Political game-changers in economics

Book review of Money and Power: The World Leaders Who Changed Economics

Sir Vince Cable was Britain’s Secretary of State for Business in Prime Minister David Cameron’s 2010-2015 government and thereafter leader of the Liberal Democrats. He is an economist who warned of an impending crisis before the global economic meltdown of 2008-9. He has now written  Money and Power — profiles of 16 “world leaders who changed economics” over the past 250 years.

In his select group is Dr Manmohan Singh, on whom he has devoted an entire chapter and analysed his influence on the Indian economy. “What influenced his intellectual journey, which went from Cambridge Keynesian economics and Nehruvian socialism to market reform in partnership with the International Monetary Fund and the World Bank? How much of India’s recent impressive growth can be explained by those reforms?” Dr Cable asks.

He quotes Dr Singh as saying: “I first became conscious of the creative role of politics in shaping human affairs and I owe that mostly to my teachers, Joan Robinson and Nicholas Kaldor [at Cambridge].” Referring to his landmark liberalisation in 1991, Dr Cable says: “Although cause and effect are difficult to disentangle, the reforms were almost certainly a key factor in pushing up the growth rate for the next decade to around 6 per cent per annum.” He adds: “Between 2003 and 2011 India achieved the remarkable growth of 8.5% per cent per annum… It was at that stage the second fastest growing economy in the world.”

Dr Cable cites the dramatic fall in absolute poverty and infant mortality and rise in life expectancy and adult literacy; and catalogues among his other achievements the launch of the unique identification Aadhaar card, which led to benefits and food subsidies bypassing corrupt intermediaries, the rural employment guarantee programme and free and compulsory education between six and 14 years.

Regarding Dr Singh’s second five-year term as Congress prime minister, Dr Cable claims, he “was personally incorruptible, his ministers were not”. This is true. But the author has been slightly swayed by the Bharatiya Janata Party’s ballistic propaganda, which proved to be an exaggeration compared to improprieties being established in court. The late Delhi Chief Minister Sheila Dikshit was investigated on the purported 2010 Commonwealth Games scandal, but never charged in court; even Suresh Kalmadi is yet to be proven guilty. On “coalgate”, Jharkhand’s independent chief minister Madhu Koda was indeed convicted. He was a bedfellow of both the National Democratic Alliance and the United Progressive Alliance.

Money and Power: The World Leaders Who Changed Economics

Author: Vince Cable

Publisher: Atlantic Books

Pages: 400; Price: Rs 699

To Dr Singh’s credit, he initiated inquiries almost every time there was a whiff of wrongdoing, sometimes prosecution, dismissed ministers while inquests proceeded, although several were later absolved of misconduct. His salutary summary is: “Manmohan Singh was not the Deng (Xiaoping) of India; but, then, democratic India is not communist China.”

Deng deservingly figures in the elite band. Dr Cable writes: “Of all the characters reviewed in this book, Deng Xiaoping contributed the most in terms of his impact: the lifting of hundreds of millions of people out of poverty and transforming a backward peasant economy into a technologically sophisticated country with living standards beginning to approach those of the developed world.”

Other Asians in the pack are Park Chung-hee of South Korea, Lee Kuan Yew of Singapore and Shinzo Abe of Japan. In Dr Cable’s view: “There is little doubt that Park (a military leader who ruled from after a coup in 1961 until his assassination in 1979), personally, was central to the overall economic strategy and specific policies within it.” Under him his country’s economy expanded 10 times.

On Lee (who was prime minister for 31 years) he writes: “There are few better examples of a country and its economic development being defined by one political figure than Singapore and Lee Kuan Yew.” He then analyses Abenomics as being “the public face and personalisation of an economic strategy summarised in the imagery of ‘three arrows’: monetary and fiscal expansion together with structural reform.” He allocates equal praise to Abe’s finance minister and predecessor Taro Aso.

American presidents Alexander Hamilton and Franklin Roosevelt, the Soviet Union’s founder and leader Vladimir Lenin, British prime ministers Sir Robert Peel and Margaret Thatcher, German chancellors Otto von Bismarck and Ludwig Erhard, Swedish prime minister Tage Erlander, Argentine President Juan Peron and Polish deputy prime minister and finance minister president Leszek Balcerowicz make the cut in this book—based on impact, regardless of capitalist, communist or socialist ideologies. He includes Donald Trump as his final pick. “He appears to have identified with no recognised school of economic thinking other than his own,” admits  Dr Cable. He defines his economic nationalism as “not easily pigeon-holed as right or left but is united by its disrespect for agreed norms and rules —nationally and internationally”. So why incorporate him in the exclusive bracket? His response is: “Trumponomics might well outlast the man.”

Economics is an intricate subject. But with his experience in academia and politics the author has charted a median to interest scholars as well as intellectually inclined sections of the public. His historical thread stitching the influences of Adam Smith, Karl Marx, John Maynard Keynes, Milton Friedman and politically motivated protectionism is interesting.