Politics in the realm of Economics; Sickness in Nepal’s Market
Economists often cringe at the notion that a state’s economy is embedded within the larger political structure. Most would argue that the economy is largely independent of politics, and that it is instead driven by the market’s cycle of supply and demand. Nothing could be further from the truth however. Nepal serves as one of the finest case studies on how political corruption and cronyism has negatively impacted and suppressed its nascent corporate sector.
The above mentioned example is not to absolve other political parties of their sins. Kp Oli’s adventures regarding ministerial appointments of business tycoons, for example, is general knowledge. The issue this article attempts to highlight is less about a political party’s corruption and more about the systemic rot that suppresses the potential of a truly ‘free’ market. The critique is more pointed towards this revolving door that exists between business and politics.
While the proportional representation system has its merits, its use by political parties to hire business tycoons as MPs and ministers has affected the market negatively. It should be common sense understanding that placing people with clear conflict of interests in political positions allows them to not just bring favorable policies for particular sectors they have invested in, but also to manipulate their sectors and become monopolies.
As a budding market, Nepal’s business potential is huge. There are multiple sectors like agriculture and hospitality that have the capacity to be the structural pillars of the state’s economy. Moreover, somewhat established markets like banking institutions too can gain immensely provided the state streamlines its bureaucracy and gets rid of the red tape. Additionally, what can be gleaned from the arguments above, is the need for an urgent overhaul in Nepal’s politico-economic system. From creating a central election financing system to ensuring politicians do not have conflict of interest in the corporate sector, these suggestions need to be implemented ASAP in order to cleanse the political economy from the system rot that it is currently plagued by. While conventional economists insist on the relative independence of markets from politics, we believe politics and economy are embedded in this soup called political economy. The state is definitely responsible in creating policies and an environment conducive for the market. And the market will collectively lobby/pressure/incentivize the state to formulate business friendly policies. So, instead of making irrelevant arguments like the need to separate business and politics, our aspirations should rather be in ‘freeing’ the market from the clutches of monopolistic tycoons and their political buddies.