Challenges for the new government
IN simplistic terms, communism failed as an economic system because it could not sustain itself in meeting the demands of the people, as the supply of the commodities was determined more through bureaucratic fiat than through an analysis of the real demand for the goods and services.
As Alan Greenspan wrote (The Age of Turbulence): "The Soviet Union had a bureaucracy for everything. At the pinnacle sat Gosplan which dictated the type, quantity, and price of every commodity produced at every single factory and plant across 11 time zones."
Such power inevitably invited corruption, as accountability to the people (as exists in democratic societies) did not exist. Of course, the political reasons were also paramount in the demise of the communist system. The stunning improvement in the economic development of the Western world increased the aspirations of the people in the communist bloc and hastened the pace of the demise of communism in its heartland in Europe.
Mikhail Gorbachev's introduction of glasnost (openness and candour) in the media and culture and perestroika (restructuring) of the nation's economy and political system led to quick extinction of the Soviet system and the dissolution of the Soviet empire.
Among the most impressive contributions of Gorbachev to the change in the global political structure was his refusal to intervene in East Europe where popular pressure for political transformation had gained momentum.
Political cost of unbridled capitalism became apparent with the global meltdown that started in the US, where the Adam Smith's theory that minimalist role by the government will take a nation "to the highest degree of opulence from lowest barbarism" fell flat on its face because lack of oversight on the craving of the capitalists for abnormal profit.
People who are strong believers in capitalism ignored the externalities embedded in the market and ignored the fact that perfect marriage between demand and supply is a theoretical concept, particularly in places where few firms control the supply of commodities and free flow of information about market conditions does not exist.
In underdeveloped economies, often captains of industry and commerce also dictate state economic policies either as pressure groups on the political authority or on their election as members of parliament. Constricting opportunities for industrialists and businessmen from contesting the elections would infringe upon their fundamental rights as free citizens.
This argument is unassailable if unholy nexus does not develop between political and economic entities. But with the withering of idealistic politics and the advent of commerce based politics politicians in both the developed and developing worlds have increasingly become dependent on donations from industrialists to finance their elections. These donations are hardly given for altruistic reasons. Such concentric relationship invariably leads to inequity and social stratification in terms of wealth and power.
Bangladesh has demonstrated its strong commitment to democracy through the recent election. Now the present government will be facing challenges to bring down the price of essentials within the reach of common people.
Over the last few weeks price of coarse, medium, and fine rice dropped by 12%. But according to Samarendu Mohanty (Rice and Global Financial Crisis), the current rice area is at a historic height and additional area is unlikely to come to meet future increased demand. If the yield growth rate does not increase, the price of rice globally will not come down.
Besides, crop yield is directly related to the amount of nutrients taken up by a crop, and fertilizer supplies a significant portion of the nutrients (fertiliser markets are expected to remain tight for another three years).
Bangladesh government's decision to increase subsidy on fertiliser and reduce price of diesel to boost agricultural production could make us less dependent on import of cereal. Warning that punitive measures will be taken against hoarders and profiteers is showing results.
The challenge will, however, have to be faced to stimulate RMG exports and invite foreign investment in the face of current global meltdown that may continue for another two years, and to create employment when the Western economies and Middle Eastern construction industry are expected to compress, thus affecting remittances from Bangladeshi expatriates.
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