When corruption crosses beyond the "peak", it tends to become more prevalent and keeps on escalating further, said Professor Wahiduddin Mahmud, chairman of the Economic Research Group.
"It becomes difficult to maintain honesty in such a time," he remarked during a public lecture, organised by the Economics Study Center of Dhaka University on Thursday.
"When corruption is at its minimum, individuals find it more difficult to get involved in it. On the other hand, when corruption is widespread, it is easier to commit such acts and even honest people find themselves in trouble," Wahiduddin said in his lecture on "Economics Crossing Boundaries: Possibilities and Constraints".
Professor Wahiduddin said the economic growth of the country is not entirely consistent with moral standards.
"The indexes used to show the economic growth over the last decade were done according to the economy. However, we can neither match it with reality, nor disregard it," he observed.
"The GDP growth reflects extreme discrimination and financial crisis. We are unable to explain it in the language of economics. At the same time, we are failing to provide any new information," he said, adding, "GDP should not be the only marker of growth. Increased economic growth means expanded social welfare."
He recommended ethical regulation of economic infrastructure for market control as well as strict use of law and technology.
The lecture was based on Professor Wahiduddin's latest book "Markets, Morals and Development: Rethinking Economics from a Developing Country Perspective."
Speaking from his book on market economy, he said, "Free market economy, which is created only to serve personal interest, will not bring development."
Referring to the theory of Adam Smith, considered the father of modern economics, Professor Wahiduddin said, "Smith spoke of a free-market economy where the market fixes the prices. But modern economist John Maynard Keynes, in one of his books, asked what will become of the market formed completely through personal interest?"
According to John it would be a complete mess. If there is no morality in the market economy, it will collapse in 10 minutes. It has to be formed in light of social and political structure.
"If our policymakers made decisions on political policy with an understanding of economics, they would not be able to sleep at night. Because such decisions are not made with limited resources like ours," he said.
He continued, "Economic development is not just about economic analysis. It depends on the culture and psychology of the people of a country developed over a long period of time. The World Bank is now acknowledging that one of its models has worked differently in different countries."
Wahiduddin urged for thinking outside of textbook economics saying, "We use Western textbooks in economics. There are examples in our textbooks about the Reserve Bank of America, about the European market or about any American society. But the market system of a developing economy is not like the market system of the west."
The lecture was moderated by Professor Atonu Rabbani, Mushtaque Chowdhury Chair, health and poverty, BRAC James P Grant School of Public Health.
The Business Standard media-partnered the virtual lecture event.