EQUITY IN A GLOBAL SOCIETY

Summary

Equity in a Global Society reproduces the LSE Centenary Lecture that Dr. I. G. Patel — a former Governor of the Reserve Bank of India and former Director of the London School of Economics — delivered on 26 October 1995, here published as a Forum of Free Enterprise pamphlet. Patel uses the occasion to defend an unfashionable position: that social science cannot quarantine itself from value judgements, and that the emerging global society must be appraised against an explicit standard. He nominates ‘equity’ as that standard, defining it not as equality but as balance — between individual rights and group obligations, between tradition and reason, between what is desirable and what is achievable.

From this premise Patel attacks the methodological prudery of the LSE economics he was once taught: the refusal to make interpersonal comparisons of utility. A dollar in the pocket of a Malawian peasant, he insists, is worth more than one in his own, and any honest economics must accept that and reason accordingly. The lecture then maps the institutional scaffolding of the global society already in place — the UN system, WHO, FAO, the World Bank, IMF, the new WTO and the dense lattice of voluntary organisations — and argues these can no longer be wished away, only made more effective and equitable.

In the rendered pages Patel lays out five urgent problems for the next century: the legitimacy of individual and group rights vis-à-vis the global society; equity in the governance of international institutions; equity in international economic relations; equity and global environmental protection; and the matching of responsibilities with resources at the global level. He works through the first three economic issues here. On macroeconomic management he declares both Keynesian and Monetarist certainties dead and argues for reviving ‘less fashionable’ tools such as incomes policies and selective controls. On trade and unemployment he defends the open trade regime that built Korea, Taiwan, Thailand and Malaysia and dismisses Northern protectionism dressed up as moral concern about labour or environmental standards. On poverty and aid he calls for developed-country aid budgets to be doubled to the 0.7% of national income target and frames the redistributive case through the parable of ‘the accident of birth’ — that no one earns the country they are born in, and the accumulated wealth of Sweden or a rich Indian family is not, by any honest reckoning, theirs alone.

Key points

• Patel argues that social sciences cannot exclude value judgements: every society — and the global society in particular — must be shaped against an explicit set of values and standards.

• He chooses ‘equity’ as the master value, defining it as balance: between rights and obligations, tradition and reason, the desirable and the achievable, rather than mere equality of outcome.

• He attacks the LSE-trained orthodoxy that interpersonal utility comparisons are impossible, insisting an extra dollar to a poor Malawian peasant is worth far more than one to a rich Westerner.

• Patel maps the de facto institutional architecture of the global society — UN, ILO, WHO, FAO, IMF, World Bank, the new WTO and the NGO network — and argues these institutions can only be reformed, not wished away.

• He sets out five urgent problems for the next century: legitimacy of individual and group rights, governance of international institutions, international economic relations, global environmental protection, and matching responsibilities with resources at the global level.

• On macroeconomics he declares both Keynesian and Monetarist certainties exhausted, and urges reconsidering ‘less fashionable’ instruments like incomes policies, selective controls and modest redistribution.

• He defends the open trade regime that lifted Korea, Taiwan, Thailand and Malaysia, and rejects Northern protectionism dressed up as concern about foreign wages or environmental standards.

• On poverty and aid he calls for developed-country aid budgets to be doubled toward the 0.7% of national income target, framing redistribution through the parable that ‘the accident of birth’ gives no one an inherent moral claim to inherited national wealth.