Sick Systems: Why Economics Now Requires A Clinical Approach
US-based renowned economist and policy expert Jeffrey Sachs in his famous work The End of Poverty talks about the menace of poverty that has been making the lives of billions of people around the world miserable, destitute and unbearable for centuries. Starting from the basic definition of poverty, which according to him is the “lack of success of the masses to have the basic needs and facilities of life,” he divides this deprivation into three different levels: extreme, moderate and relative poverty.
Moving ahead, he discusses in detail the structural, social, economic, geographic and political factors that have contributed to economic stagnation – either directly or indirectly. The writer mentions that during the era of “economic growth” from 1800-2000, poverty, geographical location, political and economic policies of governments, demographic dynamics, cultural barriers, labour-divsion and debt-trap are some of the crucial causes that impeded the economic growth and development of various countries.
All these factors have created a huge gap between developed, developing and under-developing countries in Europe, Asia, Latin America and Africa. Besides, Sachs also blames the rich countries for exploiting the poor ones to complement their growth and development. The role the of the Industrial Revolution and, the subsequent, technological advancement, as he argues, cannot be overlooked. For him, the Industrial Revolution and modern technology have also enabled the rich countries to achieve remarkable economic boom in the last two hundred years.
After a very detailed discussion on poverty, its causes, and economic growth, the writer – based on his personal and professional experiences – moved on to give a pathway that can lead not only to economic development, but also eradication of Poverty in different African and Asian countries. One of the most important methods that the writer has proposed is “Clinical Economics.” He states: “I propose a new method for development economics, one that I call clinical economics, to underscore the similarities between good, development economics and good clinical medicine.”
In his concept of Clinical Economics, the author argues that a “crisis-ridden-economy” of a country can be treated the way a doctor treats his/her patient in a clinic. When a doctor sees a patient, he/she deals with several complex and inter-linked phenomena. First of all, a doctor knows that the body of human being is very complex. Abnormality in one part can lead to other diseases. Therefore, from the patient’s initial symptoms of a disease to their spill over affects on other parts of the body, and from the diagnosis process to medical ethics and codes: a doctor has to be very careful and sensitive about the case of his/her patient. Failure in any stage of the treatment could result in other critical abnormalities, or even death.
In the same way, the writer is of the view that poor and impoverished economies also share challenges with that of a clinical patient. Like a human being, economies are also complex systems. Jeffrey Sachs says that “like the circulatory, respiratory, and other systems of a human being, societies have distinct systems for transport, power, communications, law enforcement, national defense, taxation, and other systems that must operate properly for the entire economy to function appropriately. As with a human being, the failure of one system can lead to cascades of failure in other parts of the economy.” For example when the IMF, a global financial institution that helps countries get out of financial crisis, gives bail-out packages to developing countries, it often leads to inflation and price hikes in electricity, which may further lead to poverty, social chaos, political instability and economic recession.
Therefore, economic practitioners need to think very deeply about the structural causes that hamper economic growth, and give birth to Poverty. They also need to “prescribe appropriate remedies that are well tailored to each country’s specific conditions.” The author is of the opinion that if IMF wants to bring economic stability in a country, it has to look beyond the traditional causes of corruption, trade barriers and law and order situation, rather to keep in consideration geography, climate conditions, poverty trap, gender-gap and gender roles. For example, “for the IMF and World Bank to tell Ghana to liberalize its trade, balance its budget, and attract foreign investors may be fine and good, but it will be ineffectual if not combined with trade reforms in the rich countries, debt cancellation, increased foreign financial assistance for investments in basic infrastructure, and support to the West African region as a whole to maintain peace.”
Therefore, when a clinical economist deals with a crisis-ridden-economy, he/she has to keep in consideration important factors which include: the level of Poverty and the risk factors that could exacerbate it; economic policies which include management of resources, fiscal policy, human capital, infrastructure and taxation system; physical geography–ports, waterways, natural resources; demography; physical conditions such as climate change, rainfall, fertility of the soil and diseases–both human and plants diseases; cultural barriers; and geopolitics. All these factors are directly linked with one another, and mistreatment of one of them can result in economic disaster.
In a nutshell, the book is very pertinent and relevant for the economic experts and policy makers. It can help them understand the factors that hamper a country’s economic growth and development. Moreover, the book also contains various strategies and methods that can be harnessed to bring stability, eradication of Poverty and prosperity. In this regard, the “clinical economics” approach, which Jeffrey Sachs has propounded, is timely and relevant.