Patna, Jan. 14: Nobel prize-winning economist Joseph Stiglitz today suggested that the government should always keep "general people's interest" in mind while formulating policies for helping industry acquire land and advocated state role in "regulating the market".
The Nobel laureate's remarks would have come as music to the ears of chief minister Nitish Kumar, who wants landowners to have a stake in industry if their land is being acquired.
Though the government was silent on the economist's views, a senior IAS officer said: "The government's approach is quite in conformity with what Stiglitz has stated."
Stiglitz, on a tour of Bihar, patted the state for ushering in change. "Bihar has demonstrated that change is possible, that the possibilities of growth are enormous, that the state can be an important instrument for promoting growth," he said while delivering the Asian Development Research Institute (Adri) foundation lecture ' "Redefining Capitalism".
He squarely blamed the "mis-governance" in capitalism that has acquired the name of "market economy" and the government's failure to "regulate it" for the global financial crisis. "The global financial crisis served to remind us that the markets on their own are neither necessarily efficient nor stable. Yet, the long history of failure of communism and attempts at state dominated growth have also failed," he said, clarifying that the implication was that there has to be a balance between the state's role and market.
Driving his point home in a clear and succinct manner, free of clich�s and jargons, Stiglitz said: "There has been no success where governments have not played an important role. And also, there is no success where markets have not played an important role. What is needed is the right balance in the role of the government and the same of the market."
Stiglitz also sang in tune with the chief minister who was presiding over the function on foreign direct investment (FDI) in retail. He cautioned against FDI in India. "What are the foreign funds bringing into this country? In retail, there is already a wealth of entrepreneurial talent in India. There are assertions that bringing of foreign retail will improve the supply chain and enhance the welfare of farmers and consumers. But some of these foreign retail firms, including Wal-Mart, are noted for their poor labour relation, workers' exploitation, discrimination and bribery," he said.
Stiglitz made it clear that the free market does not amount to monopoly of some rich and powerful people. Capitalism or business economy is not also something static. "Capitalism needs to be continually redefined. Scandinavian capitalism differs from American style capitalism, which in turn differs from the model of capitalism that has evolved within Germany. What is right balance will differ from time to time and from place to place on socio-economic, political and historical context," he said.
He said there should be a need to take note of the important role that other players ' civil society, co-operatives and NGOs ' should play. He enumerated a variety of "key roles" that the government could play. "The most important role for the government to play is to ensure basic functioning of society, law and order, enforcement of property rights and contracts. Another role is restraining the markets from doing what they should not."
In this context, Stiglitz specifically mentioned how "the failure of the US government to play that role was central to the financial crisis. The government needs to make market function like market". "The government must not focus just on efficiency but on fairness and social justice," he said.
Summing up his deliberations, Stiglitz said: "The successful development requires improving institutions at all three levels ' improving markets, re-inventing government, creating an active civil society and achieving harmonious relationship between the three."
Heritage site promise
Economist Joseph Stiglitz today assured chief minister Nitish Kumar of trying his level best to include Nalanda ' the ancient seat of learning ' in the list of world heritage sites.
"It was an amazing experience to see the world's most ancient university. I will certainly do what I can to ensure Nalanda is declared a world heritage site," he said, after Nitish requested him to help Nalanda get the coveted status.