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No Separate 'Development Economics'

Economics

No Separate ‘Development

Economics’

The Pioneers of Development Economics: Great Economists on Development

edited by Jomo K S; Tulika Books, New Delhi and Zed Books, London and New York, 2005; pp xvi + 234, HB, Rs 500.

BERNARD D’MELLO

T
he present hegemony of the neoclassical paradigm over development economics, indeed, over economics itself, albeit with refined and sophisticated methods, has intellectually impoverished the subject with the trivialisation of its content. Yet, the legacies of classical political economy, Marxism, J A Schumpeter, the “Keynesian revolution” and associated growth theory, and the social welfare tradition in social democracy had in the past inspired a rich output in development studies. One is reminded of the “structuralist” school in Latin America with its analysis of the secular deterioration in the terms of trade of the periphery, disequilibria in its balance of payments, and domestic price inflation, Arthur Lewis’ conception of the expanding capitalist nucleus, Paul Baran, Andre Gunder Frank and Samir Amin’s analysis of the “development of underdevelopment”, Cardoso’s analysis of the scope for “dependent development”, the theoretical foundations of the basic needs paradigm, and from there, further on to Sen’s notion of “capability” and of economy embedded in society, with a prominent place for ethics, together with a conception of development as freedom. The present volume reminds us of some of those rich legacies that development economics has drawn on – with the question of economic transformation at its core

– which its practitioners need to get back to, draw on, critique, develop and move beyond. After all, the task of economics as a social science is to understand the modus operandi of the socio-economic system, not merely to devise ways and means of manipulating the institutions of capitalism and the variables privileged by the neoclassical paradigm in order to achieve results desired by the ruling classes.

Let’s get to two of the opening essays. The essay ‘William Petty and Early Colonial Roots of Development Economics’ by Hugh Goodacre deals with Petty’s ideas about England’s colonial economic relationship with Ireland that subsequently influenced the economic relations of the European powers with their colonies. Likewise, the essay ‘Ricardo’s Fallacy: Mutual Benefit from Trade Based on Comparative Costs and Specialisation?’ by Utsa Patnaik deals with how Ricardo’s fallacious (flawed by the “converse fallacy of accident” under ‘secundum quid’) theory of comparative advantage legitimised and continues to legitimise international trade relations between (temperate) developed and (tropical) underdeveloped countries. As a teacher, however – if one were to take Ricardo’s presentation of a special case, where both countries can produce both goods – one could draw meaningful conclusions from certain extensions of the model. For instance, the basic model can be extended to show that with a particular kind of technology and human development policy in place in the underdeveloped country, and a subjection of its choices where international trade is concerned to the requirements of that policy, its comparative advantage can be modified at each phase of development to its advantage.

The core of the book is composed of articles dealing with the work of a number of well known economists who are not regarded as development economists, but whose work has been and can be of relevance to development economics – Friedrich List (by Mehdi Shafaeddin), Alfred Marshall (by Renee Prendergast), John Maynard Keynes (by John Toye), Nicholas Kaldor (by Amiya K Bagchi), Michael Kalecki (by Jayati Ghosh), Karl Polanyi (the economic anthropologist, by Kari Polanyi Levitt) and Alexander Gerschenkron (by C P Chandrasekhar). In addition, there are articles on the contribution of Marx (by Prabhat Patnaik) to comprehending the process of economic transformation (development) and of V I Lenin (by Utsa Patnaik) to the agrarian question. The contribution of some of the pioneers of development economics like Raul Prebisch and Arthur Lewis (by Kari Polanyi Levitt), and Hans Singer (by Kunibert Raffer) are also discussed.

Now, it would not be possible within the limited space of a review to comment on each of the articles. What we will do is make a few brief comments related to Kari Polanyi Levitt’s article on ‘Karl Polanyi as a Development Economist’, Utsa Patnaik’s piece on ‘Lenin and the Agrarian Question’ and Prabhat Patnaik’s account of ‘Karl Marx as a Development Economist’. The choice is dictated by our hunch that Polanyi, Lenin and Marx, all socialists and thinkers within paradigms stressing conflict, discontinuity and disequilibria, and totally critical of the existing societies of their day and time, will in today’s context, normally be ignored or considered irrelevant in any discussion on development economics in mainstream circles today.

As will be evident from Kari Polanyi Levitt’s article – a brilliant and touching piece, highly recommended by this reviewer – as a scholar, Karl Polanyi was concerned with the origin and functions of

Economic and Political Weekly May 20, 2006 markets and the structural principles of non-market economies. In all economies prior to capitalism, markets did not regulate prices and resource allocation and so livelihoods did not depend on them. Reciprocity and redistribution were the chief modes of transaction and these were based upon social obligation. It was from this vantage point that Karl Polanyi examined capitalism. The decisive step in the transition to a market economy (capitalism) took place when labour, land and money

  • Polanyi did not regard them as commodities because they are not produced for sale
  • are subjected to regulation via the market mechanism. The economic sphere eventually got separated out of the totality of the social process; for instance, workers became proletarians in the artificial creation of a labour market and the credible threat of hunger was used as a whip to enforce discipline. These and other depredations of capitalism sans social control of the economy generated a spontaneous counter movement (a reactive force) of society against the devastations of the market mechanism that eventually brought in social legislation. Polanyi understood the necessity of controlling the destruction wrought by capitalism on the human and natural environment and advocated the removal of labour, land and money from regulation by the market mechanism. Freedom could be preserved through civil rights and liberties, while the quality of life and productivity improvements could best be secured through social control of the economy. The stabilisation and structural adjustment programmes, with full convertibility of the domestic currency on the capital account of the balance of payments as the high point of the latter, would have thus been anathema to Karl Polanyi, for he had a moral abhorrence of capitalism stripped of genuine social and democratic control.
  • Utsa Patnaik’s article on ‘Lenin and the Agrarian Question’ is based on Lenin’s The Development of Capitalism in Russia, which was a Marxist analysis of Russia’s capitalist development over the last decades of the 19th century. The growth of specialisation and commercial relations in agriculture was underway in the backdrop of the Tsarist state’s fostering of late industrialisation with the influx of foreign capital. Based on the distinctions between family labour and wage labour, subsistence income and surplus income, and the distribution of landholdings by size (owned and operated areas) and other fixed assets, Lenin characterised (differentiated) the peasantry by class (and stratum). I remember intellectuals within the Maoist movement in India in the 1970s used to contrast this with Mao’s 1930 fivefold class characterisation – workers, poor peasants, middle peasants, rich peasants, and landlords. In the latter, exploitation through usury and through land rent is explicitly accounted for and, it is important to note, that there is a presumption of the preponderance of semi-feudal relations and a relative absence of capitalist relations implicit in the background (the Chinese countryside around 1930). Both Mao’s and Lenin’s class (and stratum) characterisation of the peasantry at different points in space and time have been guideposts to the application of the Marxist method in the class (and stratum) characterisation (differentiation) of the peasantry in the Indian countryside. Hopefully, Utsa Patnaik’s clear account of Lenin’s application of the Marxist method of class characterisation of the Russian peasantry will be of help to much needed similar studies in the Indian context and will be an aid to a logically correct analysis.

    Lastly, we come to Prabhat Patnaik’s account of ‘Marx as a Development Economist’. Among other things, the development of capitalism came about through the “primary accumulation of capital”, and this occurred not only in the domestic economy, but also through plunder and extraction of wealth (including the surplus) from the colonies. Thus the primary accumulation of capital impoverished the economies at whose expense this took place; the possibility of an autonomous process of capitalist development there got retarded. Primary accumulation was thus “the progenitor of development-underdevelopment dichotomy”. But, even as domestic capitalist development eventually did get underway in the underdeveloped countries, this dichotomy

    – leading to uneven development – has and is being reinforced by the process of centralisation of capital on a world scale through high finance and the stock markets, and mergers and acquisitions. As Prabhat Patnaik puts it in the opening essay entitled ‘Why ‘Development Economics’?’: “The developed and the underdeveloped countries together constitute the totality of capitalism … This totality must be the domain of analysis of economic theory, in which case there would be no separate ‘development economics’.”

    m

    Email: bernard@epw.org.in

    Economic and Political Weekly May 20, 2006

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