In his new book, Ruchir Sharma, an economist who specialises on emerging economies, revitalises the jargon-laden field of economics as a practical art that is based not just on numbers and figures but rather through sensible observations of the world. In a time when the area and scope of ‘good journalism’ is fast shrinking, Sharma, through his book, appears doing some serious soul-searching, before guiding his readers on how to read the sensational political headlines, the stories on rich, popular and trivial entries as signs of imminent booms and impending busts in the real world.

Despite being a book on economics at its core, The Rise and Fall of Nations: Ten Rules of Change in the Post-Crisis World makes a marked departure from just relying on complicated data on debt, trade and capital flows. Rather, the book offers insights on ‘political economies’, that underscores the author’s deft command of the interface between economics and politics—delving into only the numbers that are most relevant for a nation’s fortunes.

While keeping any theoretical musings at a distance, Sharma relies on his already tested approach that brought him immense fame through his 2012 book, Breakout Nations—a survey of emerging markets. A practitioner of long-term economic forecasting, Sharma is uniquely positioned as a global economist to suggest a bullish stance based on in-depth understanding of the fundamentals on the ground and through his access to the highest offices in the world. 

Sharma proposes that the post-crisis (post-economic recession) age has turned the world upside down, stymieing supercharged growth in the last decade. Furthermore, the staggering gap between public expectations and the economic growth on the ground, Sharma says, has created a fertile ground for radical political dissent and de-globalisation. 

The new post-crisis epoch calls for ‘new economics’ and book’s message is clear: The world can’t remain static, and nations should not expect a uniform macro scenario beyond a certain timeframe. Hence, nations will rise and fall—and a great sea of change will dismantle the ‘old world order’ of the 20th century, where nations were overwhelmed by the post-enlightenment Western notion of development, the effects of World Wars, Cold War and multilateral, trans-national institutions. 

Sharma is among those few chroniclers of economic events who has clearly spotted the factors behind the sudden rise of the ‘ultra right’ and free fall of ‘progressive elements’, a trend that is sweeping across the world and is reshaping economic policies. To that end, Sharma doesn’t see the spectacularly improbable rise of Donald Trump in the United States as an isolated incident. Even among South Asian democracies, leaders like Narendra Modi and KP Sharma Oli at times make their countries extensions of their own personalities and divisive politics. The author sees these rulers-at-large as desperate to convince themselves and the public that they preside over regimes with the power to change and shape the course of events. 

What primarily makes the book refreshingly honest is Sharma’s acute narrative from an investor’s perspective that does not shy away from making harsh, but necessary observations of the world. He consciously makes comparisons between countries and predicts why the global capital flows will remain depressed. This, then, Sharma proposes, is likely to worry emerging economies which heavily depend on outsourced work from the developed countries, where the costs of services are much higher.

It’s worth noticing that the structural force behind this century’s rise in consumerism has been the middle-class—the primary beneficiaries of the global trade integration. The middle-class per se’ is an ambiguous social-economic classification, broadly reflecting the ability of people to lead comfortable lives. The middle-class usually enjoy stable housing, healthcare, educational opportunities for their children, reasonable retirement and job security, and discretionary income that can be spent on vacations and leisurely pursuits. But the current downturn has brought this process to a halt—and households are saving again in an effort to rebuild lost wealth. Sharma predicts that this will be a lasting effect of the global financial crisis.

How, then, can the world economy fill this void in global demand brought on by the retrenchment of the large numbers of affluent consumers? Naturally, the emerging middle-class in China, India and other populous countries has to become the next global consumers under the new set of conditions. This could continue should these changes be institutionalised. But the policy support needed to achieve such a rebalancing is not easy in these countries. 

The creation of a social safety net, medical insurance schemes, and better public education service should be taken as markers by these economies before readying for a ride of high consumption based on individual savings. 

In short, Asian consumption is tied in the minds of many analysts to long-term institutional changes. Given the difficulties of implementing such changes, it is hard to be very confident that this rebalancing will happen in the medium term. Sharma has his views on this, and his new book is undoubtedly a helpful guide in solving the many questions miring the post-crisis world. 

Thakur is a New Delhi-based journalist and writer, he can be reached on [email protected]