16 leaders, as many economic verities

S Adikesavan | Updated on March 07, 2021

Title: Money and Power: The World Leaders Who Changed Economics Author: Vince Cable Publisher: Atlantic Books Price: ₹600

Vince Cable profiles 16 personalities who rung in deep rooted economic change in their societies

If economic theories have the salience to change the world, the political leaders who put these theories into practice deserve a deeper study as they are the ones who are instrumental in making people accept and implement the transformations.

Whether it is the “New Deal” of Franklin Roosevelt, the “New Economic Policy” of Vladimir Lenin or the “socialism with Chinese characteristics” of Deng Xiaoping, the leaders who changed economics are fascinating topics for academic examination.

Sir Vincent Cable, Liberal Democrat leader in the UK and an economist by training, attempts to string together the tales of 16 such personages from history in his latest book ‘Money and Power’.

In a grand sweep of the last 200 years, the chronicle starts with the story of Alexander Hamilton, hailed as one of the founding fathers of the United States, the world’s top economy now with a GDP of about $25 trillion, more than 25 per cent of the global economy.

The rise of US

Yet, at the time of independence, the US was a small agrarian economy which survived on exports to the UK , totalling about £750,000 and running a double digit inflation.

It is perhaps no mere coincidence that Adam Smith’s ‘An enquiry into the Nature and Causes of the Wealth of Nations’ and the American Declaration of Independence both saw light of day, in 1776.

Adam Smith was Hamilton’s inspiration in part and the foundational contributions of the first Treasury Secretary to President George Washington led to the phenomenal evolution of the world’s sole superpower.

Never in the history of the human race would a nation have come to dominate the globe in so short a time span and in so conclusive a manner, through mainly its economic might, openness to international trade and friendly immigration policies.

One cannot fault the likes of Francis Fukuyama from speculating about the “End of History” as it were. But in the beginning of it all, there was Hamilton, notes Vince Cable.

The British Prime Minister of the mid-19th century Robert Peel is introduced next as the leader who “moved Britain decisively from a protectionist to a free-trade orthodoxy” which has remained intact for almost 175 years. The East India Company which imported cotton fabrics from India at that time had come under attack as workers and wool farmers feared that imports would swamp Britain.

There was a frenzy for Indian clothes in London and the government banned the import and even wearing of Indian cotton, to protect its domestic industry.

And then the Industrial Revolution happened, which put Britain and Europe on the rising arc of history, as it were.

According to the author, Peel’s longer-term legacy of free trade was claimed by people on both sides of the Brexit debate in recent times.

Cable sums up, through the harsh lens of economic theory, leaders like Bismarck, Lenin, Roosevelt, Park Chung-hee (South Korea), Thatcher, Chinese supremo Deng Xiaoping and Singapore’s Lee Kwan Yew. The narratives’ nucleus is economics but as is often said, politics is economics by other means. The strand that keeps this weave together is the leadership provided by these people to economic policy as a catalyst for change.

For many countries, the former US President Bill Clinton’s dictum “It’s the economy, stupid,” defines the priority issues for their government. “Politicians get elected or chosen in large part because of expectations that they can deliver better economic outcomes than their predecessors and competitors,” says the former British MP.

“Achche Din…” was Narendra Modi’s talisman for the 2014 elections when he fought largely on the strength of his scorecard as Gujarat’s successful Chief Minister. ‘Money and Power’ is more germane now when the Union government is embarked upon what is promising to be a bold set of reforms including privatisation of State enterprises. Without doubt, history’s judgement of Modi, the Prime Minister, will be based on what these decisions — Atmanirbhar and its collaterals — do to the Indian economy.

Manmohan, the reformer

From India, quite expectedly, the “Quiet Reformer” Dr Manmohan Singh finds a place in Cable’s compilation. Only the blind or the bigoted can ignore the sweeping changes that Dr. Singh brought about and what, as of now, are seen as necessary (but not sufficient?) conditions for India to get out of a low-growth, inward-looking, diffident economic identity-trap.

It is heartening to note that the author mentions PV Narasimha Rao’s role in giving Dr. Singh a free hand in ringing in the changes.

The Congress had no majority of its own in 1991 and relied on the support of smaller parties.

“Paradoxically, the politically-weak government proved to be the most radically reforming in practice of any government in post-war India (or since),” writes Cable.

It is said of India that “the economy grows at night when the Government is asleep” alluding to the innate resilience and doggedness of India’s masses who thrive not because of the government but sometimes at least, in spite of it, especially in the informal, small scale trade and services sector where millions find a living.

Former Swedish premier Tage Erlander, the totem pole of Nordic social democracy, Lesceck Balcerowicz, the author of the Polish “shock therapy” after the fall of communism, Juan Peron of Argentina (an example of how not to do it ?), former Japanese Prime Minister Shinzo Abe and Donald Trump are the other leaders profiled.

A Liberal Democrat, Cable’s sympathies are with the dominant Western model, based on capitalism and the free markets.

But, his overall objectivity is reflected in the choice of the 16 leaders who followed 16 different varieties of economics.

Here’s Cable’s tailender about Trump: “Whether Trump’s highly idiosyncratic approach outlasts his presidency remains to be seen but his economic nationalism has struck a chord in the USA and perhaps more widely”. The latter idea is something which rings true closer home too.

The reviewer is a top bank executive

Published on March 07, 2021

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