More Government, Please
There is a strong need for checks and balances on powerful companies, especially MNCs, marketing to the poor. The romantici- zation of the poor as “value-conscious consumers” has resulted in too little emphasis on legal, regulatory, and social mechanisms to protect these vulnerable consumers. In the absence of such protective mechanisms, even companies that proclaim to be socially responsible market products to the poor that are of dubious value and possibly even harmful.
In recent years, the political ideology of the world has shifted decisively toward an increased role for markets.64 There is a growing libertarian movement that seeks to decrease the role of the state and to “marketize” all public sector functions. In particular, the BOP proposition argues that the private sector should play the leading role in poverty reduction; “governments and donors become mere catalysts of business activity.”65 This libertarian perspective is intrinsically flawed and problematic because it grossly underemphasizes both the role and the responsibility of the state for poverty reduction.
There is much ideological debate about the roles of free markets and the state in achieving overall economic growth and development. Regardless of one’s position on this ideological debate, there is no denying a much-needed role for the state. Financial economists Rajan and Zingales, from the University of Chicago, persuasively argue, “markets cannot flourish without the very visible hand of the governments.”66 It is the role of the state to mediate the relationship between markets and society. There is also a need to impose some restrictions on free markets to prevent exploitation of the vulnerable. Another vital role of the state is to provide basic services such as infrastructure, public health, and education. Both these responsibilities of the state are even more critical in the context of poverty reduction.