One of the key neoclassical assumptions of economics is that rational beings take decisions to maximize their own benefits. Nonetheless, when people sacrifice for the well-beings of other beings without expecting personal rewards, they are thought to behave altruistically.
Altruism in terms of economics is considered as all the measures taken for relieving individuals through economic means without taking into account self-interests. Volunteering, donating to charities, prioritizing sustainability principles for future generations, lending financial aid on simpler terms, endorsing developmental plans based on the principles of equity are some of the refined instances of economic altruism in different fields.
However, the term altruism is argued incompatible by the economic decision makers in modern economic approaches for settling down the economic issues faced by today’s world due to certain arguable grounds. The dominance of neoclassical school of thoughts in modern economic thinking is one of the root causes of undermining all those possibilities of development that contradict with the principles of rationality. Furthermore, altruism has taken a back seat due to the escalating neoliberal economic policies emphasizing free market operations, deregulation of financial markets and minimization of state interventions in the economic affairs. Consequently, these neoliberal economic reforms have led to the rise of health and education inequalities in many parts of the world. In particular, health and education are public services by nature that demand regulations in some forms to assure access of these basic necessities for all the citizens. However, free market operations have led to the misplacement of these resources and associating them with profit motivation. Therefore, adopting neoliberal economic approach is overemphasized in these exceptional cases of huge significance.
Furthermore, the latest global wealth report published by the Credit Suisse Research Institute provides core evidences of tremendous income inequality and vanished altruism in the economic growth patterns of recent times. According to this report, 43.4 percent of the total global wealth is owned by top 1 percent people of the world and top 10 percent of world’s population holds 76.5 percent of the total global wealth. Whereas, the bottom half of the world’s total population is left with 1.2 percent of the total global wealth. Owing to this greater inequality in global wealth distribution patterns, the richer are becoming richer and the economic progress of the poor class is slower as compared to the overall economic growth of the world.
The Economic perspective of providing financial assistance to the developing nations by international organizations is also deprived of altruistic behavior. The financial assistance comes with imposing harsh austerity measures such as significant reduction in government’s developmental spending, privatization of state owned enterprises, removing the trade barriers and higher interest rates on the return of debts. Such measures appear to be associated with self agendas of aid providing institutions rather than based upon pure intentions to straighten out the economic challenges of the recipient countries. Although, lending organizations provide immediate financial support, but lead the developing economies towards worse economic scenarios for coming years. For instance, cutting down the developmental budgets for accomplishing strict austerity measures by the borrowing governments deprives of the poorest segments of the states from fundamental healthcare and educational facilities. Similarly, privatization leads to the wage cuts, job losses and consequently adds on to the unemployment and poverty in corresponding states. Likewise, liberalization provides foreign markets with favorable environment to sell their products in developing countries due to the lowest tariffs on imports. This approach reduces the competitiveness of domestically produced goods and advocates more reliance on imports. Hence, the economies start losing their manufacturing bases and are not left with enough products to export quality products. Therefore, the earnings through exports plunge down and proves insufficient to finance the mounting expenditures owing to the utmost reliance on the imports. So, the developing countries have to ask for more debts in order to meet the piling up expenditures. This phenomenon pushes them into the continuous debt trap which gets intensified with the passage.
Likewise, the term inflation is more challenging for the developing countries to cope with than the developed world. The primary reasons include weak infrastructure, corruption and large dependence by the developing nations on the imports which are subjected to more price hikes due to the weakening of national currency as a result of exacerbating inflation. It has been largely witnessed that signing the aid programs offered by international aid organizations brings inflation in developing countries due to the pre-requisite conditions of structural adjustment programs such as implementing new taxes of various forms on the citizens of respective states. This turns the life of a layman more challenging in terms of maintaining the rising expenses within same level of income. Besides this, significant proportions of governments’ budgets are designated for paying high interest rates on debt services and are subjected to the shorter periods of repayments. So, the total financial aid is not consumed in absolutely productive ways due to the strict requirements of aid organizations from the borrowing states. As a result, the desired targets of creating employment opportunities, reducing poverty and fostering economic prosperity are not achieved. Hence, due to the undermining attribute of altruistic behaviors, the financial assistance does not work the developing nations in sorting out their economic adversities.
In spite of the above depiction, altruistic approach can be upheld in modern economic outlooks by yielding interest free debt servicing, absolving fierce austerity measures, investing in capacity building and sharing expertise in the fields of health and education, and collaborating with regards to the developmental initiatives based upon the principles of equity in low income economies. All such options have the potential to fix the current economic hurdles of toady’s world once initiated by the international developmental organizations and the developed world.
An interrogative clause can struck the thoughts of the policy makers of the established economies that why should the developed world adopt zero sum approach of encouraging altruism towards the under-developed world? This outlook can be responded in multiple ways. According to the latest report of International Rescue Committee, the top ten most adversely exposed countries to the climate change roughly contribute 0.28 percent of global Carbon emissions in the atmosphere. Despite of the lowest shares in net carbon emissions, they are facing the severe outcomes of climate change resulting from the externalities produced by the developed world. Besides this, the development achieved by the developed world comprises of natural resource exploitation of many parts of Asia, Africa, Latin America, Middle East and Pacific Islands. Raw materials were imported from these parts of the world at very low costs by the developed nations of today’s world. Customs of resource exploitation brought about water pollution, deforestation, land conflicts, human rights violations, and inequalities in such territories. Hence, these phenomena led to the foundation of economic instability and social unrest in these localities.
Therefore irrefutably, for the purpose of compensating the catastrophes faced by the under-developed world in all forms of externalities due to the modernized world’s pursuing efforts of achieving higher standards of living and the resource exploitation of the impoverished world, it is quite a legitimate solicit of altruistically supporting the under-nourished economies.