Tuesday, June 25, 2024


Dhaka Tribune

For Bangladesh, socialism is not the answer

We have our grand question -- what makes people rich? We also have our answer -- not socialism

Update : 27 Mar 2023, 02:57 AM

What happened in 1750? Well, we know what happened -- roughly -- in 1750 in Bengal: The British arrived. So, sorry for that on behalf of my forefathers (none of whom were involved, my ancestral involvement in the subcontinent starts post-independence). 

However, the grand -- and according to the American economist Brad DeLong, only important -- question in economics is: “What the hell happened in 1750?”

This, sadly -- and like bad jokes -- requires some explaining. 

Economic history, our evaluation of living standards in the past, is dominated by the work of Angus Maddison. It's possible to download his estimations of how our ancestors lived. What, approximately, was that living standard? 

We end up measuring GDP per capita, which isn't a perfect guide. We adjust to modern dollars, not a perfect process. We include the value of things grown at home -- someone eating rice from their own paddy. We do the best we can in an imperfect world. The answer is that our ancestors all lived much more poorly than we did.  

DeLong's version of those estimates says about $600 a year. That's $600 modern dollars a year. That's also about the same as the World Bank's estimate of absolute poverty, that $1.90 a day. 

Yes, it's entirely true that this level of poverty still exists for some in Bangladesh, just as it does for some 700 million people around the world. It's also vile that this still exists, we should do everything to get rid of it. 

Which brings us back to 1750. Because that's the first time there was a serious, sustained change in that level of living. Near all of history up to that point was near all people, living at that $600 a year standard. 

It didn't vary much over the Chinese empires, the Roman, or the variations in Indian kingdoms and empires. That's just what the average human experience was. Even if things got better, what varied was the number of people living at that number -- Malthusian economies we call this. 

A new crop increases incomes and more children survive -- so in a generation or two, there are just more people living at that same old standard. This is one of the proofs that there was growth in the Raj economy. When the British arrived, there were perhaps 170 million people (for what is now India), when they left possibly 350 million. More people at that same old standard of living.  

In Europe these days, that standard of living is more like $20,000 to $40,000. Yes, the same dollars, we are measuring the same thing. 30 to 50 times better off. The increase in Bangladesh, so far, is more like three times, not 30. Not good -- we'd like to do better, obviously. We should, too. 

Which brings us to this by Syed Badrul Ahsan in this newspaper.

“Socialism once underpinned the sovereign nature of this republic. Can someone give it back to us, please?”

Things are unfair, no doubt. Things are not as good as we'd like them to be, certainly. So, our grand question is how can and should we make them better? To which the answer is not socialism. 

For the answer to that original question, “what the hell happened in 1750,” is that for the very first time, a society managed to break free of that Malthusian poverty. We got, for that very first time in all of human history, a sustained and substantial rise in the living standards of the average working man and woman.  

Sure, it took a couple of centuries to get to 30 times in the first country that did it. China just did it in only 40 years. And here's the thing: Absolutely none -- no, not one single one -- has done it by implementing socialism. 

Everywhere that has got rich has done so by some variation of the capitalist free market. There are no exceptions to this rule. Maoist China was not an exception, nor were Castro's Cuba, Stalin's Russia, Eastern Europe, and on and on. 

All the evidence we have, the global centuries of it, is that capitalism and markets, not socialism, are what make a society and the people in it rich. 

Sure, as Mr Ahsan says, it's a better society when people can afford a whole chicken, not just pieces or the guts. We should adopt those policies which make this possible. That means not socialism. For we did actually try this. 

The 20th century is a grand natural experiment. The capitalist and market economies continued to get vastly richer, the non-capitalist and non-market countries did not. We even have 21st century evidence -- Venezuela's institution of modern socialism meant no one had chicken, not even gizzards or chitlins.

Economics is not a perfect science, that's entirely true. But we do have our grand question -- what makes people rich? We also have our answer -- not socialism. No, really, it was tried and it didn't work -- into the dustbin of history with it. Well, unless our intention is to make people appreciative of a bag of chicken guts that is. That actual chicken in every pot requires capitalism and markets. 

Tim Worstall is a senior fellow at the Adam Smith Institute in London.

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