The prevalent view is that prices are determined by supply and demand irrespective of the cost of production, with no limits factored in, giving rise to pre-capitalist mercantilism. It is the outcome of the narrow focus on economic growth that has put production-led socio-economic development on the back burner.

Structural adjustments carried out from time to time have been devoid of distributive justice that has retarded social progress. High rate of inflation and rising unemployment are its two outcomes. Economic growth strategy is not socially sustainable.

With excess money in the market finding no productive outlet, many find speculative investment in commodities, real estate, currencies etc a much better pursuit. So the supply side is “choked” by hoarding essential commodities and creating artificial shortages to make windfalls. This exposes the limits to which supply and demand factor can work. Beyond it, the markets become chaotic while one continues to hear that domestic market chain needs to be smoothened in the interest of consumers. Nothing happens. And investments are driven by speculative fever.

In market segments where competition is subdued and the writ of the oligopolies prevail, the weak regulators (or their absence) , cannot rescue consumers from the market manipulation. The greatest hurdle in this effort is the elitist state sold to an ideological dogma, devoid of innovation and creativity, and known as ‘market fundamentalism.’ The problem is resolved through imports of items in shortage, worsening trade deficit and accumulating foreign debts.

By design or by default, successive governments, particularly dictatorships (representative of renter class) have kept the regulators largely dysfunctional, whether it be Nepra or Competition Commission, creating inefficiencies in the economy, particularly in utilities as demonstrated by huge electricity distribution losses and thefts. While electricity supplies have become erratic, the increase in its tariff is unprecedented.

Its is an era of mergers, acquisitions and alliances, (with the assumption of too big to fail); giant corporations and banks at the commanding heights of the economy exercise powerful influence in formulating state policies.

In the absence of effective regulators, market pricing of products becomes too skewed, results in windfall from mercantilism rather the arduous pursuit of innovation, creativity, productivity and production increase. A system that tends to freeze production activities loses its social validity.

To make matters worse, monetary policy is designed to depress demand that leads to under-utilisation of installed industrial capacity, starves farmers of credit and slows down the pace of investment. What the country needs is a people-centred development not economic growth driven by market fundamentalism.

To stabilise prices, the mandate of the regulators needs to be reviewed. They should be empowered to ensure that business interests are balanced with those of consumers, to bring an end to the chaotic market behaviour. The regulators should be made fully autonomous, enjoy complete operational freedom and should be responsible to the parliament rather than the government.

The top officials of the regulatory bodies should be appointed by the parliament according to a well laid, sound procedure, probably similar to the mode of appointment of the superior judiciary.

But the most important aspect is what the Commission on Measurement of Economic Performance and Social Progress set up by French President Nicholas Sarkozy recommends: focus on the whole range of issues from production to wellbeing. Headed by Joseph Stiglitz , the commission had Amartya Sen as advisor and Jean Paul Fitouss as coordinator.

From production to wellbeing: “A key message, and unifying theme of the commission report, is that the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s wellbeing. And measures of wellbeing should be put in a context of sustainability.”

“Despite deficiencies in our measures of production, we know much more about them than about wellbeing. Changing emphasis does not mean dismissing GDP and production measures. They emerged from concerns about market production and employment; they continue to provide answers to many important questions such as monitoring economic activity.”

“But emphasising well being is important because there appears to be an increasing gap between the information contained in aggregate GDP data and what counts for common people’s wellbeing. This means working towards the development of a statistical system that complements measures of market activity by measures centred on people’s wellbeing and by measures that capture sustainability.”

“Such a system must, of necessity, be plural because no single measure can summarise something as complex as the wellbeing of the members of society, our system of measurement must encompass a range of different measures. The issue of aggregation across dimensions (that is to say, how we add up, for example, a measure of health with a measure of consumption of conventional goods), while important, is subordinate to the establishment of a broad statistical system that captures as many of the relevant dimensions as possible.”

“There are several dimensions to wellbeing but a good place to start is the measurement of material wellbeing or living standards.”