What does development mean today?

Well, thank you so much. I have to confess it is very rare that just the introduction is a hard act to follow, but that is the position I am in right now. I cannot tell you what an extraordinary honour it is for me to be invited to deliver this lecture, for many reasons which I think will become clear over time.

Many economists of my generation, we grew up reading the works of Albert Hirschman. Many of them, of course, we learned from, we recognized the insights; but we did not fully appreciate — at least I certainly did not fully appreciate — his depth, his profundity. And his remarkable ability to recognize the importance of context. Also (I think the term he used is self-subversion) to recognize where he had gone wrong and to say, well, all right, I have to change this approach and do things differently. Gustavo already mentioned his extraordinary personal courage, the huge role he played during the period of Nazism in rescuing many people, often completely unrecorded and he himself certainly did not want it talked about.

But, now when I read him today (and I read a lot of his work before this lecture, just as I reread some and found some new work that I had not read before) I realize how fresh it is. It is actually so relevant, as Mario has already mentioned, it is so relevant to our current times. So many of the arguments that he is making can be applied almost directly to the world that we are in today in terms of how we want to change it and how we want to understand the development process. So it is really not an accident that there is such a recent revival of interest in Hirschman's work, because, unlike a lot of the development economists of the mid 1950s and 1960s, his work actually retains a freshness and importance that is really quite unusual.

I also am really grateful that UNESCO has invited me because I think UNESCO is a hugely undervalued institution globally. It is so important to preserve our common heritage, to take it forward, to recognize the importance of cooperating for the advance of scientific knowledge, for the advance of culture in general, and with sense of a common humanity, in which we recognise and appreciate cultural differences. And yet like so many other international institutions, it is not just being ignored but also under attack really at the moment. So I am really delighted to be able to participate in something that UNESCO has organized, so thank you for that.

There is another more personal reason why I am really happy to be here today. Many decades ago, when I was a child growing up in Delhi in India, I did happen to know Eva Colorni (daughter of Albert Hirschman’s sister Ursula), who was a friend of my parents. I did not know of her connection to Hirshman at that time, and I do not think I would have even understood it as a child. But very recently when I was having lunch with Amartya Sen — he was married to Eva Colorni — he told me of this connection with Hirschman. And he also reminisced about the many long conversations he had with Hirschman in different parts of the world, including in their family home in Italy, where they had long walks and talks, when Sen felt that Hirschman hugely advanced Sen's own understanding of development and made it much more nuanced than Sen himself would have had at the time.

So, for all of these reasons, I really feel utterly honoured and privileged. I am sorry for this long introduction, but it is something that is really a huge honour for me. So, because of this massive opportunity that has been provided (and thank you all for coming out in such numbers, it is really delightful to see all of you) I would like to take up some of the issues that have bothered me over certainly the last decade in particular, but over several decades of thinking about these things.

I am going to think about how our vision of economic development has changed since “development economics” became a thing at all. And also, how do we measure progress? What do we mean by progress? How should we be measuring it? And then finally, the question that Mario asked, well, what do we do now? Where do we go from here, in this mess that we are in?

In terms of the evolution of the concept of development, when you think about the people whom we think of as the original economists — frankly we actually start too late with the usual Smith, Ricardo, Marx, and so on. There were many people who thought about what we today would consider “political economy” or the “worldly philosophers” well before them. And all of them were actually concerned with development: that was their central concern. They were looking at processes. They were looking at how economies evolved. And they were asking big questions about it. Who gains from these processes? How is the product distributed? What happens in that process? All of these were the big questions that they were asking.

But what we think of today as development economics is really a post-war phenomenon. We are thinking of the kinds of concerns that emerged in the discipline after the Second World War, when there were all these newly independent countries that wanted to develop, to advance in terms of material progress and so on. That was the period when it was really about increasing per capita income. The growth of the economy becomes development because it comes with a whole bunch of byproducts, as suggested by Simon Kuznets and various others. When the economy grows there will be structural change, there will be a decline in the primary activities agriculture, fishing, forestry, etc., an increase in the secondary activities in industry and manufacturing in particular. And then over time, as you reach higher and higher levels of economic growth and per capita income, there will be a shift to services.

This was how they conceived development as economic growth: that it would be a kind of natural process and within that there would also be more formalization of the economy. There would be more women entering the paid workforce. All of these were seen as things that would happen in the process of development. But it became evident that it did not always happen in the process of development, that yes, there are countries that show this pattern, Europe for sure, North America, Japan, but really these are the minority of countries. Especially as the 20th century proceeded, it became evident that it was really very, very few countries that showed this pattern of structural change. For a lot of economies, you did not get that expansion, you did not get that shift from primary to secondary to tertiary, you did not get the associated changes that he had suggested would occur in formalization or necessarily in the share of women in the paid workforce or any of those.

And so it became really a question of looking specifically at that question: how do you get structural change? A lot of Hirschman's work can also be seen as part of that tradition: how do you motivate that shift to higher value added activities? What are the kinds of pressures? And there were many different approaches. For example, the “big push” that Albert Hirschman himself was so much against, you know, the idea that you have to have one big organized push that will integrate a balanced pattern of growth. He did not think that was the way to go. He actually argued that in fact, unbalanced growth can generate a process of development more organically because it will encourage backward and forward linkages through more demand for certain kinds of inputs, more requirement for certain technological changes in different ways; as well generate downstream effects, the forward linkages that will enable more industries to come up simply because a certain industry will provide new things that could be used. If you interpret even the industrial revolution in those terms the way Hirschman described it, it makes a lot of sense. That is actually how the industrial revolution in England occurred and in Germany and subsequently in the United States, so it was in fact a very telling kind of argument.

These discussions (and there were many development economists who contributed to this, whether dual economies can work and sustain all of this) were still very much in the realm of asking the big questions about big processes. But from the 1980s, and really from the 1990s, we get a change in the patterns of “development economics”, rather than development itself. Particularly, it is interesting that the Berlin Wall fell in 1989 and the Washington Consensus was elaborated, talked about in 1989 — and it is not an accident that the two happened together. The two happen together because it epitomizes a major transition in the way some economists and policymakers looked at the economy.

I do not have to tell you about the Washington Consensus. Everybody knows it, so I am guessing all of you understand what it is oriented to. But it is broadly speaking, the idea that state intervention is not a great idea; you should really let markets do their thing. They are going to be more efficient. You do not want too much state activity in public provision. You certainly do not want state regulation. And you should allow markets to flourish and deliver what they want — and all kinds of other things will come with that. But associated with that, we actually got a change in the way economists looked at development. Because if you are letting markets do their thing, then what is the role for policymakers? And so you get a “miniaturization” of the problems.

As a result, we have seen from the 1990s onwards a progressive miniaturization, a search for particular tools. Development economics changed from looking at broad macro processes of structural transformation and so on, to only thinking about poverty alleviation. It got constricted to just reducing poverty. This became the broad activity of development economists and broadly speaking the development industry, which emerged out of foreign aid. It was all about poverty alleviation, and that poverty alleviation then was seen to be the outcome of ways in which you could tinker with certain social contexts that presumably generated poverty, as well as particular behavioural characteristics or particular institutional problems. So it was really much more “micro”. It was all about dealing with a specific thing in a specific location that became the concern of development economists. 

This is very interesting because once you start thinking only about poverty alleviation, it really assumes that the poor exist independently of the rich. And the poor exist because they have “issues”. They have maybe locational issues or education issues or food issues or health issues, whatever it is, but the poor are in a sense seen as being poor because either they are caught in a certain unfortunate context or they have patterns of behaviour that perpetuate their poverty. And so the whole idea increasingly became: well, what can you do to fix those specific things so that then they will stop being poor? It is a strange binary where you have these poor who at one level are not acted upon so much as that they are actors themselves who are doing wrong things in a way or they are caught in a particular world where they need specific inputs that will allow them to flourish (such as credit or food, or some other specific thing). And if you give them that then you solve that problem and then they will get up through their own bootstraps, so to speak.

This approach abstracts from all of the basic processes of accumulation, the systemic features. So you will never find discussions of class in there, for example. You certainly will not find discussions of broader social or ethnic categories, maybe some limited focus on gender, but more gender in terms of the specific social relations rather than the economic requirement of unpaid labour that generates this social difference. Because it ignores macroeconomic processes (because you are no longer looking at levels of employment or the patterns and structures that generate employment or do not and all of those things) you do not then think about absolute access to basic services for everybody. You are thinking about specific access to specific services that would alleviate poverty in that context. It is a very unidimensional notion of the poor: in a sense they are being given the dignity of being treated as subjects with independent decision-making power, but their poverty comes from their own particular circumstances and sometimes through flawed judgments about what they should do with their own agency.

The apotheosis of this is evident in what is today described as the “gold standard” of development economics, the randomized control trials. So forgive me if I express my unhappiness with the fact that this has become synonymous with what is seen as development economics today. There are many problems with randomized control trials as applied in the economic development domain today. There are ethical issues; there are conceptual issues; there are statistical and methodological issues that have been talked about by many people like Angus Deaton and many, many others. 

I am going to talk much more about the conceptual problem. Not only do you get a miniaturization (and you get this obsession with “nudges” to change behaviour), but there is this idea that you can take things out of context. Now one of the things that Hirshman was so good at is emphasizing the importance of context. That you really have to look at what is making that particular thing happen in that particular society and economy at that moment in time. It could be very different even in the following month, the following year, the following decade. All that is completely abstracted from. From that comes the idea that you can take some result from a randomized control trial and say that, okay, now we have found that out how to make people to pay for water, or some such thing. What was that extraordinary one in Kenya? That if you tell parents that their children will not go to school if you do not pay your water bill, then they start paying the water bill. This actually was an experiment, so you know you can take that and say, well, good, the great thing we should do now is go everywhere where people are not paying their water bills and say: now you better do this or your kids do not go to school. In other words, you know, there is a real problem in this, not just the miniaturization, but the idea that you can take these individual cases and then go everywhere and solve that problem.

Now, the funny thing is that this period of 30 years when this is what most development economists (thankfully not all, but many) were doing, this is actually the period when you had the greatest poverty reduction in history, which happened in China and which happened entirely through macroeconomic processes. It happened through a state led investment process with heavily controlled markets. Now I am not getting into the politics of it because I think there are many issues with the politics of it, but certainly if you look purely at what happened to the economy, this was an extremely state directed process in which there was a massive push of public investment and very, very high investment rates generated not only by direct public infrastructure investment in particular but also by state direction of finance. 

This is another thing that was completely left out of all of the discussion. States cannot, should not, interfere with financial markets in the classic Washington Consensus view. You should always allow those markets to function “freely”. But here is state directed finance and public investment generating the most dramatic economic transformation, not just in our own lifetimes, but in history, in terms of the rate at which it occurred.

Now, as I said, we can have concerns with the political economy of it, but that basic underlying feature is something that is actually true of all of the success stories of the 20th century, whether you are looking at Japan or South Korea, or some of the other medium successful economies like Malaysia. And certainly it is true of China. And that should have made us think, right? That should have made development economists say, well, you know, if all of these other things that we are doing should be reducing poverty, but they are not, is the answer to go do another five million dollar RCT on what will work in another context, or should we be actually looking at the macro policies that do deliver poverty reduction? 

I think what we have to do is to rescue development economics from this miasma which is created by the whole discourse on poverty alleviation. So that is the first proposition I want to put out, that we have to bring back the idea of the broader evolutionary institutional macroeconomic processes and stop thinking only about poverty alleviation. Recognize that the rich and the poor are two sides of a process that is occurring.

The second concern is really: when we consider development, then we have to then have some notion of progress. It could be material, it could be human. If you remember Amartya Sen, for example, was very involved in the idea of human development, which is really about the expansion of capabilities — to the point where he said development is about the freedom to have capabilities, to expand and enlarge your capabilities. How do we then monitor progress? And here I would argue that once again we have been led astray by what we are measuring, and by our obsession, particularly, with measuring the gross domestic product or GDP as the fundamental indicator of progress.

Now, in fact, now everybody knows GDP is a very bad measure of progress. Everybody knows it because it measures a whole bunch of things that should not be included. For example, financial services which earlier were entered as a cost are now a part of GDP. And this is why the FIRE sector (finance, insurance, and real estate) is the fastest growing sector in many advanced economies but also in many developing economies today and contributing hugely to GDP, whereas it does not actually contribute necessarily to material welfare. But it is not just that GDP brings in lots of things that do not really contribute to material wellbeing; it also leaves out many essential things. It leaves out essential care work — why? Because so much of it is performed in unpaid fashion in homes and communities without generating money because it is not paid for. So it is not just economically undervalued, it is socially undervalued. In fact, in many, most countries it is not even recognized. In my own country if you are doing that, you are classified as “not in the labour force”. Because you are just doing unpaid work at home, it does not matter that you are working 14 hours a day, you are seen as not really working because you are not paid for it.

Remember that GDP was developed by Kuznets in the immediate aftermath of the Second World War as an instrument to understand the war economy. And we are still using this. Our system of national accounts has done a little few tweaks, but it has not really budged from that, which is absolutely extraordinary when you think about it. At most, people will say, well, let us add something or let us deduct something. So people talk about bringing in “natural capital”, which I think is a dreadful idea because nature is not capital. I will come back to that because it is a very important issue.

Now, because everyone recognizes this is a really bad measure, we do have many attempts to move beyond GDP. In fact, “beyond GDP” is now a specific initiative of the United Nations as it well should be, and we have got many alternative measures. In a way people would say look, the sustainable development goals are like that. But there are 17 goals, 169 targets and 231 indicators. So seriously, everybody is going to take note of all of those? 

No, that is why governments end up looking at GDP. That is why everyone is still obsessing about 4.9 per cent versus 5.1 per cent rate of growth of GDP, whereas I assure you, if anybody went and looked at how those numbers were arrived at, nobody would have any faith even in that estimate of growth. I can tell you about India, where I have looked at this in some detail, all these numbers that we keep producing (6.8, 7.1 and so on) — everyone takes them seriously. But they are mythical, because we and we are making so many assumptions, presumptions. All kinds of things are going in there to come up with this one number, and then everybody takes it as gospel, as a real indicator of the real state of the economy. 

We have had other attempts. The Stiglitz-Sen-Fitoussi Commission, which was based here in Paris, in fact made it very clear. They said that what we measure determines what we do, and so it is very important that we measure the correct things. They also provided a bunch of indicators once again, a lot of indicators, maybe again too many. There are now other attempts. There is the Beyond GDP framework of the UN, and I know that there are two people who were involved in the Fitoussi commission from the OECD who have done excellent work on this, who are part of that effort. 

There are some very good economists who are thinking of the idea, which is not to generate massive numbers of indicators, but to generate just a few that will give us an idea about the real state of the economy. So for example, I was part of a UN board where we had also suggested five indicators. One of them I think it is a very important indicator that is not really taken seriously and not measured in many countries: we called it the labour market indicator, which is the median wage multiplied by the employment rate. That is, the median as the middle of the wage distribution, because the average, the mean wage tends to go up because of some getting very high salary (say the bankers at Morgan Stanley or their like), but the median wage will give you an idea about the average person in a sense. The employment rate tells how many people actually get paid employment. That is a useful indicator because it tells you about the real state of the labour market.

Just to give you an idea, I looked at two countries, the United States and India, and over three decades in the United States per capita income goes up significantly. The labour market indicator is flat. It does not increase at all. Now that tells you something. That can also explain a lot of the contradictions that we are seeing today, that there are people who are being told “you are much better off”, and they say “no, we are not”. Because that is what they feel, that is what they recognize, that for three decades they have not experienced any improvement, and many of them have more fragile employment as well. 

In my own country, India, seen as one of the great growth success stories of the world, our per capita income has risen dramatically. Again, there are many problems because the GDP measurements also keep changing, and are very easy to manipulate because it is such a complex enterprise that governments can fix these numbers to suit themselves. So we have very sharply dramatic growth rates. And since we have not had a census for 14 years, we do not even know what the population is, but we are guessing. So our “per capita income” keeps growing with massive increases. We are rivalling China now in increases in per capita income. But our labour market indicator is falling. It is worse. The average worker is worse off. If you tell most people that, they say it cannot be, but that is the reality. Because we are not measuring that, everyone thinks India is an economic success story or that some other country is a success story. 

So really what we measure matters hugely. The idea is to just take a few indicators like that, not a huge number — kind of like a dashboard. I mean, it is like driving a car. You do not need only the speedometer. You also need to know whether you have enough fuel in the car, whether your tires are OK, etc. You need some basic indicators. So we need a dashboard that will allow inter-country comparisons, but also will capture some of the essential trends that any country needs and the people need to know about. And if we did that, we would probably get very different politics as well. Because when you get high per capita GDP growth, then people think “the economy is doing really well, maybe I am just unlucky that I cannot get a job and my wages have fallen”. So there is not that wider public  recognition that there are serious problems with the way the economy is going.

Since I am on a bit of a rant about indicators, let me also mention a few other things that come from this obsession with GDP. There are these concepts that we throw around like that all the time as if they are written in stone, believing that they are completely scientific. Productivity is a classic one. We are all obsessed with productivity increases. What is productivity? Output per worker paid, measured output. So, for a country, it is GDP per worker. Now I already told you GDP is highly problematic; and workers’ measurement is also problematic, because we do not count all the workers, we do not count the unpaid workers without whom societies would not exist. Forget economies, the society would not exist without the unpaid care work that is going on. So it is a problematic indicator. But also think about it. The way you measure productivity today, who are the most productive workers on the planet? Mr. Musk, for example with the very high salary he is getting, in terms of “output per worker”, he is presumably out there on top. The bankers of Wall Street, probably also among the most “productive” workers in the world. And who are the least productive workers in the world? All of the unpaid care workers who get zero income for many hours of work. Zero means no productivity. 

So of course, paid care workers are similarly very underpaid. We suddenly woke up to this during the COVID-19 pandemic, we said my goodness, they are getting very low pay actually — something we had not bothered to look at before. So the notion of productivity is a deeply problematic one, conceptually as well.

The other concept we throw around a lot: efficiency. What on earth is efficiency? There is a market determined notion of efficiency — which, if I could get into the concepts that are underpinning it, you would all go home in disgust. So I will leave it there, but it is another problematic term that we throw around without thinking. 

Finally, just one concept or metric that we use a lot for international comparisons of country incomes. Increasingly the trend in the international organizations and international negotiations is not to use the market exchange rates, which are the actual exchange rates, the exchange rates everybody faces. Instead, we use the purchasing power parity exchange rates. And it is so common that we stop thinking about it. The World Bank gives you poverty estimates in PPP. They give you income estimates in PPP. For many data of the international organizations, you cannot get non-PPP data. Per capita income, the World Bank will publish only the PPP estimates, not the per capita incomes in actual market exchange rates. But once again, there are many methodological, empirical, and conceptual problems with PPP. I could spend an hour telling you about all those problems, but the conceptual problem is also very important. Conceptually, how does a country have a higher PPP exchange rate than the market exchange rate? Only when they have very low paid workers. That is the only way you get that difference. So it is like a double whammy for those workers, you know, you have a low wage, but then you are told your wage is not that low because you can buy cheap goods and services from other low paid workers. There is a circularity of the argument, but more than that, therefore, what it does is that it overstates the incomes of poor countries. That has a huge role in international negotiations, which affects what is seen as climate responsibility, what is seen in terms of other kinds of requirements and responsibilities, and so on. So it is a deeply problematic concept, and yet we are all using it. By the way, it is completely artificial. You will never be able to use a PPP exchange rate. I would love if I could exchange Indian rupees to the euro for twenty for one instead of ninety for one. That is the difference, but unfortunately I cannot. And so countries have to deal with the existing market exchange rates, but then they are classified into categories and treated as if they are in the world of the PPP exchange rates,  even though PPP is an entirely synthetic imaginary construct that has no bearing on reality.

What can we do about all of this? Obviously we have to drop a lot of the problematic measures that we have just got used to using, which we use now out of inertia. I do not think it is always political. I do not think it is always an exercise of control and domination. A lot of it is just inertia. But we have to move out of that and actually recognize the world as it is and then address our issues and common concerns.

As Mario and Gustavo both mentioned, Albert Hirschman himself lived through very tumultuous times. In his own personal life he experienced a lot of these tumultuous times, and he contributed to making things better as much as he could in a very personal way. But somehow, I think that those times, challenging as they were, were in a way more optimistic than the world we are in today. Today we feel confronted with monsters and we feel that we have exhausted the different avenues that we thought we knew about, the certainties we had when we were younger and so on. Again, that is why I find Hirshman so fresh because he is arguing against those certainties, both the certainty of optimism and the certainty of pessimism. He is basically saying no, there are all kinds of things going on, and often change comes in ways that you do not expect, you do not recognize, and that you are not anticipating it, but it will come, and you have to therefore be ready to adjust and be flexible to that change.

Having said that, we have to recognize it is really a perfect storm for the global majority countries. They are getting shocks from every possible side, the countries with whom Hirschman himself would have been concerned, the ones who are today classified as the developing world or less developed or lower income, middle income, whatever you want to call them. They are facing the impacts of climate change which they were not largely responsible for. Many of them are facing massive debt problems. Many of them are facing the impact of very dramatic capital flow shifts because of things that they did not do, because not because they have been fiscally profligate or anything, but because the rich countries have changed their macroeconomic policies. They are facing domestic instability because of the massively increasing inequality. And they are stuck with a very outdated international economic architecture, outdated in so many ways. 

The trade architecture, well, I would have said it is outdated except that it is also already over with! It has been overtaken: somebody has taken a sledgehammer to the trade architecture. Some of us are still in denial and saying we can go WTO and so on, but we cannot pretend for much longer. So that trade architecture, which was in fact stifling a lot of developing countries, is over. The financial architecture persists and it is as tight and oppressive as ever, so there are countries in deep debt who have already repaid the principal amount several times over, but they are still in deep debt because they had very high spreads on their bonds because they are more “risky”. So they are forced to pay at the costs of their citizens. In the current trade deals that we have seen, they are facing a massive political demands in return for a slightly higher tariff than the one they faced earlier. They are facing so many different threats, including new pandemics potential. We already have seen the emergence of the Ebola virus and various other things, and we know that newer epidemics are very likely to come. We know that climate change is already impacting agricultural productivity. It is already forcing some migration within and between countries. We know that migration itself is becoming much more difficult and we know that the taxation architecture, which is supposed to at least be neutral, is actually actively preventing countries from being able to tax their own rich elites and multinational corporations at the same rate as everybody else. So developing countries are facing this perfect storm.

Because of this, also we are operating in a world of dramatically increased inequality. This inequality exists between countries, but it is also and much more importantly within countries — so we get dramatically increased social tensions. These do not always express themselves in the way that they did with the Occupy movement, the ninety nine percent against the one percent. Increasingly they do not because, that seems to be futile — so you turn against each other. You get at people who are weaker than you. You go after migrants or people who speak a different language or people of a different religion or women or whatever. You pick on each other rather than on the system because the system seems too large and impossible to deal with. So that is the bad news.

Is there any good news? I would say there is. And again, this is kind of channelling Hirschman, which I dare to do because I have been reading a lot of the stuff he wrote recently. This is not the cliche that every challenge is an opportunity, it is much more specific. Think of it. What were the myths we were fed as the developing countries? We were told that export-led growth is the way to go. It is the only way you can expand your economies, do not even try to focus on the domestic market or the regional market. You have to be based on export-led growth, getting foreign direct investment or borrowing to create those productive structures to cater to the rich countries. That myth has been blown to smithereens. And yes we can thank Trump, or blame Trump, for that — but it is no longer a viable option. And let us not pretend that other rich countries are not following Trump. It is happening. They are quiet about it. They are politer about it, but they are doing the same thing. So that export-led growth model is dead. That is a good thing, since the export-led growth model made us treat employment and wages as a cost, not as a potential for our own domestic market expansion. That made us focused on deregulating labour markets, on deregulating our environment, on extracting as much as we could from everything in that urge to generate exports because we were told that is the only way we could grow. 

And yet out of all the countries who did it, which is practically every one, maybe a handful succeeded: China, Vietnam. Just a handful. And yet the rest did not. Even current “success stories”, Indonesia and so on, have falling real wages. So let us think back and say no, that is not necessarily the way to go. Of course, you have to export because you want to import, but let us think of other ways to grow which use our domestic markets or our regional markets, and that means better conditions for people. That means providing more income for people and so on. So that is the first good news.

The second good news might be more controversial: the collapse of foreign aid. Now here, definitely it was a shock and definitely it has led to some horror stories. I mean, UNAIDS, the money being cut, WHO, the money being cut, it is obscene and it is shocking and it is leading to people dying. Yes, absolutely. But the broader issue is ODA too was in fact a broken model. We have to recognize that a lot of ODA was deeply geopolitical in its orientation. It went to countries that would be allies. It went with very many conditions, and it often did not really deliver. It was all focused on this poverty alleviation stuff and that means different — and successive — development fashions. First it was just liberalized markets, then it was microcredit, then it became cash transfers. So countries were buffeted by that. They had to do whatever was the latest fashion, and these did not even deliver in terms of actual poverty alleviation. 

So maybe it is a good thing that that model is over. Actually, not maybe, it is definitely a good thing that model is over. Why? Because now we can actually start thinking of genuine international cooperation as the way to go. That means, for example, at the very least a model of global public investment where countries recognize that there are global public goods that matter for everyone and global public bads like climate change that are going to hit you independent of your passports and your visas. So countries contribute whatever they can to meet that requirement, and the money is distributed according to those recognized needs for the world as a whole. Now this sounds utopian in today's world, but you know it is not actually impossible. There are now more and more countries actually signing up to this in specific areas. In the several platforms for action which emerged during the financing for development conference in Spain, we had the emergence of many new platforms which actually were specific areas of global public investment that countries felt we all need to do this together. I am hoping that more and more countries will do that, because we all hope humanity steps back from the brink.

So, in a sense, we should welcome the death of paradigms that were leading us nowhere. Mario is right. I do not think Hirschman would have loved the term paradigm, but here I am saying let us not have that paradigm. Let us junk it. Let us move beyond it. And once we accept that, then we can have an entirely different way of how we treat the economy and what we want to do about it. And that means an even bigger somersault. It requires us to change the way we look at the economy. 

Now what do I mean? You know, always we are told that we have to do all these things because they are good for economic growth. You have to improve health because a more healthy workforce is more productive and that is good for economic growth. You have to get more women in the workforce that will increase your GDP by so many billions. You have to do educate people because the more educated workforce will give you higher GDP. Supposing we pose it the other way around: what do we want for our society? Do we want health for all, education for all, access to nutritious food for all, housing for all, dignity for all, access to good quality employment for all? If these are the things we want, what is the economy that will get us there? It is very clear that the economies we have today are not getting us there. So we need to design our economy to meet our social needs within environmental and planetary boundaries.

Now if you do that, everything changes. It means you can no longer think of care work or nature as these bottomless pools from which you can simply extract without cost. You have to recognize that there are costs. You have to reduce the reliance on unpaid care work and the extraction from nature, or do it in ways that are sustainable and which reward the workers who are doing it, not necessarily only in money terms, but in so many different ways. You have to recognize the importance of universal public services of good quality, public services of good quality, which reduces fragility and so on. You have to recognize the importance of generating resilience because we know there are going to be shocks. We have messed up this planet so much there are going to be shocks. So we have to build systems that enable resilience for everyone, not just for the few who can rush off to Mars or can go to New Zealand in their bunkers. And so we really have to change the way we look at the economy and then we get a whole set of very different policies. I could elaborate at length, but I should not go on forever.

I just want to put in one final note. It is possible to argue that the current global conditions are completely against all these forward looking strategies. But let us also remember that through history, periods of instability, chaos, disorder have also been periods when global patterns that seemed to be set in stone have changed. Not everywhere necessarily, but certainly in some countries. I mean, autonomous industrialization from the early 19th century occurred in periods of global instability. And social experiments also have occurred when you do not have the straitjacket of a dominant epistemological approach, and you do not have the pressure of international institutions that say no, you cannot do that, not allowed. So there are possibilities opening up. It is true that we can have apocalyptic visions, but you know, they are not necessarily helpful or accurate. And I am quoting now from Jeremy Adelman, Hirschman's biographer: “The point is not to predict a demise. Hirschman was far too seasoned in his struggles against declension to give in to it now. The point is to imagine a different way to argue.”

Thank you.

This is a translation of the article published in The Grand Continent. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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