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Development Economics: Old, New and Newer

mainstream economic theory, more broadly). For instance, these include, the Development Economics: new economic history, the new growth theory, the new geography, and related contributions all beginning with the modi- Old, New and Newer fier

Raviaws

Development Economics:Old, New and Newer

The New Development Economics: After the Washington Consensus

edited by Jomo K S and Ben Fine; Zed Books, London and New York, and Tulika Books, Delhi, 2006; pp 304, Rs 650 (hardcover).

ILENE GRABEL

A mere acquaintance with the history of economic thought is sufficient to show that the science of economics is almost as subject to fashions as the art of dressmaking. At the present time, …‘investment in human beings’ is all the rage. As is so often the case with fads, the impetus has come from America (Blaug 1968, p 215; cited in the chapter by Rose in Jomo K S and Fine (eds), p 162).

O
ver the past decade or so the development world has witnessed the apparent passing of the policy regime known as the Washington consensus. Much has been made of this transition to what some now call the “post-Washington consensus”. In view of its advocates, emphasis is placed on the first word in this locution, signalling a diverse body of reforms that are taken to have yielded a wiser, more effective, kinder and gentler prescription for the world’s poorest countries. Kuczynski and Williamson’s edited book, After the Washington Consensus (Institute for International Economics, Washington DC, 2003) is the kind of work I have in mind. But for a growing band of critics, this is too much ado about way too little. Despite its new guise, and the claims made on its behalf, the Washington consensus marches on in academia and the policy world as the dominant development approach.

Jomo K S and Ben Fine’s new edited collection The New Development Economics: After the Washington Consensus represents a new contribution to this emerging critical tradition. The thrust of the book’s introduction and many of its contributions is that the continuities between the old and the new overshadow the discontinuities. As a consequence, the socalled “newer” development economics carries forward far too many of the inherent failures that marred development efforts in Africa and Latin America throughout the 1980s and 1990s, and the transition efforts in Russia and throughout central and eastern Europe.

A central theme of the book is to trace two transitions in development economics. The “old” or “classical” development economics refers to the body of theory that was articulated in the initial post-second world war era, and especially after the 1950s. The first transition in development economics was to the “new” development economics – this work embodies the neoliberal vision of economics that is at the heart of the Washington consensus approach to development. The second and more recent transition is to the “newer” development economics that is associated with what has come to be known as the “post-Washington consensus” approach to development. Many of the papers in this book critically engage Nobel Laureate Joseph Stiglitz’s role in first articulating the concept of a post-Washington consensus. The book’s editors and contributors see development economics as a site of intellectual struggle – the book’s introduction states that “it is offered as a selective engagement across the battleground of development economics” (p xxi). The contributors do an excellent job of exploring the very practical consequences of this intellectual struggle for the world’s poor.

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Economists will be particularly interested in the book’s theoretical discussion, which encompasses a survey and critique of the currently fashionable trends in the newer development economics (and mainstream economic theory, more broadly). For instance, these include, the new economic history, the new growth theory, the new geography, and related contributions all beginning with the modifier “new”. The book also engages the factors – such as social capital, human capital, and privatisation – that have recently been discovered by the mainstream of the profession as the new keys to economic development. Each of the book’s essays carefully trace the discovery of one of these new keys to development, discuss the negative effects of this discovery for the conduct of development policy, and argue that there is a strong continuity between the old development theory and the newer approach. All of the authors also call for a rethinking of development economics that grounds theory and policy in empirically- and historically-informed research. In the view of the book’s editors and contributors, a truly new development economics must be at least (if not far more) interdisciplinary than the old development economics. Moreover, development economics must drop its fetish of scientific pretension and its claims of universalism. The goal of this engagement is in the words of Fine “to rescue, restore and advance alternative perspectives” (p xix).

The book contains many useful and provocative essays by important figures in development economics, such as Sonali Deraniyagala, Kate Bayliss, Mushtaq Husain Khan, Terence Byres and Hugh Goodacre. Of particular note is the essay by Fine,‘The New Development Economics’. This chapter forms the heart of the book in that it traces the evolution of development economics (old, new and newer) and situates these theoretical shifts within the broader corpus of changes within economic theory. The essay by John Sender, ‘Social Capital’, is a superb and devastating critical assessment of the current fashion of social capital theory.

The editors and contributors might have engaged the work of a growing number of development economists whose work is leading toward the articulation of a true post-Washington consensus approach to theory and policy. In particular, some discussion of recent research that articulates alternative economic policies for

Economic and Political Weekly July 8-15, 2006

developing countries would enhance the book, even if space permitted only a brief discussion of this new research. The book would also benefit from a concluding chapter that ties the various contributions together and outlines the parameters of a truly new development economics.

The editors and contributors are to be commended for producing a book that is quite accessible, though firmly grounded in economic theory. It should be read by academics and undergraduate and graduate students of development, by activists and by policy-makers. The latter might benefit particularly from the book’s forceful argument that there is neither much that is new nor useful in the “newer” development economics. The challenges facing the developing world today demand nothing less than a fundamental rethinking of development economics theory and policy.

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Email: igrabel@du.edu

Economic and Political Weekly July 8-15, 2006

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