Uprising and economics: Lessons from history for Bangladesh

The present is rooted in the past. Although our knowledge of history is incomplete and often distorted, certain events and incidents hold the power to shed light on current affairs and future possibilities, guiding us toward wise solutions. By understanding past strengths, weaknesses, and mistakes, we can better shape the future.

History is not a random series of events. Karl Marx saw history as "economics in action"—a contest among individuals, groups, and nations for food, resources, and economic power. These struggles are influenced by institutions that set societal rules and shape economies, leading to disparities in stability and prosperity. History shows that every economic system must offer some form of profit motivation to drive productivity.

On January 13, 2011, Mohamed ElBaradei, former head of the International Atomic Energy Agency and 2005 Nobel Peace Prize winner, tweeted, "Tunisia: repression + absence of social justice + denial of channels for peaceful change = a ticking bomb." The following day, Tunisia's President Ben Ali, in power since 1987, was forced to step down, sparking the "Arab Spring."

Drawing on extensive historical research, Daron Acemoglu and James Robinson argue in their acclaimed work Why Nations Fail that a nation's sustained prosperity depends on inclusive political and economic institutions. Good institutions foster trust and create an environment where conflicts between competing interests can be peacefully resolved.

In recent years, Bangladesh also saw growing autocratic rule, social inequities, and disregard for democratic principles. Such factors fueled a student-led uprising, ultimately forcing Sheikh Hasina to step down in a dramatic end to her government. Economic conditions, including perceived injustices in the politicised quota system for government jobs, high youth unemployment, and rising living costs, further ignited public frustration. Economic misdeeds during the past 15 years compounded this discontent. Look at the staggering numbers: bank loan defaults have increased by nine times, embezzlement of about $8 billion from the banking sector, nearly $150 billion smuggled out of the country, accumulation of unplanned and costly external public debt of about $100 billion, etc. 

Economic inequality: An inevitable phenomenon

Will and Ariel Durant, Pulitzer Prize-winning historians, compiled The Lessons of History, a collection of essays drawn from their lifetime research of 5,000 years of human culture and civilization. They explained that practical abilities vary widely among people, with a minority often possessing a disproportionate share of exceptional talents. Consequently, the Durants concluded that wealth concentration and economic inequality are natural, recurring features throughout history.

When inequality becomes overwhelming, this imbalance is often moderated either by peaceful reforms or, if left unaddressed, by violent revolutions to redistribute wealth. For example, faced with a potential revolt due to extreme wealth disparity between rich and poor, Solon, an enlightened leader, saved 6th-century B.C. Athens through sweeping reforms. In contrast, Rome in the 2nd century B.C. suffered a century of class conflict and civil war due to its rigid stance on wealth concentration. More recently, from 1933 to 1952 and again from 1960 to 1965, the United States pursued peaceful reforms to achieve a more balanced redistribution, reflecting Solon's approach.

In Bangladesh, a crony capitalist system has concentrated wealth among a small group of oligarchs at the centre of power, who leverage political and personal networks to benefit at the expense of the broader population. These elites have found ways to exploit natural resources and syphon foreign currency out of the country, creating an inevitable crisis through wealth concentration in the hands of a select few.

Bangladesh now faces a choice: follow Solon's path of peaceful reform or risk a violent upheaval to curb further exploitation of state resources and work toward a more just and equitable society.

Institutions: The foundation of a nation

Drawing on extensive historical research, Daron Acemoglu and James Robinson argue in their acclaimed work Why Nations Fail that a nation's sustained prosperity depends on inclusive political and economic institutions. Such institutions distribute power broadly, embedding it within open, pluralistic political systems rather than concentrating it in the hands of a narrow elite. This distribution ensures meaningful constraints on the exercise of power, supporting the development of inclusive economic systems that prevent elites from exploiting public resources.

A compelling example is the Korean peninsula: once united, it split into two states with vastly different institutions, leading North Korea to become one of the poorest and South Korea one of the most prosperous countries in the world. Similar trends are evident globally; a recent study by Professor Simeon Kaitibie and his team illustrates how institutional quality positively impacts agricultural services in Sub-Saharan Africa and Asia.

Good institutions foster trust and create an environment where conflicts between competing interests can be peacefully resolved. Unfortunately, in Bangladesh, the deterioration of institutions since independence is troubling, despite a few success stories. Yet, as history repeatedly shows, human ingenuity can overcome challenges— geological, psychological, economic, or even those related to food security. As Will and Ariel Durant observed, "Man, not the earth, makes civilization."

With sincere efforts and committed leadership, Bangladesh can overcome its obstacles and restore its societal foundation. Progress may be slow, but with determination, the groundwork for a stronger nation can be laid, sustaining hope for a better future.

Bangladesh: A "soft state"

Bangladesh can be labelled as a "Soft State," a term coined by Swedish Nobel laureate Gunnar Myrdal to describe development challenges in the Third World. This term signifies a nation with weak legislation, inconsistent law enforcement, and widespread disregard for the rule of law, particularly by public officials who often collude with powerful elites instead of regulating them. These characteristics result in corruption across decision-making and execution processes, hindering broad public participation in economic and political life and obstructing the establishment of inclusive institutions.

In recent years, the government has emphasised massive infrastructure projects—roads, highways, metro lines, and bridges— as symbols of progress, often neglecting the foundational role of strong institutions. Key institutions, such as security agencies, the judiciary, civil bureaucracy, the election commission, and anti-corruption and financial oversight bodies, have often been compromised by political influence, leading to uneven development. The fragility of these institutions became clear when several crumbled quickly after a regime change, an unprecedented phenomenon in Bangladesh's history.

The challenges of a "Soft State" are crucial factors in underdevelopment and can significantly delay progress. Following Bangladesh's recent student-led movement, there is an urgent need to strengthen the nation's foundations for long-term, sustainable prosperity by reducing its "softness."

Long road ahead

Bangladesh must seize this pivotal moment. Social justice and discipline are essential for lasting economic and human progress. Inclusive economic institutions can provide the masses with opportunities to participate actively in careers and commerce, fostering societal stability. However, the challenge lies in establishing these institutions.

Non-inclusive, or extractive, political systems typically allow elites to structure economic institutions in ways that benefit themselves at the expense of society, reinforcing their political dominance. Even if new leadership emerges, the cycle often continues, with new power holders incentivised to maintain the status quo of extractive institutions to strengthen their control.

Evidence suggests that mainstream political parties have limited motivation to build beneficial institutions unless pressured by grassroots movements, such as the recent student mobilisation. There may even be a need for a new political party with visionary leadership and youth-driven energy focused on nation-building.

At the same time, deep-rooted corruption, often protected by political power, cannot be significantly reduced without strong institutions staffed by people of integrity.

Reforming these institutions to ensure stability and restore public confidence is a monumental task. Therefore, the interim government's tenure should reflect the time needed to address these complexities and set Bangladesh on a more stable path.

Dr Ishrat Hossain (PhD, Oklahoma State University, USA) is an Adjunct Associate Professor of Economics at East West University, Bangladesh. Write to him at Hishrat2014@gmail.com