Dark divergence

Written by Subhomoy Bhattacharjee | Updated: May 25 2014, 09:45am hrs
Imagine trying to write The Wealth of Nations in the 21st century with the example of not just England, but at least 20 nations to contemplate Even Adam Smith would possibly have abandoned the enterprise.

The problem for global economic commentators today in attempting to build a common narrative is hideous. There is just too much of data and divergent national templates to factor in. Yet, as the Wall Street-led model clearly came asunder in 2008, it has become impossible to attempt any analysis of the world economy without touching on all the major economies.

At one level, the commentator has to masticate through all these strands and then plan a commentary which would make sense of all that stuff. At the institutional level, the World Bank-led Growth Commission led by Nobel laureate Michael Spence has described the time series path of how major economies have grown and then connected those with the policies they have used to come to the hypotheses that growth per se is a useful goal for economies to pursue. At the other end, another Nobel laureate, Joseph Stiglitz, has done the same with the opposite conclusiona focus on why growth does not pay.

But given the enormity of the divergent national economic histories even among the top 20 economiesthe G20 nationsa succinct analysis is still a long way off. In some ways ,it is possibly the equivalent of the theory of everything that physicists have been grappling with for over a hundred years.

Michael Mandelbaum is one of the formidable minds to attempt that quest. In The Road to Global Prosperity, he raises some of the vital issues that scholars are attempting an answer towhether a broadly common economic narrative, a la The Wealth of Nations, is possible to build now.

Reading the book, it is easy to discern some of the major issues that the professor of Johns Hopkins University, School of Advanced International Studies, has delved into earlier. In his The Case For Goliath: How America Acts As The Worlds Government in the Twenty-first Century, Mandelbaum has argued that the dominance in world affairs by the United States is better than the alternatives. Attacking the same argument here, he argues that one of the key elements that will shape and, indeed, determine if the global economy will build a higher level of prosperity in this century is whether the United States remains an enforcer of global rules of economic engagement. For instance, surveying the shape of global commerce, especially that navigating through the Indian Ocean, he notes that till now neither China and certainly not India have built a blue water navy to police the routes. So the enforcer of peace on the waters happens to be the US Navy. The alternative does not exist, so what are the possibilities if this covenant is broken, as it might be, is one of the issues he examines.

The slim book reads, in fact, more like a compendium of notes that the professor may have built up in the course of attempting the co-authored (with Thomas Friedman) That Used to be US. There are plenty of such questions he raises all through the book, but does not offer too many answers on the way.

This is particularly evident in his review of the BRICS economies. Writing about India with perspicacity, Mandelbaum notes accurately the growth hiccups India has struggled with. But thereon, he has only brief comments to make on why they have emerged. For instance, writing on the same set of factors a few years ago in Faultlines, Raghuram Rajan noted that it is the asymmetrical access to resources in India that lies at the heart of the current surge of corruption charges and anger that has convulsed the nations.

Mandelbaum has few similar insights to offer. This is discernible in his survey of the others in BRICS too. He describes successfully and in a very clear language the developments in each of them till now. But then, he offers few suggestions on the possible developments from here, especially as strands of a global economic pattern. It is possibly the reason why, despite the formidable scholarship underlying the book, there are few throw-forwards from this book. Possibly, the next book from him will build on these notes.