Criticism Saves Development
I remembered that lunch with Sen from several years ago when discussing the post-Covid-19 economic recovery. Post-pandemic economic recovery demands more inclusive development.
Didie SW
Red-yellow leaves were scattered along the road. The warm sunlight could not dispel the piercing cold wind. It was an autumn afternoon in Cambridge, Massachusetts.
I arrived at Harvest, a contemporary American diner in Harvard Square, just before 1 o'clock. Shortly after that, an old Indian man, with a slight limp, arrived. His hair was silvery-white and he wore a white shirt beneath a sweater and a dark winter coat. The waiter greeted him and led him to my table.
The man was Amartya Sen, the winner of the 1998 Nobel Prize in Economic Sciences. We had made an appointment to have lunch together on that sunny afternoon. Sen was charming and friendly. His conversations were rich, covering a range of topics from food, novels, philosophy, economics, politics, and to cultural issues.
Quietly, he recalled a childhood incident and other events that influenced his view on development. On a day filled with conflict between Hindus and Muslims, Sen, then 10 years old, was playing in his yard in Dhaka, Bangladesh. Suddenly a man came in, groaning with pain. It was not really clear where he came from. Blood flowed from a knife stuck in his back. The man was Kader Mia, a poor laborer.
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Sen's father took Mia to the hospital. Unfortunately, he could not be saved. On that fateful day, Mia had gone to work to earn money. His wife had warned him not to go to the troubled area, but Mia had no choice. His family must eat. It was a tragedy. Death was the price of poverty.
Inclusive development
I remembered that lunch with Sen from several years ago when discussing the post-Covid-19 economic recovery. Post-pandemic economic recovery demands more inclusive development. Why? There are big problems ahead: income inequality, the risk of the deteriorating quality of human capital (education and health), and gender inequality.
The economy is improving gradually, but there is a risk of lopsided recovery. Some go up and some go down, like the letter K (K-shaped recovery). Digital technology and healthcare companies or those with savings excel. However, micro, small and medium enterprises (MSMEs), informal workers and those who have no savings go down.
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A woman arranges a display of locally produced coffee on Thursday (23/7/2020) at a business meeting on micro, small and medium enterprises (MSMEs) in Mataram, West Nusa Tenggara (NTB). Local MSMEs have developed superior products from the NTB administration’s economic assistance for earthquake-affected communities. Today, MSMEs in Lombok have said they have been encouraged by the transition to the “new normal” phase of the Covid-19 mitigation measures.
Data from the Bank Indonesia Consumer Survey showed that the largest decline in the ratio of savings to total income occurred in the group with expenditures of Rp 3 million (US$215) and below. On the other hand, the upper middle class (spending of Rp 5 million and above) showed an increase in savings (September 2020-October 2021).
Data from the Deposit Insurance Corporation (LPS) indicated that the highest growth in third-party funds occurred in the group with savings of Rp 5 billion and above. The upper middle class is able to survive because they have savings and digital access. On the other hand, the lower middle class is at risk of decreasing welfare due to depleted savings and limited digital access.
We also note that, although schools have reopened, not all students can attend classes. Not only that, a study by the Asian Development Bank (ADB) on several ASEAN countries showed that around 27 percent of children could not attend online classes because of inadequate internet infrastructures. There is a risk that education quality will decline.
Health issues have also come to the surface. Covid-19 is a perfect example of how health is a very important asset. When health is disrupted by a pandemic, the economy reels. The Covid-19 pandemic came with a message: investing in public health, especially for vulnerable groups, is a vital factor. We also learned that the pandemic has had a deeper negative impact on women, because many of them work in the informal sector. A McKinsey report (2020) showed that more than half of the world's jobless were women.
It requires legal institutions and a working democracy. What Amartya Sen articulated is very important.
The pandemic has scarred the wellbeing of vulnerable groups. That is why post-pandemic development must be inclusive and provide access for the wider community. This can only be realized if it does not focus only on economic growth but also on institutional development, including access to health, education, and gender equality. It requires legal institutions and a working democracy. What Amartya Sen articulated is very important.
According to Sen, the concept of wellbeing must be seen in the context of a person’s capability to be something (being) or to do what they want (doing). Sen called “beings” and “doings” as achieved functionings that make life worthwhile, such as doing work, being literate, healthy, respected and so on (Robeyns, 2003).
Achieved functionings focus on what is achieved (actual achievement). Meanwhile, capabilities are the freedom to achieve. Here, the role of freedom becomes important.
To illustrate, we can observe people who fast. There is a similarity between people who are fasting and those who are starving because they are poor: neither are eating food. However, there is a sharp contrast between the two: people who fast actually have the freedom to obtain food, but are choosing to fast. As for those who are starving, they do not have the freedom to choose to eat. People who fast have a greater capacity than those who are starving.
Poverty also needs to be considered in this context. People become poor because they can't do something; because their capability is small, not because they don't have something. With this logic, prosperity is created not because of the things we have, but because of the activities that allow us to have those things. Here, the element of freedom is important. If people are limited in their political rights, silenced, access to education and health, then their capabilities are limited. They are unable to develop themselves. That is why Sen saw the importance of freedom in development.
With his concept, Sen expanded the dimension of development so that the roles of the economic, social, and political aspects are balanced. We know that, in a narrower perspective, development often focuses on economic interests. For the sake of economic interests, sociopolitical aspects are often marginalized, repression is justified, and criticism is silenced in the name of development. Indonesia’s New Order regime and Chile’s government under Pinochet are examples of how repression is justified in the interest of economic development. We should not repeat this mistake again.
A staff member (C) wearing protective equipment guides a traveller at the arrival hall of Incheon International Airport on November 30, 2021, amid growing concerns about the Omicron Covid-19 variant.
Sen praised Indonesia for choosing the path of democracy. Corruption, collusion and nepotism (KKN) practices in the financial sector, where loans were given without proper risk analysis, made Indonesia’s banking sector so fragile during the 1997 Asian financial crisis. The banking crisis could have been avoided if criticism was allowed. So there is a need for transparency and good institutions. However, in an authoritarian system, criticism is considered the enemy and an act of treason. As a result, erroneous policies cannot be corrected.
In our discussion, Sen also talked about entitlement. He used food shortage (famine) as an example. In his book Poverty and Famines: An Essay on Entitlement and Deprivation, he answers the dangers of what he called "Malthusian optimism". According to Thomas Malthus, hunger occurs if the amount of food is less than the needs of a population. Therefore, the indicator of food production per capita is very important.
However, Sen's study showed that in the case of Bengal in 1943, food shortages actually occurred even when food production per capita was high, as was the case in China in 1958-1961. Sen pointed out that the problem was not food production per capita, but access to food. Hunger is a condition in which people are deprived of food, and is not simply due to a lack of food. Increasing food production does not solve the problem if food access is absent.
Institutional development
In the case of China’s Great Leap Forward, for example, an authoritarian government was also responsible for the deaths of millions of citizens. This occurred because criticizing the government's mistakes in its food policy was impossible in an authoritarian system. From this, we learn about the importance of freedom and democracy in development. The two can prevent further political and economic catastrophes.
Amartya Sen may be right. However, the relationship between democracy and economic growth is not always congruent. I asked about his views on this. He paused for a moment while taking a sip of his drink, then enthusiastically said: “While there is no definite relationship between economic growth and democracy, history shows, great famines have never occurred in an independent, democratic country with press freedom.” If it did occur, criticism allows the problem to be addressed immediately and its impact is limited.
Media reports and criticism prompted the government to act quickly. The problem was resolved immediately before it worsened even further.
He was right. It reminded me of the famine that happened in 2005 in Yahukimo, Papua. Media reports and criticism prompted the government to act quickly. The problem was resolved immediately before it worsened even further. Acemoglu, Naidu, Restrepo and Robinson (2019) also showed that democracy has a positive impact on per capita income, investment, improving public services, and reducing social unrest.
There is not enough evidence that democracy hinders economic growth in developing countries. Sen is right. Democracy is very important.
He then talked about India. He criticized the Modi government and his concerns about identity politics.
Institution building and political rights are not attractive during good economic times. However, they are very important during social and economic difficulties. That is why development must be seen in a wider context, including social and political rights. It must be inclusive. And this is what is needed in post-pandemic economic recovery.
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History teaches us that improving the economy requires institution development, such as bureaucratic reform, improving public services, governance, legal certainty, fighting corruption, and protecting the environment. Look at the case of Indonesia: the orientation on economic development that is not followed with institutional development has encouraged the rise of KKN practices.
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President Joko “Jokowi” Widodo delivers his speech virtually during the commemoration of 2021 National Press Day in Ancol, North Jakarta, on Tuesday (9/2/2021. In his address at the event themed “Rising from the Pandemic, Jakarta as the Gateway to Economic Recovery with the Press as the Accelerator of Change”, the President expressed appreciation for all members of the press who had helped the government in educating the public to be disciplined in adhering to health protocols to prevent the spread of the novel coronavirus.
Like a house of cards, the Indonesian economy collapsed in 1998. Suharto fell. We then started what was called reformasi (reform). However, it has not always been satisfying. It may make us impatient, but it is needed. Acemoglu and Robinson (2012) pointed out that “extractive” institutions in which oligarchs control the decisions lead to economic collapse. That's why institution building is so important. Democracy may be noisy and annoying, but it keeps development sustainable.
It was almost 3 o'clock when Sen asked for the bill. He did not allow me to pay for our lunch. I was surprised and extremely flattered by his hospitality. We then said our goodbyes. Sen walked to Brattle Street and I returned to my office on Mount Auburn Street. The cold wind, the falling red leaves, accompanied my steps. Cambridge did have strong charm in the fall.
I suddenly remembered what the humanist Goenawan Mohamad wrote: “The human capacity to do justice makes democracy possible; the human capacity for arbitrariness makes democracy necessary.”
Muhammad Chatib Basri is a lecturer at the University of Indonesia Economics and Business School.
(This article was translated by Hendarsyah Tarmizi).
