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Shock Doctor – Jeffrey Sachs

Born 1954 in Detroit, and currently heading the Earth Institute at Columbia University

 

Fifty years ago, it was too easy to suppose that the economists who spoke out for the developing world were soft-left, sandal-wearing, generally anti-capitalist types. But that was before the Polish revolution of 1989, followed swiftly by the Russian Perestroika era, changed all our minds about the proper role of business in social development. Not to mention the bankruptcy of state socialism in the development process.

Joining the front line

Byt the time Sachs became a Harvard economics professor at the tender age of 28, the Solidarity movement in Poland had already been organising for three years. But it was when the break-up of the old Comecon group brought Solidarity to the government table that he was called in by the union, and later by the new Polish government, to devise a transitional model for denationalising the socialist state without immediately imposing the full weight of shareholder pressure on the companies that would now be working under a capitalist system for the first time.

Sachs’s solution, a process that left the initial control of most enterprises to a group of major banks, was not entirely successful but still established a template for subsequent liberations in the former Soviet Union and elsewhere. He helped Slovenia and Estonia (1991 and 1992) to introduce new stable and convertible currencies, and both Soviet President Mikhail Gorbachev and the subsequent Russian President Boris Yeltsin consulted him on the transition to a market economy.

Pain is part of the process

The challenge, you might say, had been to break out of the cold-war economic assumptions from both left and right, and to seek a middle way forward that didn’t necessarily rely on either perception. And yes, there were casualties and real pain – corruption and shortages happened, and many loss-making employers in Eastern Europe went to the wall when their state subsidies expired. It wasn’t always easy being the voice of progress.

As India and then China turned to capitalism, the shock doctor found an important role in establishing the way forward. His work as a senior advisor on health matters for the Indian Government earned him the Padma Bhushan, one of India’s highest honors.He was a key adviser to the US government in devising the Brady Plan, which helped much of Latin America to escape the debt cycles of the 1990s. And his extremely tough rescue plan for Bolivia, as far back as 1985, helped it to defeat its hyperinflation and to restore its credibility, culminating in the linkage of the Bolivian economy to the US dollar.

Africa’s theorist

But by the mid-1990s his thoughts were already turning to economic models for Africa, which have drawn both praise and (sometimes plentiful) abuse. Sachs maintains that Africa’s fragmented politics and its lack of infrastructure are essentially a result of poverty; his adversaries tend to insist, conversely, that the poverty is the result of the fragmentation.

Sachs favours the introduction of improved and genetically modified seeds, irrigation, and fertilizer, which he says can quadruple African crop yields. In short, he does not support the idea that increased aid is necessarily the best solution. Microloans, credit unions and malaria prevention all form part of his economic strategy. This is fresh thinking, by any standards.

Twice voted one of Time Magazine’s 100 most important leaders, Sachs still remains focused on social disadvantage. He is a special adviser to UN Secretary-General Ban Ki-Moon, working on the UN’s Millennium Development Goals – a project which he headed up from 2002 to 2006. He is also co-founder and Chief Strategist of Millennium Promise Alliance, a non-profit organization working to end extreme poverty and hunger.

 “History is written by the rich, so the poor get blamed for everything.”

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