Development Economics-Development Economics-History, Discourse and the History, Discourse and the Environment (From a non-Environment (From a non-

Economist)Economist)

PIA 3395- Development TheoriesPIA 3395- Development Theories

Week EightWeek Eight

I. Golden OldiesI. Golden Oldies

II. Literary MapII. Literary Map

III. SynthesisIII. Synthesis

Dedicated to Prof. Robert B. Dedicated to Prof. Robert B. Pettengill’s Introduction to Pettengill’s Introduction to

Economics Course Fall, 1962 Economics Course Fall, 1962

Pettengill, 1904-1997 Prof. of Pettengill, 1904-1997 Prof. of Economics, State University of New Economics, State University of New York at AlbanyYork at Albany

““It was Good but not that It was Good but not that good”good”

Goal: With Apologies to Goal: With Apologies to EconomistsEconomists Some Basics for Non-Some Basics for Non-

EconomistsEconomists

See Prof. Siddharth Chandra See Prof. Siddharth Chandra or Prof. Shanti Gamer-or Prof. Shanti Gamer-Rabindran if you plan to write Rabindran if you plan to write an economics question!an economics question!

The Nature of the The Nature of the Debates Debates

I. Mercantilism and Industrialization- I. Mercantilism and Industrialization- British Origins (Dudley Dillard)British Origins (Dudley Dillard)

a. Nature of Royal Monopolies- a. Nature of Royal Monopolies- King vs. StateKing vs. State

b. Linked to Overseas Empires-b. Linked to Overseas Empires- especially in Englandespecially in England

United Kingdom Royal Coat of United Kingdom Royal Coat of ArmsArms

Mercentilism, ContinuedMercentilism, Continued

c. Royal Monopolies- on trade, c. Royal Monopolies- on trade, extraction, production and landextraction, production and land

d. Agricultural Production based d. Agricultural Production based systems in England and Overseassystems in England and Overseas

e. Accumulation of Wealth: Silver and e. Accumulation of Wealth: Silver and GoldGold

South African GoldSouth African Gold

II. Orthodoxy- Classical II. Orthodoxy- Classical LiberalismLiberalism

a. Hidden Hand- Adam Smith and the a. Hidden Hand- Adam Smith and the Rationalists (Mill, Ricardo)Rationalists (Mill, Ricardo)

b. Market and Free Trade stimulate the b. Market and Free Trade stimulate the accumulation of capitalaccumulation of capital

c. Ending of subsidies, monopolies and c. Ending of subsidies, monopolies and commons- Cottage industry and the commons- Cottage industry and the factory systemfactory system

Links to British Links to British Rationalism and Rationalism and Masonry?Masonry?

Adam SmithAdam Smith Hidden HandHidden Hand

Orthodoxy- Classical Orthodoxy- Classical Liberalism, ContinuedLiberalism, Continued

d. Technical and commercial d. Technical and commercial transitionstransitions

e. Supply and Demand and the Miracle e. Supply and Demand and the Miracle of the Marketof the Market

f. St. Simonism and Intervention f. St. Simonism and Intervention (Continental Europe)(Continental Europe)

Claude Henri de Rouvroy, Claude Henri de Rouvroy, Comte de Saint-Simon Comte de Saint-Simon

III. Keynesianism: Still on III. Keynesianism: Still on TopTop

Keynes: The Rise of Keynesianism as Keynes: The Rise of Keynesianism as a dominant economic principal, that is a dominant economic principal, that is government had a role in the government had a role in the management of the economy. The management of the economy. The origins of development theory lie in origins of development theory lie in the late colonial periodthe late colonial period

John Maynard Keynes- John Maynard Keynes- 1883-19461883-1946

British Economist who worked several British Economist who worked several years in the British India Office and years in the British India Office and spent World War Two in Government spent World War Two in Government ServiceService

John Rapley: “Keynes had no John Rapley: “Keynes had no problem with the market economy. He problem with the market economy. He liked the machine but judged it to be liked the machine but judged it to be in need of improvement if it was to in need of improvement if it was to operate well.”operate well.”

Lord Keynes Addressing Bretton Lord Keynes Addressing Bretton Woods Meeting. — July 1944 Woods Meeting. — July 1944

Keynes-1Keynes-11. Keynes’s goal was to influence the 1. Keynes’s goal was to influence the

market and not replace it. market and not replace it.

2. He Influenced the U.S. New Deal and the 2. He Influenced the U.S. New Deal and the thinking of the Labour Party in Englandthinking of the Labour Party in England

3. He had an important influence on 3. He had an important influence on

the social democratic parties in the social democratic parties in

Western EuropeWestern Europe

4. His ideas suggested that European 4. His ideas suggested that European mixed mixed economies could be replicated in economies could be replicated in

LDCsLDCs

Keynes-2Keynes-2

There are a number of There are a number of components to Development components to Development Theory as it links to Theory as it links to Keynesianism. KEY: Faith in Keynesianism. KEY: Faith in the Statethe State

Keynes-3: Components Keynes-3: Components and Debates and Debates

1. Physical development (roads and 1. Physical development (roads and dams) and Economic Growthdams) and Economic Growth

2. Physical and Mental Change or Social 2. Physical and Mental Change or Social DevelopmentDevelopment

3. Human Resource Development vs. 3. Human Resource Development vs. Social and Economic ChangeSocial and Economic Change

4. Proposed a Mixed Economy- public 4. Proposed a Mixed Economy- public and privateand private

5. At questions the relationship between 5. At questions the relationship between ESD and Political ChangeESD and Political Change

Keynes-4Keynes-4

Critics suggest that Critics suggest that Keynes promoted “Big Keynes promoted “Big Government”Government”

Keynes-5Keynes-5

Techniques:Techniques:

1. Fiscal Policy1. Fiscal Policy

2. Monetary Policy2. Monetary Policy

3. Wage and Price Controls3. Wage and Price Controls

Early Anti-Silver CartoonEarly Anti-Silver Cartoon

Keynes-6: Criticism Keynes-6: Criticism (Isbister)(Isbister)

1. Economic vs. Social Development- 1. Economic vs. Social Development- the Role of HRD vs. Growth and the Role of HRD vs. Growth and DistributionDistribution2. False Path of Political 2. False Path of Political Independence vs. Political Independence vs. Political DevelopmentDevelopment3. Keynesian as Commandism? 3. Keynesian as Commandism? Socialism vs. KeynesSocialism vs. Keynes4. Industrialization vs. Private Sector 4. Industrialization vs. Private Sector Tracks (The goal of capital formation)Tracks (The goal of capital formation)

IV. IV. Neo-OrthodoxyNeo-Orthodoxy1.1. Public Choice (Social Choice and Rational Public Choice (Social Choice and Rational

Choice)Choice)

2.2. Irrationality of Collective ChoiceIrrationality of Collective Choice

3.3. Tragedy of the CommonsTragedy of the Commons

4.4. Free Rider ProblemFree Rider Problem

5.5. Development plus Economics equals Development plus Economics equals OxymoronOxymoron

Neo-Orthodoxy, Neo-Orthodoxy, ContinuedContinued Trade not Aid- Lord BauerTrade not Aid- Lord Bauer

a. Globalization

b. Internationalization of Capital

c. Modes of Production and International Economy

d. Information Technology

e. Institutional Economics (Douglass North)

Nobel Laureate Douglass North Nobel Laureate Douglass North chats with Estomih Nkya chats with Estomih Nkya (GSPIA PhD 1994)(GSPIA PhD 1994)

Critiques of Neo-Orthodoxy Critiques of Neo-Orthodoxy on the Left (|Escobar)on the Left (|Escobar)

a. Rationality vs. Irrationality of a. Rationality vs. Irrationality of workers and peasantsworkers and peasants

b. Fordism vs. Post-Fordist situationsb. Fordism vs. Post-Fordist situations

c. Critics of Globalization, IMF and World c. Critics of Globalization, IMF and World BankBank

d. Development Economics as a mask for d. Development Economics as a mask for underdevelopmentunderdevelopment

Dependency Theory and Dependency Theory and Globalization- Leys Globalization- Leys

Key: Domestic Capitalists and Slack Key: Domestic Capitalists and Slack (areas of economy that can be locally (areas of economy that can be locally influenced)influenced)

Sometimes Labeled Dependent Sometimes Labeled Dependent DevelopmentDevelopment

Real Capitalists vs. Crony CapitalistsReal Capitalists vs. Crony Capitalists

Worshop Exercise: PhD Worshop Exercise: PhD Questions (Any Topic)Questions (Any Topic)

Group 1 Write a PhD Question for Group 2Group 1 Write a PhD Question for Group 2

Group 3 Write a PhD Question for Group 4Group 3 Write a PhD Question for Group 4

Group 2 Write a PhD Question for Group 1Group 2 Write a PhD Question for Group 1

Group 4 Write a PhD Question for Group 3Group 4 Write a PhD Question for Group 3

Each Group outline an Answer plus 12 Each Group outline an Answer plus 12 references for presentation to the groups references for presentation to the groups next weeknext week