Laissez-Faire, Laissez Mourir — Developing Economics

The spread of the coronavirus epidemic around the world in the past few weeks has exposed not only differences in the lack of preparedness of various public health systems, but also differences in reactions to the crisis. Some governments imposed an early lockdown in their attempt to ‘flatten the curve’ while others have taken a […]

via Laissez-Faire, Laissez Mourir — Developing Economics

Development as transformation

DSC00236The quote below is about the nature of the development process, at least as it used to be understood. It is taken from an article in the March issue of the journal Development and Change, which provides a forum for the interdisciplinary discussion of current issues of development.

Here, development is seen as a process of transformation and the achievement of greater human well-being across a population, rather than simply poverty reduction by itself. Historically, the latter actually seems to have been achieved and sustained through socioeconomic change rather than narrow targets aiming just to reduce poverty.

This idea also has implications for applying notions of development to richer countries which, despite them having already made the transition to capitalism, are still undergoing a process of transformation, and are therefore in some ways still ‘developing’ socially and economically.

“Inherently multi-dimensional, before the 1980s and the ascendance of neoliberalism, development was understood as encompassing social and economic transformation. Inherent in the idea of development was a project of industrialization (and associated structural transformation of an economy), urbanization, transformations of social institutions and social relations, and improvements in human well-being…accumulation in the ‘modern sector’ allows for it to be taxed for the financing of education, health care and a range of public goods that enhance people’s well-being. Development goes beyond a quantitative increase in aggregate output, as important as that may be; its meaningfulness is to be found in the qualitative improvement in people’s well-being and how command over resources translates in to qualities of ‘doings’ and ‘beings’…[T]hese concerns about the ends of development are captured in the slogan of ‘a better life for all’. This was understood as applying to the full range of people within a territory: the expansion of opportunities and enhancement of quality of living. Development was not simply concerned with the relief of poverty. In the development process ‘structural and institutional factors were assigned a key role in the development process. In the initial phase of the field, the state was also assigned a large role in promoting development almost as a historical imperative’.

Jimi O. Adesina

Good reasons to become a Keynesian — LARS P. SYLL

Below is a revealing quote by Richard Posner from today’s post on the blog of Lars P. Syll. It sums up some of the economics mainstream’s attitudes towards Keynes’ original work, how neglected it is by those arguing against its importance, and its continuing relevance.

I first read Keynes’ General Theory when in my final year of school, before I went on to university. While finding it difficult, it was also inspiring to me and full of insight. In particular, the notion that unacceptable levels of unemployment are a periodic characteristic of capitalist economies and require government action to remedy, truly hit home. It cemented my Keynesian position for some years.

I have since rowed back from being a confident and dedicated Keynesian, although I remain influenced by leftist and other radical economists. Where appropriate, I find that the interdisciplinarity of political economy can also be helpful, not least in the study of development as a process of economic and social change.

Many of those now known as post-Keynesians, who profess to carry the true mantle of Keynes’ original thinking, also wrote on economic development. This is true in the case of key figures Michal Kalecki, Nicholas Kaldor and Joan Robinson, all of whom strongly influenced the so-called Cambridge School and its radical or heterodox offshoots.

Posner’s full quote can be found at the link below.

Until [2008], when the banking industry came crashing down and depression loomed for the first time in my lifetime, I had never thought to read The General Theory of Employment, Interest, and Money, despite my interest in economics … I had heard that it was a very difficult book and that the book had been […]

via Good reasons to become a Keynesian — LARS P. SYLL

Some (political economy) thoughts on the response to Covid-19 – capitalism, socialism and the role of the state

The big state is back with a vengeance, if it ever went away. The apparent suddenness and rapid escalation of the spread of the coronavirus has called forth an almost equally rapid increase in the scope of state intervention in many nations. Countries that had spurned a move to state capitalism have suddenly found themselves having to embrace it.

Authoritarian state capitalist, though ostensibly communist, China, took a while to respond to the outbreak, but once it did, it acted forcibly and, for now at least, it seems to have stemmed the tide. But democratic Japan, South Korea and Taiwan seem also to have responded relatively effectively to the outbreak, at least compared with many other countries.

The UK government has so far pledged a massive fiscal programme of stimulus, including wage subsidies, bridging loans for firms, and at the time of writing is about to announce support for the self-employed as well. Private sector rail company franchises have been suspended in the wake of collapsing ticket sales. The health service has been promised whatever it needs financially to deal with the virus. Private firms are being asked to switch production to medical supplies as fast as possible. The post-crash decade of austerity was already somewhat at an end, but now it has been dramatically, inevitably put into reverse gear. Continue reading

Beyond the modernist-postmodernist dualism – an application to development economics

Context matters in economics, both in theory and policy. The quote below from development economist Daniel Gay summarises his attempt to bridge and transcend the divide between the modernism which characterises mainstream economics and the subjectivism of postmodernism. He points the way to the importance of reflexivity in social science, and how the ‘background, beliefs and possible biases’ of policy-makers and their advisers should be made explicit in arguments used to justify particular decisions.

This is especially important in development economics, but also economics in general, because of the distinctive economic, social and political differences between specific countries, in and through time. This is so whether one is comparing rich and rich, rich and poor, or poor and poor. There is little room for universal theories here. Continue reading

Holistic visions in economics – philosophical lessons from the Cambridge tradition

MartinsCambridgeRevivalThe Cambridge tradition referred to here has been the inspiration for much non-mainstream, heterodox economics across the world. It tends to be left-wing politically and in policy terms, biased towards state intervention to improve economic performance and achieve greater social justice in society.

In many ways, as heterodox institutionalist economist Geoffrey Hodgson has put it, this Cambridge tradition, whether post-Keynesian or heterodox more generally, has not had the influence on mainstream thinking that the originators of its critiques and contributions have surely craved. This has been due, according to Hodgson, to a sometimes uncritical attitude towards statism and an often implicit adherence to the desirability and workability of democratic socialism. There has also been a neglect of microeconomic issues, such as alternative psychological theories of the individual which critique utility maximisation, and the institutions which shape incentives, as well as the role of information in production and markets.

Despite all this, the quote below is from a fascinating, wide-ranging book which explores the author’s conception of the Cambridge tradition in terms of its economic, social and ethical theory. It makes a case for the philosophical notions of internal relations and organicism, and from there for a macroeconomics which cannot be reduced to microeconomics.

From subatomic particles all the way to human societies, this philosophical vision of reality argues for the primacy of entities as constituted by their relationships with other entities. I find this holistic notion appealing; these kinds of ideas reinforce my own attraction to thinking about the systemic in economics and political economy, which tends to be neglected by the mainstream. Continue reading

Fighting corruption in developing countries – an interview with Mushtaq Khan

Professor Mushtaq Khan, who I was lucky enough to be taught by at SOAS, here discusses the fight against corruption in developing countries on Nigerian TV, and why in many cases it simply is not working.

In the video, Khan ranges over the differences between ‘rule-following’ in advanced and poor countries, and the incentives facing individuals in economies which are largely informal.

He makes a point of distinguishing between forms of corruption which are damaging for growth and development and those which are associated with the promotion of these processes. He cites examples from the past such as South Korea, Taiwan and China where the latter has occurred.

Khan also mentions the problem of reform fatigue in cases where plenty of money and effort has been spent fighting corruption with little in the way of positive results. The answer, he says, is not to give up, but to intervene in ways which actually work. This may involve policies which operate at a relatively small scale to begin with, rather than blanket top-down interventions, so that successes are sustainable and gradually build support for further changes across the economy and society.

As well as being a Professor of Economics at SOAS, Khan is Executive Director of the Anti-Corruption Evidence research consortium.