The Covid pandemic is the result of imbalance between the unlimited needs of consumption of humankind and the limited resources of nature. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services says that opening up ecosystems where the fauna was never before so closely in touch with humans by expanding the frontiers of agriculture, mining and hydropower into previously unfragmented forests, swamps and rivers has led to the virus 'jumping' to humans. Further, it says, the global economy has expanded manifold, based on intensive use of ever more distant natural resources. The cliché of 'global value chains' hides within itself the rampage of human use of distant resources. This has forced viruses that were so far 'hidden' in their isolated habitats to seek greener pastures in humans.
An article on Forbes.com says that nitrogen dioxide (NO₂) is emitted in large quantities by burning fuels in power stations. It has been linked to both inflammation and viral infection. Healthy individuals exposed to NO₂ experience an inflammatory response in their lungs. Disease-fighting white blood cells become less efficient in killing viruses when exposed to NO₂. Furthermore, the social inequality espoused by the present development model deprives large sections of the poor of nutritious food and proper healthcare, leading to increase in infections. These poor, in turn, infect the richer sections. For example, in the ongoing pandemic, a housemaid infected a number of flats at one go in a housing society.
The underlying principle behind these imbalances is 'maximisation of utility', which is the bedrock of modern economics. The principle holds that more consumption spontaneously leads to more welfare or happiness of the society. For example, it is assumed that the target of making the Indian economy a US$ 5 trillion one will lead to a proportionate increase in the welfare of our citizens.
A student of economics is taught that if the first banana eaten gives a utility of 10 units, the second may give a utility of eight units, and the third, five units. It is taught that every person must maximise their consumption until the additional consumption of bananas brings forth a utility of zero - in this instance, a person with a full stomach will obtain negative utility from further consumption of bananas. Nevertheless, a huge amount of consumption has to take place before a person reaches a point of zero utility. Such bounds of consumption are not easily attained with other items. A person may continue to obtain positive utility by buying their third car and the hundredth outfit. We have opened up ecosystems, are using distant natural resources, weakening our lungs due to NO₂, and created social inequality to produce more and to consume more, with the assumption that such consumption will lead to higher welfare. In the process, we have unsuspectingly invited Covid-19.
A number of observers say that adopting healthy lifestyles and using clean energy would prevent these ill-effects of ever-increasing production and consumption. I am not convinced. The state government of California provided huge incentives to the people to transition to fuel-efficient hybrid and electric cars. It did not lead to an observable reduction in pollution because people drove longer distances, leading to the same quantity of emissions. The primary objective of humankind is considered to be consumption. Therefore, reduced cost of transport in fuel-efficient vehicles translated to longer distances travelled and resulted in the same levels of emissions, rather than the same distances travelled and lesser emissions.
There is a need to revisit the principle of utility not only because of Covid but because anyway, it does not lead to welfare. Economist Amartya Sen has pointed out that a monk has higher welfare at a lower level of consumption. On the other hand, we see richer people living in lavish villas suffering from multiple diseases and having a low level of welfare. Therefore, high welfare goes with low consumption and low welfare goes with high consumption. However, economic theory continues to be driven by maximisation of production and consumption—leading to Covid and ill-fare, as explained above.
In distinction to the economic theory of utility, Psychologist Carl Jung has said that happiness comes from syncing of one’s conscious mind with one’s own unconscious psyche or unconscious desires. In the above example, the monk is happy with less consumption because his unconscious desire is to walk freely in nature or sing in praise of divinity. Putting him in an air-conditioned penthouse causes him ill-fare. 'Consumption' of closed though 'comfortable' spaces is a pain for him.
The need, therefore, is that economists must discard the theory that consumption begets welfare. They need to make a new definition - that welfare is attained by pursuing only such consumption and in such quantities that is in sync with the unconscious desires. If the unconscious desire of a monk is to walk in nature, then his welfare will not be increased by cutting forests for mining of coal. On the contrary, his welfare will be enhanced by preserving forests. That in turn, will prevent the spread of Covid-like diseases. The welfare of Bismillah Khan will be increased by allowing the Ganga in Varanasi to flow uninterrupted and clean, even though it will lead to higher price of electricity and higher cost of production for our industries that will have to install pollution treatment plants.
Indeed, the welfare of a number of persons will be increased by cheap electricity made available by hydropower projects on the rivers, and by the availability of cheap paper produced by allowing factories to pollute them. Personally, I think there are only a few who would prefer cheap electricity and paper above clean rivers. But granted that there are some persons whose welfare will be so enhanced; it is the solemn responsibility of the Government to assess the change in welfare of the total population. I daresay, the welfare of the people of our country would be reduced were we to reach a GDP of US$5 trillion!
It is simultaneously necessary to make psychology a compulsory subject in our schools. Every student must be exposed to the idea that their welfare is dependent, not on the level of consumption but on the direction of the same. This teaching will reduce the wanton pursuit of consumption, reduce the destruction of the environment, reduce the level of diseases and increase the capacity of humankind to live with viruses like Covid-19. The task of building a humane society has to start with new economic theory.
The writer is a former Professor of Economics, IIM Bengaluru
