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SHIKHAR 2012
Team ID code: SH201230217
Participant:
Chitransh Agnihotri
PGDIE 41, Roll no. 100
NITIE, Mumbai
Rakesh Kharra
PGDIE 41,
NITIE, Mumbai
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Appendix
Abstract 3
Introduction 3
A market economy (or free-market economy) 5
Process of recession 11
Present Situation 13
Future Ahead 18
Summary 20
Annexure 21
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Has MARKET ECONOMY approach led the world to the current
economic situation?
Abstract
Our present actions decide the future; hence the practices adopted in economics in past
decades are the director of present economic situation. As the society, science and technology
evolves so as the economics which is the science behind the human decisional behavior.
Market economy conceptualized by Adam Smiths Invisible hand and self love1 which
emphasize on the self regulated efficient and productive market and self interest of person in
mutual gain from exchange respectively.
Introduction
There is question asked regarding the present economic turmoil i.e. Has market Economy
approach led the world to the current economic situation? the question here is
macroeconomic in nature and there is basic principle that macroeconomics consequences are
always studied or analyzed on the long term not on the day to day basis or small time frame.
So to answer this question there may be n mathematical model or numeric data analysis can
be done, but the article sticks to a principle which is:
Forecasting and trend analysis beyond 5 years is of no value as nobody knows whatis going to happen tomorrow since we dont know how society, environment and
individual behave in future and hence business investment based on these long
forecasting make no sense.2
But, simply the answer of the above question is yes it the sole reason behind the present
situation, talking about India only, before 1991 (under Manmohan Singh due to more of
international pressure of taking loan from IMF rather than self motivated reforms)the closed
economy was supposed to be in a state of Hindu growth rate, but as the reforms applied here
the market starts to open up in some sector according to sustainable development without
affecting the domestic production and consumption drastically i.e. it doesnt generate
unemployment and doesnt lead to draw up the money out of the nation as during the time of
East India. It enables India to grow exponentially in service lead industry particularly IT
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services. So if there were no open market economy exists there the India wills still growing at
its classical Hindu Growth rate.
Though market economy brings the brink of economic slowdown in India but it has less to
do with market economy and more with counteractive government regulations as you cannot
do business daily with old strategies and you need constant feedback over it. And as per the
planned economic model India has a titanic of population and resources and who the hell
these politicians and bureaucrats have the dare to decide what is good and what is bad if they
are not even able to manage just the planning and controlling part effectively.
Problem doesnt lies in the basics but the interpretation of the basics; as the time changes, the
market economy is firstly adopted well in European nations with the following principles:
Developed society believes in specialization and productivity improvement thus theyare able to product surplus in very less cost and can therefore dumb their surplus in
other societies to generate extra wealth3
The market must be self regulated that is resources are drawn to their most valuedapplication, without the need for any central direction4
These principles are also valid today but the moral and ethics of the business acumen people
must be high and their need will always be keep into control i.e. it doesnt become greed.
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A market economy (or free-market economy)
It is an economic concept intended to develop a market i.e. a place for trade in which
decisions regarding investment, production and distribution are based on supply and demand
and the prices ofgoods and services are determined in a selfadjusting basis of Adam Smiths
invisible hand principle This is contrasted with a planned economy, where investment and
production decisions are embodied in a plan of production. Market economies can range from
hypothetical laissez-faire and free market variants to regulated markets and interventionist
variants. Most existing market economies include a degree ofeconomic planning or state-
directed activity and are thus classified as mixed economies. In a market economy resources
are moved for the better utilization so as to create a surplus i.e. more wealth: hence work on
following principles:
Division of labour so as to achieve efficiency and better productivity The products efficiently produced i.e. surplus traded generate more wealth These more wealth can then be used for R&D and investments in better technology
and means of production can further grow the productivity
These more surplus is now traded with other societies to create much more surplus As the economy grows with enhanced efficiency less labour in needed to generate the
same products hence always new business areas are explored.
New business areas are explored new ideas will conceived for constructive purpose This accumulated huge wealth is shared with employees to enhance their motivation
(like Ford Motors) and thus the overall economy will grow.
Analogy of market economy with wild life:
In a forest where wild life flourishes with innumerable coexisting species, the balance of the
forest resource is solely dependent upon the consumption of animals and is kept in check by
natures law. But if we put up a rule and provide Lion (the king of jungle) with 2deers
everyday then gradually the lion would become sluggish and deer would tend to feel
exploited and will not use their brain to save themselves from lion.
But on the other hand, if it is an open game then the lion will have to hunt for his food
and for his existence, for which he shall develop new strategies and apply them, in the
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process of prove himself as the king of jungle. On the deers part they will think hard to save
themselves from lion and will try and implement various tricks. Hence the whole wildlife
ecology is evolving for its existence and getting stronger to face any natural calamity or
disaster.
Pros of Market Economy: Hence from this analogy, we can say that in an open economy, the
players and consumers are free to whose whatever they want and can implement any strategy
to maximize their payoff and competition shall keep the things in check. It will keep the
market dynamic and open to a lot of opportunities rather than making the whole system
stagnant and immune to growth when it is of closed category. Hence for the development of
both and to satisfy Darwins theoryof survival of fittest open market is must.
The Advantages of Market Economy are as follows:
1. Competition between different firms leads to increased efficiency, as firms dowhatever is necessaryincluding laying off workersto lower their costs;
2. Most people work hard (the threat of losing one's job is a great motivator);3. There is more innovation as firms look for new products to sell and cheaper ways to
do their work;
4. Foreign investment is attracted as word gets out about the new opportunities forearning profit;
5. The size, power, and cost of the state bureaucracy is correspondingly reduced asvarious activities that are usually associated with the public sector are taken over by
private enterprises;
6. The forces of production, or those involved in creating them along with people readyto spend money at domestic or international level, undergo rapid development;
7. Many people quickly acquire the technical and social skills and knowledge needed tofunction in this new economy;
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8. A great variety of consumer goods become available for those who have the money tobuy them; and
9. Large parts of the society take on a bright, merry and colourful air as everyone busieshimself trying to sell something to someone else.
Cons of Market Economy: the basic of self interest when misinterpreted i.e. sole ideology of
Market economy is wealth generation by dislocation of resources and enhancing efficiency,
in short profit maximization by hook or crook in present world of competition either by
overexploiting or influencing government policies. So there is a question if profit is necessary
then how much? What percent of profit is ok? There the principle of need is changed to greed
as business entities are owned by shareholders they need maximum profi t else they cantinvest in your business and hence the probability of happening of a disaster increases.
The major disadvantages are as follows
1. Distorted investment priorities, as wealth gets directed into what will earn the largestprofit and not into what most people really need (so public health, public education,
and even dikes for periodically swollen rivers receive little attention)
2. Worsening exploitation of workers, since the harder, faster, and longer people workjust as the less they get paidthe more profit is earned by their employer (with this
incentive and driven by the competition, employers are forever finding new ways to
intensify exploitation)
3. Overproduction of goods, since workers as a class are never paid enough to buy back,in their role as consumers, the ever growing amount of goods that they produce (in the
era of automation, computerization and robotization, the gap between what workers
produceand can produceand what their low wage allows them to consume has
increased enormously)
4. Unused industrial capacity (the mountain of unsold goods has resulted in a largepercentage of machinery of all kinds lying idle, while many pressing needsbut
needs that the people who have them can't pay forgo unmet)
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5. Growing unemployment (machines and raw materials are available, but using them tosatisfy the needs of the people who don't have the money to pay for what could be
made would not make profits for those who own the machines and raw materials
and in a market economy profits are what matters)
6. Growing social and economic inequality (the rich get richer and everyone else getspoorer, many absolutely and the rest in relation to the rapidly growing wealth of the
rich)
7. With such a gap between the rich and the poor, egalitarian social relations becomeimpossible (people with a lot of money begin to think of themselves as a better kind
of human being and to view the poor with contempt, while the poor feel a mixture of
hatred, envy and queasy respect for the rich)
8. Those with the most money also begin to exercise a disproportional politicalinfluence, which they use to help themselves make still more money
9. Increase in corruption in all sectors of society, which further increases the power ofthose with a lot of money and puts those without the money to bribe officials at a
severe disadvantage
10.Increase in all kinds of economic crimes, with people trying to acquire moneyillegally when legal means are not available (and sometimes even when they are)
11.Reduced social benefits and welfare (since such benefits are financed at least in partby taxes, extended benefits generally means reduced profits for the rich; furthermore,
any social safety net makes workers less fearful of losing their jobs and consequently
less willing to do anything to keep them)
12.Worsening ecological degradation (since any effort to improve the quality of the airand of the water costs the owners of industry money and reduces profits, our natural
home becomes increasingly unliveable)
13.With all this, people of all classes begin to misunderstand the new social relations andpowers that arise through the operations of a market economy as natural phenomena
with a life and will of their own (money, for example, gets taken as an almost
supernatural power that stands above people and orders their lives, rather than a
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material vehicle into which people through their alienated relations with their
productive activity and its products have poured their own power and potential; and
the market itself, which is just one possible way in which social wealth can be
distributed, is taken as the way nature itself intended human beings to relate to each
other, as more in keeping with basic human nature than any other possibility. As part
of this, people no longer believe in a future that could be qualitatively different or in
their ability, either individually or collectively, to help bring it about. In short, what
Marx called "ideological thinking" becomes general);
14.The same market experiences develop a set of anti-social attitudes and emotions(people become egotistical, concerned only with themselves. "Me first", "anything for
money", "winning in competition no matter what the human costs" become what
drives them in all areas of life. They also become very anxious and economically
insecure, afraid of losing their job, their home, their sale, etc.; and they worry about
money all the time. In this situation, feelings as well as ideas of cooperation and
mutual concern are seriously weakened, where they don't disappear altogether, for in
a market economy it is against one's personal interest to cooperate with others);
15.With people's thoughts and emotions effected in these ways by their life in a marketeconomy, it becomes very difficult for the government, any government, to give them
a true picture of the country's problems (it is more conducive to stability to feed
people illusions of unending economic growth and fairy tales of how they too can get
rich. Exaggerating the positive achievements of society and seldom if ever mentioning
its negative features is also the best means of attracting foreign investment. With so
much of the economy depending on "favourable market psychology", the government
simply cannot afford to be completely honest either with its own people or the rest of
the world on what is really happening in the country);
16.Finally, the market economy leads to periodic economic crises, where all thesedisadvantages develop to a point that most of the advantages I mentioned earlier
simply dry upthe economy stops growing, fewer things are made, development of
the forces of production slows down, investment drops off, etc. (a close look at the
trends apparent in the disadvantages of the market should make clear why such crises
are inevitable in a market economy). Until an economic crisis occurs, it is possible to
take the position that the advantages of a market economy outweigh its disadvantages,
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or the opposite position, and to develop a political strategy that accords with one's
view, whatever it is. But if a crisis does away with most of the important advantages
associated with the market, this is no longer possible. It simply makes no sense to
continue arguing that we must give priority to the advantages of the market when they
are in the process of disappearing.
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Process of recession
Recession i.e. economic slowdown for a period more than 6 months which creates
unemployment and slows down the growth of nation. In a market economy there are three
major sectors(Agribusiness, Manufacturing and Service) which are govern by innumerable
companies each having its own core strength and business vision, mission, values and
culture. If any sectors one business entity fails or have some problem in it causes the
unemployment and hence less credit and cash flow in market directing the reduction of trade
and hence to match the low demand supply decreases and hence much more layoff and
causes the unemployment chain until some restructuring or business and economy not been
done by some key entities mainly government to save its economic downturn and recession.
The failure mainly occurred due to some undesirable actions of key professionals of industry,
the major mistake they did are solely motivated on the following principle:
Over rely on mathematical models formulated by PhDs in finance and economics asthey thought that probability of the high risk products are very less but they forger the
very basic principle of Heisenberg uncertainty principle(the either the location or
momentum of electron can be identified with certainty) of physics i.e. which interpret
here as the event which has very less probability we cant predict there consequences
precisely and they can create a huge problem or disaster5
The very basic principle of market economy i.e. it can interact in a way of self interestthat doesnt harm anyone else despite help others to grow also, but due to greed and
pressure from stakeholders and shareholders of maximum profit and continuous
growth the high salary taking CEOs and executives make the organizations to launch
the products into the risk prone market
The maximum business entities going limited which are run by professionals exactmeaning people who have no emotions and hence they always look the things for
their benefits only not for its societal impact or impact on his coworker or
subordinate.
According to Minsk6: There are basically five stages in Minskys model of the credit cycle:
displacement, boom, euphoria, profit taking, and panic. A displacement occurs when
investors get excited about somethingan invention, such as the Internet, or a war, or an
abrupt change of economic policy. The current cycle began in 2003, with the Fed chief Alan
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Greenspans decision to reduce short-term interest rates to one per cent, and an unexpected
influx of foreign money, particularly Chinese money, into U.S. Treasury bonds. With the cost
of borrowingmortgage rates, in particularat historic lows, a speculative real-estate boom
quickly developed that was much bigger, in terms of over-all valuation, than the previous
bubble in technology stocks.
As a boom leads to euphoria, Minsky said, banks and other commercial lenders extend credit
to ever more dubious borrowers, often creating new financial instruments to do the job.
During the nineteen-eighties, junk bonds played that role. More recently, it was the
securitization of mortgages, which enabled banks to provide home loans without worrying if
they would ever be repaid. (Investors who bought the newfangled securities would be left to
deal with any defaults.) Then, at the top of the market (in this case, mid-2006), some smart
traders start to cash in their profits.
The onset of panic is usually heralded by a dramatic effect: in July, two Bear Stearns hedge
funds that had invested heavily in mortgage securities collapsed.
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Present Situation
The 20072012 global financial crisis; also known as the Global Financial Crisis and 2008
financial crisis, is considered by many economists to be the worst financial crisis since the
Great Depression of the 1930s.It resulted in the threat of total collapse from large financial
institutions, the bailout of banks by national governments, and downturns in stock markets
around the world. In many areas, the housing market also suffered, resulting in evictions,
foreclosures and prolonged unemployment. The crisis played a significant role in the failure
of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a
downturn in economic activity leading to the 20082012 global recession and contributing to
the European sovereign-debt crisis. The foundation of this crisis were laid down in 1999
when Bill Clinton (then US president) deregulated the financial sector giving them the full
liberty to decide and trade their product by themselves without government interventions so
the no. of bad decisions happened that time which created a bubble which bursts as the
financial crisis and money evaporation from the world. The following are the causes of the
crisis7:
1. Subprime lending: intense competition between the lenders and less creditworthyborrowers lead
2. Growth of the housing bubble: This housing bubble resulted in many homeownersrefinancing their homes at lower interest rates, or financing consumer spending by
taking out second mortgages secured by the price appreciation.
3. Easy credit conditions: after the 2001 dotcom burst to counteract with deflation soeasy loans are provided as the no. of lenders increase hence to maximise the profit and
with help of financial models forecasting credit conditions were eased down
4. Weak and fraudulent underwriting practices: due to their large size and marketpowerwere far more effective at policing underwriting by originators and forcing
underwriters to repurchase defective loans. By contrast, private securitizers have been
far less aggressive and less effective in recovering losses from originators on behalf of
investors.
5. Deregulation: continuous deregulation of financial market as per the influence overthe policymakers by these too big institutions of financial market
6. Increased debt burden or over-leveraging: Prior to the crisis, financial Institutionsbecame highly leveraged, increasing their appetite for risky investments and reducing
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their resilience in case of losses. Much of this leverage was achieved using complex
financial instruments such as off-balance sheet securitization and derivatives, which
made it difficult for creditors and regulators to monitor and try to reduce financial
institution risk levels. These instruments also made it virtually impossible to
reorganize financial institutions in bankruptcy, and contributed to the need for
government bailouts.
7. Financial innovation and complexity: The term financial innovation refers to theongoing development of financial products designed to achieve particular client
objectives, such as offsetting a particular risk exposure (such as the default of a
borrower) or to assist with obtaining financing. Examples pertinent to this crisis
included: the adjustable-rate mortgage; the bundling of subprime mortgages into
mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale
to investors, a type ofsecuritization; and a form of credit insurance called credit
default swaps (CDS). The usage of these products expanded dramatically in the years
leading up to the crisis. These products vary in complexity and the ease with which
they can be valued on the books of financial institutions.
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8. Incorrect pricing of risk: a lack of transparency about banks' risk exposuresprevented markets from correctly pricing risk before the crisis, enabled the mortgage
market to grow larger than it otherwise would have, and made the financial crisis far
more disruptive than it would have been if risk levels had been disclosed in astraightforward, readily understandable format
9. Boom and collapse of the shadow banking system: There is strong evidence thatthe riskiest, worst performing mortgages were funded through the "shadow banking
system" and that competition from the shadow banking system may have pressured
more traditional institutions to lower their own underwriting standards and originate
riskier loans.
10.Commodities boom: Rapid increases in a number of commodity prices followed thecollapse in the housing bubble.
11.Systemic crisis: the following missyestem happened in the system so that the crisisevolve
that "Manager's capitalism" has replaced "owner's capitalism", meaning managementruns the firm for its benefit rather than for the shareholders, a variation on the
principalagent problem;
the burgeoning executive compensation; the management of earnings, mainly a focus on share price rather than the creation of
genuine value; and
the failure of gatekeepers, including auditors, boards of directors, Wall Streetanalysts, and career politicians.
12.Role of economic forecasting:the breakdown of the banking system in particular andthe economy in general owing to their use of bad risk models and reliance on
forecasting, and their reliance on bad models
Impact: As the financial sector fails in US, the economies associated or which depends upon
US also suffered a lot like stock market crash, commodities prices surges and inflation
associated with the bad debt conversion and mostly there is evaporation of money from the
system i.e. make it difficult for other business to run their day to day operations since there is
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less cash flow in the system, hence overall productivity of many manufacturing giants
hampered and hence there is a overall threat to the wealth generation in the system.
To avert these crisis government restructure the loans and hence taken them as their part to
make the loans more trustworthy these bad debts of institutions resulted in government fiscal
deficit to grow substantially hence it issued more and more no. of federal bonds in the
international market, but as the deficit keeps on growing the US become credit defaulter and
hence it is transferred to the nations which have purchased its bond.
And hence this US financial institution born crisis led rise to European Subprime crisis.
TheEuropean sovereign debt crisis is an ongoing financial crisis that has made it difficult or
impossible for some countries in the euro area to re-finance their government debt without
the assistance of third parties. From late 2009, fears of a sovereign debt crisis developed
among investors as a result of the rising private and government debt levels around the world
together with a wave of downgrading of government debt in some European states. Causes of
the crisis varied by country. In several countries, private debts arising from a property bubble
were transferred to sovereign debt as a result of banking system bailouts and government
responses to slowing economies post-bubble. In Greece, unsustainable public sector wage
and pension commitments drove the debt increase. The structure of the Eurozone as a
monetary union (i.e., one currency) without fiscal union (e.g., different tax and public
pension rules) contributed to the crisis and harmed the ability of European leaders to respond.
European banks own a significant amount of sovereign debt, such that concerns regarding the
solvency of banking systems or sovereigns are negatively reinforcing.
Causes : The European sovereign debt crisis resulted from a combination of complex factors,
including the globalization of finance easy credit conditions during the 20022008 period that
encouraged high-risk lending and borrowing practices; the 20072012 global financial crisis;
international trade imbalances; real-estate bubbles that have since burst; the 20082012
global recession; fiscal policy choices related to government revenues and expenses; and
approaches used by nations to bail out troubled banking industries and private bondholders,
assuming private debt burdens or socializing losses.
The interconnection in the global financial system means that if one nation defaults on its
sovereign debt or enters into recession putting some of the external private debt at risk, thebanking systems of creditor nations face losses. For example, in October 2011, Italian
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borrowers owed French banks $366 billion (net). Should Italy be unable to finance itself, the
French banking system and economy could come under significant pressure, which in turn
would affect France's creditors and so on. This is referred to as financial contagion.[6][28]
Another factor contributing to interconnection is the concept of debt protection. Institutions
entered into contracts called credit default swaps (CDS) that result in payment should default
occur on a particular debt instrument (including government issued bonds). But, since
multiple CDSs can be purchased on the same security, it is unclear what exposure each
country's banking system now has to CDS.
Greece hid its growing debt and deceived EU officials with the help of derivatives designed
by major banks. Although some financial institutions clearly profited from the growing Greek
government debt in the short run,there was a long lead-up to the crisis.
Impact on Eurozone and related economies:
As the Eurozone crisis hits again makes a negative environment in the businessorganizations as there is more of inflation and commodities price surges up as the
faith on Euro and Dollar reduced substantially.
This financial impact also caused a huge political impact in Eurozone creating a hugepolitical conflicts and in the nations itself i.e. shift of power
Impact on India: India is a trade deficit country with maximum of its export in terms of IT
services and import in terms of Oil for power generation, so if there is less IT services which
are mostly demanded by developed nations reduced and hence the layoff of professionals
increased creating unemployment. Increasing oil prices in terms of dollars further demand a
credit injections in the system which further devalued Indian currency INR a lot hence further
make the oil prices to surge to its peak. If the oil i.e. energy prices are high then it impacted
to other sectors also which overly dependent on energy i.e. manufacturing and logistics. And
hence an uncontrolled vicious inflation cycle is operating in the nation which is unable to be
in check by any corrupt and self interested greedy policymaker here.
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Future Ahead:
The financial and economic crisis which began in 2008 in the United States and quickly
turned into a global depression is now rapidly becoming a social crisis. In some countries it is
threatening to lead to a severe political crisis. There are already commentators who rank 2008
alongside 1945, 1989 and 2001 as a turning point in world history. We all agree that
regardless of when the recovery comes, nothing will be quite like it was before 2008. We all
also agree that a certain type of uncontrolled financial market will be a thing of the past. We
all would even agree that all governments and agencies worldwide will, for some years to
come, have to use extraordinary instruments of intervention in order to save the banking
system, stimulate consumption and prevent social emergenciesand that because of this a
new quality of international cooperation is emerging. Every situation has two outlooks short
term and long term:
Short term: This situation is not generated in days but piled up over years hence cant be
solved with few governmental measures and debt deflation. For it to be overlooked
continuously over a time with the government policy regulation in parallel with a regulatory
body which constantly watch over the situation and ensuring the situation in check via taking
instantaneous decisions.
Long term: The world will not be turned on its head. The framework of principles according
to which wealth is created, goods distributed and human talent put to use will not be changed.
The market economy has a future, provided it remains or once more becomes socially
oriented, operating not as a goal in itself but as an instrument in the service of humankind. In
other words, the social market economy developed must be developed so that which can
motivated with the principle of need not the greed and it can able to regulate itself in
optimum time duration so that no bubble or burst happen in future.
We have to adapt the social market economy to the 21st century, to our new demographic,
technological and competitive conditions and to the emergence of new economic powers like
India, China, Brazil and Russia. This means learning from past mistakes that were made by
many actors worldwide, while sticking to core principles. It means asking the right questions
about how this crisis came about, what to do next, how to speed up recovery and how to
make it sustainable
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Model proposed for sustainable growth: the sustainability development has three core
principles:
1. Economy: growth of all societies with cooperative models i.e. macroeconomics( tradebetween the nations boundary) and microeconomics( trade within the nation to
enhance the efficiency and able to evolve the core strength within the nation) must be
so much free that Adam Smiths Invisible Hand must be present there in parallel to
inefficient bureaucratic system, which overlooks the fault after it occurs.
2. Energy: Every individual must have the access to energy for creation of wealth andfulfilling his basic needs water, food and electricity. In coming 3 decades as
population will rise by 50% the production of these above mentioned triad needed
more resources with enhanced perfect efficient economic system which will further
add to economic development
3. Environment: the business entity must be keep in check so that no business isaffecting the environment around it and climate in negative way, via taxing the bad
i.e. pollution and subsidising the good i.e. non conventional way of energy production
which is helping the economy to flourish again.
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Summary:
Summing up the paper with the conclusion that, yet the market economy approach led the
world to present situation of crisis but still it is the system which is generating the wealth for
many nations for a long time. Every coin has two faces the better people see the good face
and best people look over both the face with the wisdom, i.e. rational decision over the
system implementation and keeping it in check is the need of hour. Among the problems at
hand: how to restructure Wall Street remuneration packages that encourage excessive risk-
taking; restrict irresponsible lending without shutting out creditworthy borrowers; help
victims of predatory practices without bailing out irresponsible lenders; and hold ratings
agencies accountable for their assessments. These are complex issues, with few easy
solutions, but thats what makes them interesting. As Minsky believed, Economies evolve,
and so, too, must economic policy. Again as the three laws of motion cant be contradicted
similarly Adam Smiths law ofInvisible hand and Self interestalso cant be overlooked.
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Annexure:
1. Wealth of nations : Adam Smith, Book IV, Chapter 2, Restraints on particular import& Book 2, Chapter 2, Of the principles which gives occasion to the division of Labour
2. Breakout Nations : Ruchir Sharma, Chapter 1, The Myth of the Long Run3. Wealth of nations : Adam Smith, Book 1, Chapter 3, That the division of Labour is
limited by the extent of The Market
4. Wealth of nations : Adam Smith, Book 4, Of the system of Political Economy5. Black Swan: Nassim Nicholos Taleb, Part II, We just cant predict, Chapter 10, The
Scandal of prediction
6. Minsky Minskys Financial Instability Hypothesis and the Leverage Cycle bySudipto Bhattacharya(London School of Economics), Charles A.E. Goodhart (London
School of Economics), Dimitrios P. Tsomocos Alexandros(University of Oxford),
P. Vardoulakis(Banque de France), This draft: March 2011
7. "World Economic Outlook: Crisis and Recovery, April 2009"