Economic Development for Transformative Structural Change: Lack of Alternatives Is Not the Problem (pt 1/4)
Historically all major thinkers about the economy were development economists as they saw the economy going through transformative structural changes and that is what they studied, says Jayati Ghosh, co-editor of The Handbook of Alternative Theories of Economic
Lynn Fries This is The Real News Network. I’m Lynn Fries in Geneva. Here in Geneva at the Book Launch for the Handbook of Alternative Theories of Economic Development, the comment was made that what this book is telling us is that right now when everybody in the world is recognizing that things are not quite alright e need to actually look at things differently and do things differently. There is a rich tradition of alternative thinking. And there are insights available to us that we should look at. This program features that discussion, specifically, comments made by a panel moderated by book co-editor, Jayati Ghosh, of Jawaharlal Nehru University. We now go inside this book event at the UN Library as Jayati Ghosh opens that discussion.
Jayati Ghosh: We actually think that this book … Well, it was a long time in the making, it took about three or four years to actually get all of this together, but we think it’s come out at a propitious time. Our main editor, Erik Reinert, he couldn’t be here today unfortunately, but he has a theory that we are living in what he calls an 1848 moment. 1848 in Europe was the year of revolutions. It was the year that the Communist Manifesto was written. It was the year when the established order came under attack from left and right. Erik Reinert talks about how there was a very right-wing person who broke the barriers… talked about how free trade et cetera was actually antithetical to a sane society. And he was so right wing, Hildebrandt, he had move to Switzerland. Karl Marx, as you know, was too left wing, he had to move to England.
But John Stuart Mill, who was in fact the big votary of free trade, recanted in 1848. He talks about how, in fact, free trade, there are many concerns with how it is operating and we have to think about what it actually does for the processes of growth and development.
Of course, all of them saw themselves as talking about development. And in a sense, that’s what we want to bring back, the notion that development economics is not something separate. There’s real economics and then there’s development economics. That’s not true. All major thinkers about the economy were development economists because what they saw the economy as doing, in a sense, going through transformations, structural changes, different kinds of evolution. That is what they studied.
So in this book, it’s a very big, fat book, as you can see, there are 40 articles, 50 contributors, but the reason is because we’ve tried to bring in as many different ways of looking at different realities as possible. In the process, we’ve tried to get away from some of the standard, shall we say, mistakes that often happen, well, perspectives on looking at the process of economic development. First of all, the notion that the physiocrats were the origin of economic thinking and after the physiocrats came Smith, and so on, and so forth.
This book shows that there was a wealth of fascinating economic theory, which is still relevant, in the 16th and 17th centuries in Europe, but, in fact, also in China, in the Tang dynasty, in India, in the second and fourth century BC, and so on, and so forth. So there was a wealth of very, very interesting, relevant discussion on economic development in the history of economic thought.
We tried to get away from a very Anglo-Saxon and Northern European, North Atlantic approach to development, which, as you know, is a big problem in social sciences, generally. Also, we have, essentially, tried to move away from a static notion of development. A notion that there is a particular problem, that poverty is a problem that you can deal with by going and doing a particular policy and that that will actually change.
In a sense, we are trying to rescue development economics from what we feel is a kind of trap it has fallen into, where it’s gone from looking at macro processes to micro interventions and to micro aspects. So that you’re no longer looking at economic development as a broad evolutionary process that has winners and losers, in a way that can actually be altered through negotiation, contestation, struggle and change. But you’re looking at poverty alleviation and how to do it. Then, of course, the development industry, we all know, tends to different kinds of silver bullets that would then solve the problem of poverty.
I think the contributions in this book take a much more complex view. There are contributions from many, many different countries from all the major continents. There are historical, analytical, and contemporary contributions. But I think what’s important is that it’s telling us that right now, when everybody in the world is recognizing that things are not quite alright, we need to actually look at things differently and do things differently. There’s a rich tradition of that. There are insights available to us that we should actually look at.
So I’m going to begin by asking Rainer Kattel, who is one of the editors of this volume. Rainer is currently he’s a professor at Tallinn University of Technology in Estonia. He’s also a visiting professor at University College London. I think Rainer has some very interesting insights, not just about industrialization and development, but about de-industrializing, coming from Eastern Europe, and what that does to development. In particular, how the wheels of history can change in very different ways. Sometimes very bad, we’ve been through a lot of the bad, recently and sometimes, in a positive direction.
So, Rainer, can I ask you a little bit about those?
Rainer Kattel: Yeah. I think one of the first things to, in the context of the book, to look at is actually when we started it/discussion with Elgar was probably five years ago,.if you look at it now, the political context has really radically changed and, both for the worse and for the better. In that sense, if you look at what happened in United States, of course, it has become much worse for heterodox ideas and heterodox thinking.
But, also, there are, of course, countries where the ir political change is quite different. Even in my own country, Estonia, where I come from, we were, for 25 years, I think, one of the most neoliberal countries in Europe. So we were number one in economic growth, but also number one in GINI Index. So we had sort of embodied the neoliberal good and the bad. And, of course, also our ideas had actually very difficult traction.
But, since last October, we have a prime minister who used to be on my student. So, things actually can change to the positive or people who have been educated in heterodox ideas can also come to power. And, of course, the same as we see happening now in the U.K.where Jeremy Corbyn, all of a sudden, has become a youth idol. And he’s being sung at at Glastonbury Festival, which is the last thing you would think of as a political event. But, still, so there is a political sea change going on.
I think what the book really tries to address is to show sort of the key fallacies of the last, perhaps, 20 years in development thinking. And I think they all center around the basic idea that economics is a science and economic activity and technology and innovation are somehow value-free; that they do not create moral or social values,that they are apolitical, in that sense. They are what they are. They’re like physics. You just need to do it well, you need to do it right, and you get development.
But, of course, that’s what heterodox economics can do very well, to show this is blatantly not true. I mean, it’s not true historically and it’s also not true in terms of theory and other frameworks and concepts. So if you look at financial innovations, obviously, there are innovations that are very, very harmful for a society, for the social good. The same thing if you look, for instance, around idea of inequality, dislocation of people, all of these processes. There are economics, our economic processes, especially technological processes, can also be very, very harmful. So there is obviously a need to understand economy and economics as a political economy, as a moral science, as it were.
I think this is what the volume really shows that there is a wealth of … There is not only one way doing economics as a moral science, if you will. But there has been in history, and even today, multiple ways of doing that. That’s, perhaps, where this volume has become particularly, I think, timely, is to show exactly for these new political movements, that there is not only one way of doing, I don’t know, 1970s social democracy. But you can also do very different ways of heterodox, new economic policies that are, perhaps, much more inclusive and actually oriented towards public purpose and public good than the economic orthodoxy.
In essence, I think this is really what the books shows, but I think for the political movements, and also for our discussion, I think, what is really the key issue is how do you break what the great John Kenneth Galbraith called bureaucratic symbiosis? I mean, he saw the symbiotic relationship between big business and government. He thought they both sort of serve the same master which is themselves basically, and really don’t care about public purpose, and public value, and all those issues.
I think this really has become, probably, the most interesting issue for our times is how do you break the power of big business and their collusion with government? For instance, what has now become the key in international trade is, of course, data. Data has become so dominantly important, but data is basically owned by five companies. All of them are American companies. So how do you sort of break this kind of hold of these companies over the sort of economic code of our time? And how do you also make the governments actually not to sort of collude with them? Of course, I think today only the European Commission fined Google for 2.4 billion Euros for not following the rules. So I think there is a way to do that.
But I think we need to really to find ways how this becomes more a grassroots movement, rather than just sort of a movement in courts. So I think this is what our volume really tries to sort of highlight, is these various options and various ways to do that, but I will stop here as a brief-intro.
Lynn Fries We’re going to break and be back with Part 2 of this program. Special thanks to the panelists and moderator of this discussion. And the UN Library, Geneva, as host of this book launch for the Handbook of Alternative Theories of Economic Development. And thank you for joining us on The Real News Network.