THE risE and dEclinE of dEvEloPmEnT Economics

In 1979 Hirschman was invited to write an essay in honor of William Arthur Lewis. That same year, Lewis won the Nobel Prize in economics. Hirschman had sparred with Lewis in the 1960s: Lewis was a champion of more balanced growth; Hirschman favored disequilibrium. Lewis’ winning the Nobel Prize meant— as Clifford Geertz, Hirschman’s long- time friend, noted— that Hirschman would likely not. By then, Hirschman was growing more and more concerned that the field had grown stale. So he used the invitation to take stock of development economics, to show that it was mixed from the start. But the combination of a narrowing of the field (what he called “monoeconomics”) and the insistence on the part of some (neo- Marxists) that economics in the periphery somehow earned it a different brand of social science sent the field off into a desert. In a sleight of hand, Hirschman affili- ated Lewis with this trend. Now that the great hopes of devel- opment were largely dashed, the field had rallied around the opposite of what once motivated it; scholars replaced hope with futility. What Hirschman advocated was an approach premised on the idea that peoples of the Third World could chart their own futures, and did, despite the long- standing convictions of development economics that only outside forces and expertise could shake them from their lot.

—Jeremy Adelman

Dev elopm en t

50

dEvEloPmEnT Economics is a comparatively young area of inquiry. It was born just about a generation ago, as a subdiscipline of economics, with a number of other social sciences looking on both skeptically and jealously from a distance. The forties and especially the fifties saw a remarkable outpouring of fundamental ideas and models which were to dominate the new field and to generate controversies that contributed much to its liveliness. In that eminently “exciting” era, de- velopment economics did much better than the object of its study, the economic development of the poorer regions of the world, located pri- marily in Asia, Latin America, and Africa. Lately it seems that at least this particular gap has been narrowing, not so much unfortunately be- cause of a sudden spurt in economic development, but rather because the forward movement of our subdiscipline has notably slowed down. This is of course a subjective judgment. Articles and books are still being produced. But as an observer and longtime participant I cannot help feeling that the old liveliness is no longer there, that new ideas are ever harder to come by and that the field is not adequately reproducing itself.

When scientific activity is specifically directed at solving a pressing problem, one can immediately think of two reasons why, after a while, interest in this activity should flag. One is that the problem is in fact disappearing— either because of the scientific discoveries of the preced- ing phase or for other reasons. For example, the near demise of interest in business- cycle theory since the end of World War II was no doubt due to the remarkably shock- free growth experienced during that period by the advanced industrial countries, at least up to the mid- seventies. But this reason cannot possibly be invoked in the present case: The problems of poverty in the Third World are still very much with us.

The other obvious reason for the decline of scientific interest in a prob- lem is the opposite experience, that is, the disappointing realization that a “solution” is by no means at hand and that little if any progress is being made. Again, this explanation does not sound right in our case, for in the last thirty years considerable advances have taken place in many erst- while “underdeveloped” countries— even a balance sheet for the Third World as a whole is by no means discouraging.1

In sum, the conditions for healthy growth of development economics would seem to be remarkably favorable: the problem of world poverty is

r i s e & decl i n e of dev elopm en t econom ic s

51

far from solved, but encouraging inroads on the problem have been and are being made. It is therefore something of a puzzle why development economics flourished so briefly.

In looking for an explanation, I find it helpful to take a look at the conditions under which our subdiscipline came into being. It can be shown, I believe, that this happened as a result of an a priori unlikely conjunction of distinct ideological currents. The conjunction proved to be extraordinarily productive, but also created problems for the future. First of all, because of its heterogeneous ideological makeup, the new sci- ence was shot through with tensions that would prove disruptive at the first opportunity. Secondly, because of the circumstances under which it arose, development economics became overloaded with unreasonable hopes and ambitions that soon had to be clipped back. Put very briefly and schematically, this is the tale I shall tell— plus a few stories and re- flections on the side.

a simple classification of development Theories

The development ideas that were put forward in the forties and fifties shared two basic ingredients in the area of economics. They also were based on one unspoken political assumption with which I will deal in the last section of this paper.

The two basic economic ingredients were what I shall call the re- jection of the monoeconomics claim and the assertion of the mutual- benefit claim. By rejection of the monoeconomics claim I mean the view that underdeveloped countries as a group are set apart, through a number of specific economic characteristics common to them, from the advanced industrial countries and that traditional economic analy- sis, which has concentrated on the industrial countries, must therefore be recast in significant respects when dealing with underdeveloped countries. The mutual- benefit claim is the assertion that economic re- lations between these two groups of countries could be shaped in such a way as to yield gains for both. The two claims can be either asserted or rejected, and, as a result, four basic positions exist, as shown in the following table.

Dev elopm en t

52

Types of development theories

Monoeconomics claim: Mutual- benefit claim: Asserted Rejected

Asserted Orthodox economics Development economics Rejected Marx? Neo- Marxist theories

Even though there are of course positions that do not fit neatly just one of its cells, this simple table yields a surprisingly comprehensive typology for the major theories on development of the periphery. In the process, it makes us realize that there are two unified systems of thought, orthodox economics and neo- Marxism, and two other less consistent positions that are therefore likely to be unstable: Marx’s scattered thoughts on develop- ment of “backward” and colonial areas, on the one hand, and modern de- velopment economics, on the other. I shall take up these four positions in turn, but shall give major attention to development economics and to its evolving relations with and harassment by— the two adjoining positions.

The orthodox position holds to the following two propositions: (a) economics consists of a number of simple, yet “powerful” theorems of universal validity: there is only one economics (“just as there is only one physics”); (b) one of these theorems is that, in a market economy, benefits flow to all participants, be they individuals or countries, from all voluntary acts of economic intercourse (“or else they would not en- gage in those acts”). In this manner, both the monoeconomics and the mutual- benefit claims are asserted.

The opposite position is that of the major neo- Marxist theories of de- velopment which hold: (a) exploitation or “unequal exchange” is the es- sential, permanent feature of the relations between the underdeveloped “periphery” and the capitalist “center”; (b) as a result of this long process of exploitation, the political- economic structure of the peripheral coun- tries is very different from anything ever experienced by the center, and their development cannot possibly follow the same path— for example, it has been argued that they cannot have a successful industrialization ex- perience under capitalist auspices. Here, both the mutual- benefit claim and the monoeconomics claim are rejected.

A cozy internal consistency, bent on simplifying (and oversimplify- ing) reality and therefore favorable to ideology formation, is immediately

r i s e & decl i n e of dev elopm en t econom ic s

53

apparent in both the orthodox and the neo- Marxist positions. This is in contrast with the remaining two positions. It should be clear why I have placed Marx into the southwesterly cell (mutual- benefit claim re- jected, monoeconomics claim asserted). Writing in Capital on primitive accumulation on the one hand, Marx describes the process of spolia- tion to which the periphery has been subject in the course of the early development of capitalism in the center. Thus he denies any claim of mutual benefit from trade between capitalist and “backward” countries. On the other hand, his well- known statement, “The industrially most developed country does nothing but hold up to those who follow it on the industrial ladder, the image of its own future,” coupled with the way in which he viewed England’s role in India as “objectively” progressive in opening the way to industrialization by railroad construction, suggests that he did not perceive the “laws of motion” of countries such as India as being substantially different from those of the industrially advanced ones. Marx’s opinions on this latter topic are notoriously complex and subject to a range of interpretations, as is indicated by the question mark in the table. But to root neo- Marxist thought firmly in the southeasterly cell took considerable labors (which involved, among other things, up- rooting an important component of the thought of Marx). The story of these labors and revisions has been told elsewhere,2 and my task here is to deal with the origin and dynamics of the other “hybrid” position: development economics.

It is easy to see that the conjunction of the two propositions— (a) cer- tain special features of the economic structure of the underdeveloped countries make an important portion of orthodox analysis inapplicable and misleading, and (b) there is a possibility for relations between the developed and underdeveloped countries to be mutually beneficial and for the former to contribute to the development of the latter— was es- sential for our subdiscipline to arise where and when it did: namely, in the advanced industrial countries of the West, primarily in England and the United States, at the end of World War II. The first proposition is required for the creation of a separate theoretical structure, and the sec- ond was needed if Western economists were to take a strong interest in the matter— if the likelihood or at least the hope could be held out that their own countries could play a positive role in the development pro- cess, perhaps after certain achievable reforms in international economic

Dev elopm en t

54

relations. In the absence of this perception it would simply not have been possible to mobilize a large group of activist “problem solvers.”

The inapplicability of orthodox monoeconomics to Underdeveloped areas

Once a genuinely new current of ideas is firmly established and is being busily developed by a large group of scholars and researchers, it becomes almost impossible to appreciate how difficult it was for the new to be born and to assert itself. Such difficulties are particularly formidable in economics with its dominant paradigm and analytical tradition— a well- known source of both strength and weakness for that social science. Accordingly, there is need for an explanation of the rise and at least tem- porary success of the heretical, though today familiar, claim that large portions of the conventional body of economic thought and policy ad- vice are not applicable to the poorer countries— the more so as much of this intellectual movement arose in the very “Anglo- Saxon” environment which had long served as home for the orthodox tradition.

Elements of such an explanation are actually not far to seek. Devel- opment economics took advantage of the unprecedented discredit or- thodox economics had fallen into as a result of the depression of the thirties and of the equally unprecedented success of an attack on or- thodoxy from within the economics “establishment.” I am talking of course about the Keynesian Revolution of the thirties, which became the “new economics” and almost a new orthodoxy in the forties and fifties. Keynes had firmly established the view that there were two kinds of eco- nomics: one— the orthodox or classical tradition— which applied, as he was wont to put it, to the “special case” in which the economy was fully employed; and a very different system of analytical propositions and of policy prescriptions (newly worked out by Keynes) that took over when there was substantial unemployment of human and material resources.3 The Keynesian step from one to two economics was crucial: the ice of monoeconomics had been broken and the idea that there might be yet another economics had instant credibility— particularly among the then highly influential group of Keynesian economists, of course.

Among the various observations that were central to the new devel- opment economics and implicitly or explicitly made the case for treating

r i s e & decl i n e of dev elopm en t econom ic s

55