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eradication of poverty and the pursuit of
economic equality for all. According to
World Bank, in 2005, 41.6 percent of Indians
lived in poverty with less than $1.25
per day. In 2008, the mortality rate for
children under the age of fi ve stood at 69
per 1,000 which is a little less than in
Haiti (72 per 1,000) and more than in
China (21 per 1,000). Hardly any evidence
could further dispute the
self-destructive nature of socialist
economic policies to deliver the
promised goals.
The failure of socialism in development
policy refl ects its misunderstanding
of the emergence of
economic system as an order
of spontaneous creation.
Socialist political experiment
rests mainly on the
idea of guiding the development
policy through economic
dirigisme. In the
course of political
economic history,
C OMPARATIVE PLANNING
socialist political leaders pledged on the
promise of delivering social goals such as
free education and health care and a better
standard of living for all members of
society. The socialist philosophy of economic
policy is mainly derived from the
philosophical thought of Marx, Hegel,
Rosseau and Lenin. The epistemological
nature of economic philosophy is subject
to the perception of human nature of
greed in relation to the concept of “homo
economicus” fi rstly developed by Adam
Smith in “The Wealth of Nations”. In its
origins, the conceptual framework in development
policy depends on which economic
philosophy shall prevail as a set of
guiding principles in the policy course.
The rise of the British empire in the 19th century of the Victorian age to the world
political and economic giant was largely
based on the legacy of the economic
thought from enlightenment which
stressed the importance of free market,
sound money and limited government
which focused on the enforcement of the
rule of law. The intercourse of development
policy in each country lies fi rmly on
the grounds of formal and informal institutions.
The interaction between formal and
informal institutions is one of the most
powerful determinants of a perspective of
economic development in a long term.
Formal institutions such as the constitution
and legislative laws are nonetheless a
central element on which the creation of
the fundamentals for the pursuit of economic
development is based. However,
formal institutional phenomena could not
be explained without a proper understanding
of informal institutions such as
ethics, culture and habits. These institutions
endogenously determine the very
nature of formal institutions since the latter
are not established mechanistically but
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