William Easterly: The Ideology of Development

William Easterly with his usual perspective, free markets are good, Jeff Sachs is bad (Thomas Friedman too, but who cares so I cut that part), i.e. he argues that "Developmentalism is a dangerous and deadly failure." Here's a shortened version -- the longer essay has the full flavor of his remarks:

The Ideology of Development, by William Easterly, Foreign Policy: A dark ideological specter is haunting the world. It is almost as deadly as the tired ideologies of the last century — communism, fascism, and socialism — that failed so miserably. It feeds some of the most dangerous trends of our time, including religious fundamentalism. It is the half-century-old ideology of Developmentalism. And it is thriving.

Like all ideologies, Development promises a comprehensive final answer to all of society’s problems, from poverty and illiteracy to violence and despotic rulers. It shares the common ideological characteristic of suggesting there is only one correct answer, and it tolerates little dissent. It deduces this unique answer for everyone from a general theory that purports to apply to everyone, everywhere. ... Development even has its own intelligentsia, made up of experts at the International Monetary Fund (IMF), World Bank, and United Nations.

The power of Developmentalism is disheartening, because the failure of all the previous ideologies might have laid the groundwork for the opposite of ideology—the freedom of individuals and societies to choose their destinies. Yet, since the fall of communism, the West has managed to snatch defeat from the jaws of victory, and with disastrous results. Development ideology is sparking a dangerous counterreaction. The “one correct answer” came to mean “free markets,” and, for the poor world, it was defined as doing whatever the IMF and the World Bank tell you to do. But the reaction in Africa, Central Asia, Latin America, the Middle East, and Russia has been to fight against free markets. So, one of the best economic ideas of our time, the genius of free markets, was presented in one of the worst possible ways, with unelected outsiders imposing rigid doctrines on the xenophobic unwilling.

The backlash has been so severe that other failed ideologies are gaining new adherents throughout these regions. ... This blowback against “globalization from above” has spread to every corner of the Earth. It now threatens to kill sensible, moderate steps toward the freer movement of goods, ideas, capital, and people.

Development's Politiburo

The ideology of Development is not only about having experts design your free market for you; it is about having the experts design a comprehensive, technical plan to solve all the problems of the poor. These experts see poverty as a purely technological problem, to be solved by engineering and the natural sciences, ignoring messy social sciences such as economics, politics, and sociology.

Sachs, Columbia University’s celebrity economist, is one of its main proprietors. He is now recycling his theories of overnight shock therapy, which failed so miserably in Russia, into promises of overnight global poverty reduction. “Africa’s problems,” he has said, “are … solvable with practical and proven technologies.” His own plan features hundreds of expert interventions to solve every last problem of the poor—from green manure, breast-feeding education, and bicycles to solar-energy systems, school uniforms for aids orphans, and windmills. Not to mention such critical interventions as “counseling and information services for men to address their reproductive health needs.” All this will be done, Sachs says, by “a united and effective United Nations country team, which coordinates in one place the work of the U.N. specialized agencies, the IMF, and the World Bank.” ...

Unfortunately, Development ideology has a dismal record of helping any country actually develop. ...

What explains the appeal of development ideology despite its dismal track record? Ideologies usually arise in response to tragic situations in which people are hungry for clear and comprehensive solutions. The inequality of the Industrial Revolution bred Marxism, and the backwardness of Russia its Leninist offshoot. Germany’s defeat and demoralization in World War I birthed Nazism. Economic hardship accompanied by threats to identity led to both Christian and Islamic fundamentalism. Similarly, development ideology appeals to those who want a definitive, complete answer to the tragedy of world poverty and inequality. It answers the question, “What is to be done?” to borrow the title of Lenin’s 1902 tract. It stresses collective social outcomes that must be remedied by collective, top-down action by the intelligentsia, the revolutionary vanguard, the development expert. As Sachs explains, “I have … gradually come to understand through my scientific research and on the ground advisory work the awesome power in our generation’s hands to end the massive suffering of the extreme poor … although introductory economics textbooks preach individualism and decentralized markets, our safety and prosperity depend at least as much on collective decisions.”

Freeing the Poor

Few realize that Americans in 1776 had the same income level as the average African today. Yet, like all the present-day developed nations, the United States was lucky enough to escape poverty before there were Developmentalists. ... George Washington did not have to deal with aid partners, getting structurally adjusted by them, or preparing poverty-reduction strategy papers for them. Abraham Lincoln did not celebrate a government of the donors, by the donors, and for the donors. Today’s developed nations were free to experiment with their own pragmatic paths toward more government accountability and freer markets. Individualism and decentralized markets were good enough to give rise to penicillin, air conditioning, high-yield corn, and the automobile—not to mention better living standards, lower mortality, and the iPod.

The opposite of ideology is freedom, the ability of societies to be unchained from foreign control. The only “answer” to poverty reduction is freedom from being told the answer. Free societies and individuals are not guaranteed to succeed. They will make bad choices. But at least they bear the cost of those mistakes, and learn from them. That stands in stark contrast to accountability-free Developmentalism. This process of learning from mistakes is what produced the repositories of common sense that make up mainstream economics. The opposite of Development ideology is not anything goes, but the pragmatic use of time-tested economic ideas—the benefits of specialization, comparative advantage, gains from trade, market-clearing prices, trade-offs, budget constraints—by individuals, firms, governments, and societies as they find their own success.

History proves just how much good can come from individuals who both bear the costs and reap the benefits of their own choices when they are free to make them. ... Those who best understood the lessons of the 20th century were not the ideologues asking, “What is to be done?” They were those asking, “How can people be more free to find their own solutions?”

The ideology of Development should be packed up in crates and sent off to the Museum of Dead Ideologies, just down the hall from Communism, Socialism, and Fascism. It’s time to recognize that the attempt to impose a rigid development ideology on the world’s poor has failed miserably. Fortunately, many poor societies are forging their own path toward greater freedom and prosperity anyway. That is how true revolutions happen. [via Newmark's Door.]

Update: Dani Rodrik comments on the article.

Comments

[anne]

Thank you so much for the essay, which has a motivation I need to understand better before being critical.

"A dark ideological specter is haunting the world. It is almost as deadly as the tired ideologies of the last century — communism, fascism, and socialism — that failed so miserably. It feeds some of the most dangerous trends of our time, including religious fundamentalism. It is the half-century-old ideology of Developmentalism. And it is thriving."

Why would such a passage be written? Notice the easy linking of communism and fascism and socialism. Then, we come to religious fundamentalism. Would socialism mean the dread universal health care system of Norway? What sort of religious fundamentalism? Catholic? Imagine how afraid we should be of a Mass in Latin. Where does the anger come from?

[paine]

if this one question catechism
has a cogency
i'll be damned if i know what it is ...

"the opposite of ideology
the freedom of individuals and societies
to choose their destinies"

perhaps he means
that sub set of ideologies
those that have an action plan
to impose
dogmatic codes on the populous
at any and all cost to that populous

ie anti pragmatism
the mom and apple pie amurrrikan
anti dogmatic ideology

the nothin fixed about it
'cept nothins ever fixed
ideology

i guess
its nice to new speak
the perfectly useable
word
ideology
into
its "terrible " proper sub set only

so mindless
" wait next time
and maybe
you'll get yours-ism"
can prevail

ther's always a new world
acomin for pure know nothingness

using proper conditioning techniques
" we are all
free to be thinkless "
crowd
can hammer
chicken brained
trial and error alibis
into the helotry
(from left or right)

leaving the producing
social herd
to be gull winged
and sheared ad libidum
by the latest band aid and sky pie fab

just call it freedom

freedom
to make progress happen
ie
an open process
of civil internal
re-organization
by the benignly
inspite of themselves
goo goo consequential selfish demons
in chase of a new type
of
private market appropriatable only

whole people social surplus

are we to "believe " the enlightenment was
a loose internally inconsisten
grab bag of memes
an anti ideology ???
eclecticism has its discontents
but its not idea less

its not such deductionless
rude myopic empirics
a rube won't be wise
to try to "know "
ahead of time
when a sharpee
is about to guy his ass away

a humble earthy example from the 60's
that comes to mind

jobblers using the ideology based conjecture
"they" may use
inflation policy to take away my real gains
so lets
cola our wage rate contracts

[anne]

The problem I have had with William Easterly from the beginning is philosophical, and echoes a problem I have worried about before. Easterly has always gone way beyond rightfully criticizing specific development program or generalizations, to mocking a sense that we have an obligation to others. That is why the title "White Man's Burden" has such a mean-spirited connotation.

[John H. Morrison]

From the second sentence in this guy's article, linking socialism with communism and fascism, one can see the worth of this article -- it's all bad history. Which government resembles the fascist and communist governments more, US under Bush, Chile under Pinochet, and Singapore; or the social democracies of western Europe and elsewhere?

Did the southeast Asian countries advance through freedom and the free market, or through government industrial policy? How free were people in the US in general, when the US had its alleged free market? (Let's include people who weren't "free, white, and twenty-one" and male.)

[anne]

When the Supreme Court reversed the Brown v Board of Education ruling, the reversal worried me more in philosophy than real immediate consequences. Separate was held to be inherently unequal in 1954, so we had an obligation to work at intergation. Suddenly integration is not a constitutional nor court ideal. We are free again, as we were from the revolution to 1954, not to work for integration.

Similarly, that we are to be concerned with development in Africa becomes questionable and worse when we have never shown all that much obligation to begin with. So, we are free to ignore the needs of Africans and they in being ignored are free.

[ken melvin]

Ye shall have but one god.

[evagrius]

"Few realize that Americans in 1776 had the same income level as the average African today. Yet, like all the present-day developed nations, the United States was lucky enough to escape poverty before there were Developmentalists. In the words of former IMF First Deputy Managing Director Anne Krueger, development in the rich nations “just happened.” George Washington did not have to deal with aid partners, getting structurally adjusted by them, or preparing poverty-reduction strategy papers for them. Abraham Lincoln did not celebrate a government of the donors, by the donors, and for the donors. Today’s developed nations were free to experiment with their own pragmatic paths toward more government accountability and freer markets. Individualism and decentralized markets were good enough to give rise to penicillin, air conditioning, high-yield corn, and the automobile—not to mention better living standards, lower mortality, and the iPod."

Few realize that, in 1776, Americans were settled in a very small strip of land on the eastern coast with a huge continent, fairly underpopulated, ( the native population having been drastically reduced through disease imported from Europeans), and full of natural resources and fertile land. Also, few realize that an ocean proved a fairly effective barrier to any nation wishing to invade it.

"The opposite of ideology is freedom, the ability of societies to be unchained from foreign control. The only “answer” to poverty reduction is freedom from being told the answer. Free societies and individuals are not guaranteed to succeed. They will make bad choices. But at least they bear the cost of those mistakes, and learn from them. That stands in stark contrast to accountability-free Developmentalism. This process of learning from mistakes is what produced the repositories of common sense that make up mainstream economics. The opposite of Development ideology is not anything goes, but the pragmatic use of time-tested economic ideas—the benefits of specialization, comparative advantage, gains from trade, market-clearing prices, trade-offs, budget constraints—by individuals, firms, governments, and societies as they find their own success."

Yes. It would really help if all those nations could just go back to 1776 in a very large Way-Back Machine.

Easterly makes good points...but this is 2007, not 1776.

If his criticism of developmental ideology has good points, his proposed "solution" is no solution at all.

[reason]

If he were to say that western countries should abandon their support for agriculture tomorrow in the interests of the poor of the world, he might win sympathy for his point of view. Otherwise, it is a bit hard to work out what he wants to say. Nothing positive at all it seems.

[reason]

This strikes me as misleading:

Few realize that Americans in 1776 had the same income level as the average African today.

Be careful what you are measuring! Development is NOT the same as growth as Jane Jacobs discovered to her amazement.

[anne]

Having now read the entirety of this remarkable essay, I am struck by the sheer mean-spirited inanity. What is the point of comparing America in 1776, with the Congo and the tragedy of colonial exploitation that ruined the country, which was completely different geographically to begin with, over 200 years beyond 1776? I know there are fierce and discouraging problems in the Congo, working on development projects there is not however among the problems. Why the absurd analogies, why the bitterness? But, this is what bothered me about William Easterly from the beginning.

[anne]

Reason

"Development is NOT the same as growth as Jane Jacobs discovered to her amazement."

Please explain this important comment.

[robertdfeinman]

I like Easterly, so this is going to sound a bit odd.

A man goes to his doctor who tells him he has incurable cancer. He comes back six months later and the doctor tells him it is still cancer and it is still incurable. That's Easterly. He diagnosed the problems of development about ten years ago and has been repeating his diagnosis ever since.

Why people find this unsatisfying is because his proposed remedies are vague and uninspiring. People prefer the magic bullet, whether it actually works or not. This is why Sachs gets so much attention. He is like the herbal medicine quack, sure that his prescription will work. When it doesn't he always has an excuse: "You didn't follow the treatment regime closely enough, or some external factor intervened, or..."

We have plenty of diagnosticians, the world is waiting for some treatment specialists who are neither utopian nor dystopian, but realists and experimentalists.

Meanwhile there is still some value to Easterly showing that the King has no clothes on.

[evagrius]

Cities and the Wealth of Nations
Beginning with a concise treatment of classical economics, this books challenges one of the fundamental assumptions of the greatest economists. Classical (and Neo-classical) economists consider the nation-state to be the main player in macroeconomics. Jacobs makes a forceful argument that it is not the nation-state, rather it is the city which is the true player in this world wide game. She restates the idea of import replacement from her earlier book The Economy of Cities, while speculating on the further ramifications of considering the city first and the nation second, or not at all.

From the Wikipedia-

Reading the article makes me quite interested in this maverick thinker.

[anne]

Of course, the problem is Jeffrey Sachs, always and forever, but I have no idea at all after all the complaints what the problem with Sachs is. Development programs are run from ideas that are always unreal to various extents and need to be modified continually as problem arise in implementation. But, where is Sachs problematic in continually pushing for international assistance? Where is program advocacy is Sachs inflexible, other than in asserting the need for programs.

[anne]

"Where in program advocacy is Sachs inflexible, other than in asserting the need for programs?"

Interesting that the city is the focal point of Jane Jacobs work, which I know but have not thought in this vein about. We are becoming nationally and internationally more urban peoples, and there is no reason to suspect an end. So focus on the city in development. Of course, bur I never thought in just this vein. Nice.

[Meh]

I don't know rdf, you always pop up to say you like Easterly's work, but then disavow the bits that are problematic. It's not that his solutions are uninspiring, it's that the ignore the wealth of evidence about how various countries, from the US, to South Korea, actually undertook their development. Until he's prepared to let go of his ideological leanings enough to engage with the actual history of development, then it's hard to feel much enthusiasm for the accuracy of his analysis.

[anne]

http://www.nytimes.com/library/books/030200jacobs-book-review.html

March 2, 2000

Seeing Humans as Cogs in the Wheel of Nature
By CHRISTOPHER LEHMANN-HAUPT

THE NATURE OF ECONOMIES
By Jane Jacobs.

There's a play on words in the title of Jane Jacobs's illuminating new book, "The Nature of Economies," that doesn't become evident until you understand what she's up to in her text.

When you first see the title, you take her to mean that her book is about the character of economies. Then, as you begin reading, you realize she means that economies are part of nature.

In fact, she sounds this theme immediately when she writes in her foreword that "the basic premise" on which her argument is constructed "is that human beings exist wholly within nature as part of natural order in every respect." She continues, "Readers unwilling or unable to breach a barrier that they imagine separates humankind and its works from the rest of nature will be unable to hear what this book is saying." As we will shortly see, those works include economies.

At first, this seems a departure for Ms. Jacobs, who is still best known for her first book, "The Death and Life of Great American Cities," in which she argued passionately and influentially that cities, essential to the economic life of societies, must be allowed to develop freely and spontaneously.

In her subsequent books, among them "The Economy of Cities," "Cities and the Wealth of Nations" and "Systems of Survival," she has worked to develop a theoretical framework for the practical case made in "Death and Life."

Like "Systems of Survival," her new book takes the form of conversation among a small group of fictional intellectuals.

Two of them, Armbruster, a retired publisher, and Kate, an editor at a science magazine, meet in a coffee shop and express concern that Armbruster's niece, Hortense, has taken up with another ecologist, one Hiram Murray IV, her previous one, Ben, having been one of those people who "thought everything industrial or technological was unnatural and that everything unnatural was bad." Let's meet this Hiram, says Kate, and so they do.

Of course their meeting is just an excuse for Ms. Jacobs to record their unspontaneous conversation, full of phrases like "to be sure" and "in sum." Hiram turns out to be exploring the field of biomimicry, or "trying to develop products and production methods learned from nature." Explaining biomimicry gets him started on how rooted in nature even human economies are.

Development can be defined as "differentiation emerging from generality," Hiram explains, citing 19th-century embryologists and evolutionists.

"Economic development is a version of natural development," not "a collection of things but rather a process that yields things." ("The Thing Theory," he adds, "supposes that development is the result of possessing things such as factories, dams, schools, tractors, whatever -- often bunches of things subsumed under the category of infrastructure.")

Systems expand by capturing and using transient energy, Hiram goes on.

"The more different means a system possesses for recapturing, using, and passing around energy before its discharge from the system, the larger are the cumulative consequences of the energy it receives." ...

[robertdfeinman]

Meh:
First I think personal remarks are inappropriate. If you don't like what I write than skip reading it.

As to my real point. I think Easterly (along with Stiglitz and a few others) has done a better job of analyzing why the efforts of the IMF and World Bank were mediocre than other critics. Returning to my medical analogy: knowing the cause of an illness doesn't mean that one also knows how to treat it.

Easterly focuses on corruption and that the aims of the bureaucrats diverge from those of those who are the target of aid. The staff at the World Bank was rated by how much money it could give away, not by how well the money was used. This may be undergoing some change.

Fighting corruption is a global problem and there seems to be little interest in winning the fight. There are too many people getting rich under the present arrangement. Many of these people are the most powerful members of their societies. Expecting them to suddenly start acting in the public interest is utopian.

I have my own utopian solution. If you want to see corruption eliminated (at least at the national level) abolish all private bank havens and tax avoidance countries. The US could reform the misuse of the oil funds sloshing around the middle east quicker if it invaded Switzerland, Jersey and Bermuda than Iraq.

[Bruce Webb]

Irony must be totally dead. Because with four tweaks I can transform Easterly's criticism of Developmentalism into a Heterodox attack on Orthodoxy:

"Like all ideologies, Friedmanism promises a comprehensive final answer to all of society’s problems, from poverty and illiteracy to violence and despotic rulers. It shares the common ideological characteristic of suggesting there is only one correct answer, and it tolerates little dissent. It deduces this unique answer for everyone from a general theory that purports to apply to everyone, everywhere. ... Friedmanism even has its own intelligentsia, made up of PhD's at The University of Chicago, George Mason University, and the Cato Institute"

It's like a Maoist complaining that Stalinists are just following the Party Line. The lack of introspection is actually typical, the Orthodox having casually assumed they had won the war.

[anne]

"Development even has its own intelligentsia, made up of experts at the International Monetary Fund (IMF), World Bank, and United Nations."

Yes; this is an astonishingly ironic passage, but there is a peculiar fierceness that would use the manner of characterization of a Joseph McCarthy to vilify development assistance advocates or technical specialists. I noticed though a fabulously wealthy youngish poster on Brad DeLong's site a few days ago who is bent on showing how much of a destroying force Bono, yes, Bono had become in Africa.

[anne]

Bono? Is Bono really an African problem? Evidently, that is the idea that is being passed around. I am still puzzled, because I know there is an emotional problem that is being expressed in philosophical terms, since the philosophy which is a philosophy of nihilism makes no sense, but what is the problem?

[anne]

The problem here has never been whether William Easterly is right to complain about selective misuse of international development resources, rather Easterly was from the beginning bent on discrediting assistance. When finding reason to question an attempt to broaden primary education by eliminating school fees in Africa, as Easterly did, I have to wonder what the heck is really going on.

[anne]

Increasing opportunities for African medical education for docgtors and nurses will not solve the problem of Kenyan nurses and doctors going to work in Britain, but there is every reason to broaden medical education in Africa and try to find ways to keep more graduates.

[James Killus]

One of the interesting features of the current crop of right wing ideologues is that you can usually tell what they are up to by observing what they accuse others of being or doing.

As nearly as I can tell, Jeffry Sachs believes that developing nations, for example, those in Africa, have 1001 problems, some big, some small, and many of them require individual, technical fixes without any overarching theoretical construct to tie them together. He does, again, as nearly as I can tell, believe that there is one large problem, and that is the rapacity of foreign businesses and foreign governments intervening in African affair for the benefit of those businesses rather than the benefit of Africans.

Mr. Easterly, by contrast, believes that "free markets are good" and that most assuredly includes the unregulated intrusion of foreign capital and business interests into African countries, (something that the United States has not allowed in its entire history, as it happens), regardless of the perceived political interests of the Africans themselves.

In other words, Mr. Easterly is an ideologue calling a pragmatist ideological. Psychologically, this is called projection. In common parlance, this is called lying.

[robertdfeinman]

James Killus:
Please cite the place where Easterly supports "free markets are good".
What he supports is grassroots solving of local problems. That may include "free" markets or not as determined by local conditions.

Calling someone an ideologue and accusing them of lying is commonly called an ad hominem argument. It is usually the sign of the accuser having a weak argument of their own. Please back up your claims with some actual documentation.

Easterly can probably defend himself as he has now done on

Dani Rodrik's blog.

[gaddeswarup]

William Easterly seems to have several interesting ideas. From
http://www.nyu.edu/econ/user/comin/primitive.pdf:
"Is it possible that precolonial, preindustrial history also matters significantly for today’s national economic outcomes?
This paper assembles a new dataset on the history of technology over 2500 years of history prior to the era of colonization and extensive European contacts. It finds that there were important technological differences between the predecessors to today’s modern nations as long ago as 1000 BC, and that these differences persisted to 0 AD and to 1500 AD (which will be the three data points in our dataset). These precolonial, preindustrial differences have striking predictive power for the pattern of per capita incomes across nations that we observe today".

[evagrius]

gaddeswarup;

Obvious, isn't it? :0

[anne]

William Easterly would do well to credit and fairly attend to the work of the magnificent Jared Diamond on very long term development patterns. And, there is another complaint I have over a gross omission, a strenuous complaint. Paul Krugman somewhere commented that Diamond could keep him happy as a clam for weeks, having set aside cultural determinism in tracing long term development patterns.

[James Killus]

Gee, robertdfeinman, to quote what you said to Meh, I think personal remarks are inappropriate. If you don't like what I write then skip reading it.

And, frankly, what you just wrote to me was a lot more personal than what Meh said to you.

In any case, it's a little late to get snitty about the characterization of Easterly's position as "free markets are good." That was the first sentence in Mark's posting. I'm just wondering if you can practice what you preach and back up Easterly's claims about Jeffry Sachs. I doubt you can, but I doubt even more that you will try.

[anne]

http://www.edge.org/3rd_culture/diamond/diamond_p2.html

April 23, 1997

Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?
A Talk by Jared Diamond

I've set myself the modest task of trying to explain the broad pattern of human history, on all the continents, for the last 13,000 years. Why did history take such different evolutionary courses for peoples of different continents? This problem has fascinated me for a long time, but it's now ripe for a new synthesis because of recent advances in many fields seemingly remote from history, including molecular biology, plant and animal genetics and biogeography, archaeology, and linguistics....

[paine]

guys u are letting Easty off too easy here

like other hands off sages
this is john the baptiat work
for the coming of the trans nats

notice his planetary enemy number one
"xenophobic populists"

get it ....guys who won't
open the gates
for the multi national
corporate cross border players
ie gubmint by compradors

ready to expedite
"sensible, moderate steps toward the freer movement of goods, ideas, capital, and people"

let the record show
with heavy emphasis
the words
" sensible and moderate ..."

'all the better to eat you with my dear ...'

hey
this guy for sure
wants a borderless
whole earth platform
for progress to dance apon

a free fire zone
safe
for discretionary
corporate "investments"

[anne]

http://www.edge.org/3rd_culture/diamond_rich/rich_p2.html

June 7, 1999

How To Get Rich
A Talk by Jared Diamond

In Guns, Germs, and Steel I asked why history has unfolded differently over the last 13,000 years in Eurasia, in the Americas, in sub-Saharan Africa, and in Aboriginal Australia, with the result that within the last 500 years Europeans were the ones who conquered Native Americans and Aboriginal Australians and sub-Saharan Africans, rather than vice versa....

[anne]

http://www.nytimes.com/books/97/06/15/reviews/970615.15shreevt.html

June 15, 1997

Dominance and Submission
By JAMES SHREEVE

GUNS, GERMS, AND STEEL
The Fates of Human Societies.
By Jared Diamond.

On the morning of Nov. 16, 1532, the Incan Emperor Atahualpa greeted the Spanish conquistador Francisco Pizarro in the Peruvian highland town of Cajamarca. Atahualpa was surrounded by some 80,000 Indian warriors; Pizarro came accompanied only by a ragged group of 168 horsemen and foot soldiers. The meeting was ostensibly friendly, but when Atahualpa scorned an offered Bible, the Spaniards attacked. By nightfall, 7,000 Indians had been slaughtered, without the loss of a single Spanish soldier. (Atahualpa was captured alive and held for an enormous ransom of gold. When the ransom was delivered, Pizarro executed him anyway.) Within a few decades the Incan, Aztec and Mayan civilizations had crumbled, and within a few centuries 95 percent of the native population of two entire continents had disappeared as well....

[gordon]

Easterly says: "The only “answer” to poverty reduction is freedom from being told the answer". Then, further down, he talks about: "... the pragmatic use of time-tested economic ideas—the benefits of specialization, comparative advantage, gains from trade, market-clearing prices, trade-offs, budget constraints—by individuals, firms, governments, and societies as they find their own success..." So developing countries can find their own solutions to their problems - provided they pick from this short, First Year Economics list of options? Is Easterly pupating into a Developmentalist before our very eyes?

A few days ago I linked to a paper of Dani Rodrik's - his 2004 WIDER lecture. It's good to remember that Prof. Rodrik, at least, is prepared to allow a somewhat more extensive menu of options than Mr Easterly.

[Anarcho]

"Few realize that Americans in 1776 had the same income level as the average African today. Yet, like all the present-day developed nations, the United States was lucky enough to escape poverty before there were Developmentalists."

Sorry to point out the obvious, but the US state practised quite a few forms of interventionism. Most obviously, high tariffs but also funding of industrial projects as well as infrastructure and communication developments. Then there is armaments production, "where assured government orders justified high fixed-cost investments in special-pursue machinery and managerial personnel. Indeed, some of the pioneering effects occurred in government-owned armouries." [William Lazonick, Competitive Advantage on the Shop Floor, p. 218] Not to mention changing the law to provide critical help, like (for example) the chartered corporation.

Then, of course, there was the ready repression of the labour movement. Unions were habitually suppressed as conspiracies, while strikes faced the full might of the state (as well as private police forces employed by the bosses). Conspiracy laws were later replaced by anti-trust laws.

America is no exception to the fact that state aid is required to produce capitalism. As economist Paul Ormerod puts it, the "advice to follow pure free-market polices seems . . . to be contrary to the lessons of virtually the whole of economic history since the Industrial Revolution . . . every country which has moved into . . . strong sustained growth . . . has done so in outright violation of pure, free-market principles." These interventions include the use of "tariff barriers" to protect infant industries, "government subsidies" and "active state intervention in the economy." He summarises: "The model of entrepreneurial activity in the product market, with judicious state support plus repression in the labour market, seems to be a good model of economic development." [The Death of Economics, p. 63]

[reason]

Anne

Reason

"Development is NOT the same as growth as Jane Jacobs discovered to her amazement."

Please explain this important comment.

You have gone part of the way yourself. Specialisation increases total temporal income, but it is not development because it does nothing for the diversity and resiliance of an economy. Jane Jacobs theorises that agricultural productivity growth didn't come before the city, but followed it. It is the increase in diversity that stimulates productivity not the other way around. Not seeing this comes from a comparitive static rather than a dynamic approach to the problem. She then goes on to discuss the importance of import replacement in city development.

She did once say that recognising that development and growth are two different things is her most important discovery.

I don't know whether she is correct or not, but an approach based on looking at increasing complexity and population settlement patterns is novel. Purely economic thinking sometimes means putting on blindfolds.

[reason]

Another way of saying this is - avoid conclave industries. Industries that do not development networks of suppliers do nothing for development. They may well make the general population worse off (plantation agriculture and mining are the worst examples) by making import competition cheaper. If you cannot avoid mining and plantation agriculture, tax and spread.

[paine]

reason

nice points
to sum up one aspect :

self determinating self actualizing development
requires an independent national perspective

its interesting the self regard of citizens is often placed in opposition to the self regard of their respective nations
all to afford entrance to the interests of trans national entities

ie
the mine owners and plantation owners
and parts assemblers projects

-----all of which are dependent on global markets
and are thus really international projects
projects of global activity ----

may profoundly
contradict
the best over all interests
of the nation and its people

landing pods for the TNCs
in which "they" embed their possibly
"treasonous"
ways to profit

[paine]

anarcho i like this passage:

"The model of entrepreneurial activity in the product market, with judicious state support plus repression in the labour market, seems to be a good model of economic development."

[anne]

Reason

"Specialisation increases total temporal income, but it is not development because it does nothing for the diversity and resiliance of an economy. Jane Jacobs theorises that agricultural productivity growth didn't come before the city, but followed it. It is the increase in diversity that stimulates productivity not the other way around."

Here then, an explanation of the weakness of growth that is natural resource or rural focused with a relative urban neglect.

[paine]

anne
urban vs rural though very useful
may lead to missing
the formal point

by building
a diverse self developing system
a nation
retains the motor of its own destiny
example on a grand scale ....
the pace direction and magnitude
of national development in
the PRC

IS NOT RUN FROM WALL STREET IS IT

and yet the solid social base
of rural china built in the 80's
was crucial to their take off in the 90's
and upheavals
there now
a serious threat to the teen years ahead

then again diverse
commercial/ industrial city states
like
SINGAPORE
are pure examples
of urban uber alles

this despite their requiring
the generosity of the tnc empires
to prosper as they have

[anne]

Yes; I understand the problem is integration through growth, and I will think of this more carefully. Singapore by the way has evidently been remarkably adaptable, for all the political rigidity, as a sort of trade facilitator through southeast Asia. Nelson Mandela would refer to Singapore as a development model for South Africa.

[reason]

paine...
I will say that assembly plants CAN be a good path to development if some parts are locally produced, and there is a possibility that over time more of them will be. Didn't Taiwan follow that path?

[Kirsty]

I am currently completing my dissertation on sachs versus easterly. Little did i know what I was getting myself into!

I think that both authors have merit in economics today, but I propose Paul Collier's book 'The Bottom Billion' as being a good middle ground. He states that the problem with the MDGs are that they do not focus enough on the extreme poor, and that we focus to much on the role of aid. Instead of constantly bickering over which way to best administer aid, he looks to military intervention (NOT in the style of Iraq), as well as the role of laws, charters and trade policy.

Easterly also has a point. By administering first year economic principle, we can improve the situation of aid projects... react to incentives, accountability and feedback, we've heard it all before because it works. His ideas could be useful for NGOs, who should coordinate to prevent overlapping projects.

This is not to say that I disagree with Sachs. I believe his plan is a step in the right direction. But is it a step too far. Some of the goals focus on 5billion of the worlds inhabitants - naturally, this affects the progress for the 'extreme poor' (see Gwatkin, 2002).

A largely contested subject, but I don't think you need to polarise every differing opinion.

[anne]

Please describe your actual thesis, if possible.

[anne]

Please describe your actual thesis, if possible.

[reason]

Singapore may have been well managed, but look at a map. That location is something special.

[Kirsty]

Its a literature review of sachs, easterly & collier, relating to the theory of the vicious circle of poverty and the recent controversies over foreign aid.