay, we consider the analogous journey from Western to Eastern conceptions of development. This involves switching from viewing humans as producers of wealth, to viewing wealth as a producer of human development. To start with the Western conceptions, both Adam Smith and Karl Marx defined economic growth as the process of accumulation of wealth. The range of diversity of Western thought is bounded by the Left-Right spectrum. Ideas on which both extremes agree command wide- spread consensus in the West.
Consequently, a core concept of modern economic theory is that wealth is the means and ends of the process of economic development. Unfortunately, due to the dominance and influence of Western paradigms, this concept has been widely accepted and adopted in the East today.
Mahbubul Haq was indoctrinated into the Western development paradigm which gives primacy to wealth at leading universities, Yale and Harvard. He got the chance to apply these economic models as chief economist in Pakistan during the ’60s. However, because of his Eastern upbringing and heritage, he was able to recognise the murderous message at the heart of the cold mathematics of the Solow-Swan growth models. These models focus on savings, created by reducing present levels of consumption, as the only route to the accumulation of greater future wealth.
Mahbubul Haq realised what is not mentioned in the economics textbooks : obsession with the production of wealth requires us to use the sordid and cruel tactic of obliging workers to produce wealth while refusing to allow them to consume it – in order to purchase more machines and raw materials. He was clear-sighted enough to recognise the consequences of these policies : wealth did indeed accumulate, but it went into the pockets of the 22 richest families, without providing any relief for the misery of the masses.
Today the global application of capitalist growth strategies has led to a dramatic increase in inequalities both inside nations and across nations. One horrifying statistic pertaining to inequality on our planet is that the 13 most wealthy individuals currently possess more wealth than the poorest half of humanity (i.e. 3.5 billion).
Dissatisfaction with state-of-the-art Western growth theories led Mahbubul Haq to a revolutionary insight, taken from the heart of the traditions of the East, and having no parallels in current Western economic theories. Instead of capital, Mahbubul Haq placed human beings at the centre of the process of
economic growth, returning to the ancient wisdom that “human beings are the means and ends of development”. Although labelled a heretic for going outside the boundaries of contemporary economic thought, the pragmatic genius of Mahbubul Haq sought to minimise the differences and create bridges to conventional thinking in order to achieve acceptance for his radically different approach to development.
His Human Development Index (HDI) was a master stroke, combining two inherently incompatible conceptions of development in a compromise which ceded ground to wealth in order to create international visibility for poverty. His friend and classmate Amartya Sen was reluctant to accept the HDI owing to certain inherent flaws in this marriage of fire and water, but eventually agreed to its practical necessity. The pragmatic approach of Mahbubul Haq paid off handsomely when the HDI measure achieved global recognition as rectifying major defects in the standard GDP per capita. Widespread acceptance and use of HDI has led to a radical change in the discourse on development, by adding poverty, health, education and other soft social goals to the pure and simple-minded pursuit of wealth. The revolutionary ideas of Mahbubul Haq have led to improvements in the lives of millions, as global consensus develop- ed on the embodied social goals.
The Human Development approach of Mahbubul Haq was carried further by Amartya Sen, who defined development as the freedom to develop human capabilities. This notion, closely aligned with Eastern thought, was so alien to orthodox economists that they rejected it. Consequently, a new human-centred field of development studies emerged, which combined many streams of
dissent from orthodoxy. Unfortunately, leaders at the helm of policy-making in the poor countries of the world are trained in orthodox economic theories, and have not assimilated the radical lessons of Mahbubul Haq, acquired from bitter experience. The paths to genuine development lie open, but with their backs to the doors, they are unable to see them.
Conventional growth theories create the mindset that the game is all about wealth creation. We will worry about our poor population only after we acquire sufficient wealth to feed them. The poor are a burden on the development process because providing for them takes away from money desperately needed to finance development of infrastructure, purchase of machinery and raw material, and industrialisation. We cannot afford to feed the poor, if we want to grow rapidly. The human development paradigm stands in dramatic contrast to this currently common mind- set among planners. Instead of utilising humans to produce wealth, we utilize wealth to develop human capabilities. Our human population, our poor, are our most precious resource. This point of view receives strong support in the empirical findings of a recent World Bank study entitled “Where is the Wealth of Nations?” The study finds that the wealthiest nations are rich because they have spent money to develop their human resources, and not because of natural resources.
Thus, instead of being a burden, our poor are our most efficient means to development. If we use available wealth to improve their lives, to empower them, to educate them, and to provide them with the support they need, they can rapidly change the fate of the nation.
Furthermore, they are also the end of the development process – that our goal is NOT to produce more and more wealth, a la Adam Smith and Karl Marx – but to ensure that our people lead rich and fulfilling lives. If we use our energies to achieve this goal, then we have already arrived at the destination – we do not need to wait for a distant future where sufficient wealth will accumulate to enable us to take good care of our people.
1. The Express Tribune, 20 May 2017
Source: WEA Pedagogy Blog https://weapedagogy.wordpress.com/2017/05/21/the-human-development-revolution/
Dr Asad Zaman is currently vice-chancellor of the Pakistan Institute of Development Economics, and was previously Director- General of The International Institute of Islamic Economics, International Islamic University, Islamabad. His email is: [email protected]