3. Policy Response

Human civilization over the centuries has witnessed a considerable change in how societies are governed. Greater part of history of human civilization covers government by monarchies. The functioning of parliamentary democracy, which is now ruling large portion of the world, has had relatively short life span. Far shorter is the record of totalitarian regimes established after revolutions through military power and armed struggle. In all these societies, from monarchies to democracies, contemporary knowledge of economics governed the policy making in the interest of society. Fiscal and monetary affairs were managed in a manner to balance the fiscal sustainability of the state against the societal interests. Learned men always advised the royalty on the right course of economic policy or fiscal stance. As economics developed as an independent body of social science, economists became the advisors to the policy makers. The affinity between economists and politicians has been a critical factor in most decisive moments in a country’s destiny and also influencing the course of global development. Trust, courage and conviction, and vision of the political leadership determined its political survival from time to time. Such a synergistic partnership of economic wisdom and political traits has led to prosperity and equity at times, while the conventional wisdom and political myopia or obstinacy have also been the cause of economic doom and bankruptcy.