Can Narrative Economics Justify Economic Fluctuations and Inequality? An Approach from Micro to Macro Perspective

Abstract

The opus dwells on aspects of building narrative, especially for state policies. It thoroughly examines economic narratives as a reason for the economic fluctuations and aggrandizement of resources. The present work is a watershed development while explaining the factors behind the dynamics of the economic system, engages upon a bottom-up approach, and provides a model for the impact of narrative-driven choices at the micro and macro levels contemplating the role of narrative in escalating inequality. The present research is intrigued by the fact that narratives form an inextricable role while forming and implementing state policies; moreover, non-developmental narratives can dampen the impact of desired policy and economic objectives. Importantly, since facts do not always back narratives, erratic economic and social outcomes petered out from conventional policy action. A few wealthy and resourceful people can swing the narrative and build upon by the low literacy, learning poverty, lack of rational approach, religious and caste factors. Such narratives subsequently influence people’s decisions, often their political decision, which enhances their probability of acquiring more wealth, leading to a perpetual concentration of wealth and power in few hands. The reason for the “perpetual concentration” of wealth and power lies with the existence of strong narratives that directly or indirectly reinforces aggrandizement and causes penury to the few left out underprivileged sections. Such inequality will be nothing short of being “narrative-driven inequality”. The research also emphasized the role of institutions, media, and technology, which unanimously plays a crucial role in creating, validating, and disseminating narratives. An overall ethical responsibility must be felt and shared for the common good and shared prosperity. The participative decision making helps dilute non-developmental narratives.