Strange economics

Published August 25, 2020
<em>Published in Dawn, August 25th, 2020</em>
Published in Dawn, August 25th, 2020

ECONOMICS is strange, full of odd things that are rarely challenged. It is a bit like religion that one is supposed to accept without asking any questions.

When I was studying the subject in college, we were told that there were three factors of production — land, labour and capital — of which the first was fixed and the other two were mobile. In simple terms, this meant that while your piece of land stayed where it was, your body and your money were not rooted in the same way.

Out of college, one got to appreciate the difference between something being mobile and the same thing being freely so. Thus, while labour and capital are technically not fixed to one place, their movement can be restricted in any number of ways.

The movement of capital can be constrained by border controls and limits on convertibility. There was a time when many countries made it very onerous to convert local into foreign currency and to export or import money. Browsing through my late father’s files, I was struck how many letters he had to write, how many forms he had to fill, and how many trips he had to make to the State Bank to get the few pounds that were needed to finance my year abroad during which I picked up all the myths about economics.

Here we see the politics of power and powerlessness.

Restrictions on the movement of labour are much easier to grasp. Much as I always wanted to go to Goa to work, it was out of the question. An invitation to teach at the IIM-Calcutta withered on the vine. Even an acceptance at a conference in Manipal was nixed by the Ministry of External Affairs.

Countries exercise strict control on who they let in from other lands. Even within countries there can be restrictions on movement as there were for non-Whites in apartheid South Africa and as there still are in China with its internal passport system known as hukou. Cities are so clean in China because poor villagers are not allowed to move there at will. In Pakistan, there are many roadblocks requiring identification before one is allowed entry into the cantonment areas. I recall a time when I was denied permission to visit my ancestral home in another city because I did not have the requisite NOC to enter the locality.

Now consider what has been happening over time. While constraints on the movement of capital have been progressively relaxed, those on that of labour have been progressively tightened. There was a time when Europeans just picked up their bags and moved to Argentina or Brazil and people like James Joyce and D.H. Lawrence decided they had had enough of the parochialism of their native lands and would rather live in France or Italy or Germany.

Such free movement is no longer possible with rulers like Trump further closing their borders to most outsiders especially those from “----hole” countries and England opting for Brexit to keep out eastern Europeans. Meanwhile, capital is circulating around the world at hyper speed, flowing in and out at will. Anyone attempting to restrict unlimited transfers, like Mossadegh or Allende, is deposed by the intelligence agencies of countries displeased with such restrictions.

Here we see the politics of power and powerlessness. The small minority that owns the bulk of global capital exercises its power via the International Monetary Fund, the World Bank, and the World Trade Organisation to enforce rules that ensure its capital can roam freely in the pursuit of profit. Meanwhile, the vast majority that owns nothing but its labour is powerless to achieve the same mobility for its human capital and is kept out if it tries by policemen like Home­land Security.

Thus while ‘hot’ money zips in and out across borders, ‘cold’ bodies are often found dead in refrigerated vans or in capsized ferries in freezing waters. If lucky, migrants endure long confinements in refugee camps before being sent back where they tried to escape from.

There was no mention of the concept of power in any of the college courses in economics and although it was never stated, it became clear that the system the subject extolled privileged banknotes over human lives. The system did not exist to serve human beings; human beings existed to serve the system run by capital. Meanwhile, all courses in politics lauded liberal democracy in which people were sovereign and dictated policy by virtue of the power of an equal vote.

If that is indeed the case how come a tiny minority that owns capital always gets what it wants and the vast majority with all its votes ends up empty-handed? Is it one-person-one vote or one-dollar-one vote?

I am sorry I made my father use his hard-earned money for me to learn all this rubbish.

The writer was a professor of economics at the Lahore University of Management Sciences.

Published in Dawn, August 25th, 2020

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