PETER BAUER: ECONOMIST AND SCHOLAR

Basil S. Yamey

I find myself in somethingof a quandary. It is my allotted andagreeabletask to considerPeterBauer’s contributionsto develop-ment economics.But to assessthesecontributionsis to praisetheirauthor.I have,indeed,cometo praiseBauer—not,I amhappyto say,to bury him: he is alive and well; and I can testify that he is asentertainingandproductiveasever.Now—astheearly19thcenturyauthor,AugustusHare,emphasized,it is notproperfor agentlemanto be praisedto his face. It wasfor this reasonthat Harecrossedout,in his prayerbook, all passagesin which the Lord is praised.PeterBaueris a gentleman—hismembershipof theBritish Houseof Lordsis proofenoughof that fact. Hencemy quandary.My escaperouteliesin thefactthat Baueris both a scholarandagentleman.And itis his scholarlywork I will be talking about—andI will not evenallude to hisgreatpersonalqualitieswhich aresoevidentto all whoknow him well.

WhenBauer’searliestcontributionsto economicsbeganto appearin thejournals,developmenteconomicswasnotyet recognizedasaseparatebranchofenquiryor studywithin theeconomicsdiscipline.His first writings in any casefell outside the boundariesof thatbranch.As a young scholar,he wrote on such arcanesubjectsasinterestand quasi-rent,anddepreciationand interest;he also hadpublishedapaperexaminingnotionsconcerningmonopoly;andanearly postwar publication was on Lord Beveridge’s plan for fullemployment.In the first half of the 1940she wrote severalarticleson the operationsand effectsof the British agricultural marketingschemes.Thesestudiesare still essentialreadingfor any serious

CatoJournal,Vol. 7, No. 1 (Spring/Summer1987).Copyright © Cato Institute. Allrights reserved.

Theauthoris EmeritusProfessorof Economicsat theLondonSchoolof Economicsand Political Scienceand a Fellow of the British Academy. The paperis a revisedversionoftheauthor’saddressin honorofPeterBauerdeliweredattheCatoInstitute’sconference“DevelopmentEconomicsafter40Years,” May 1, 1986.

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studentof thesubjectof so-calledcontrolledagriculturalmarketing,whetherin its specificallyBritish manifestationsandcontext,ormoregenerally.

Theearlyworksmaketwo thingsclear.First,theyshowthatBauercombinesamasteryofeconomicanalysiswith aconsummateabilityto apply it to observedsituationsandprocesses.Second,it revealshis remarkableability to involve himself in, andto assimilatethedetailsof, any situationor processhe choosesto study,andto placetheseaccuratelywithin their antecedentsandtheirgeneralcontext.

It waslargely by accidentthat Bauer’s intereststurned,afterthewar,towhatcameto becalleddevelopmenteconomics,andin whichhe cameto makehis majorandformidablecontributionsto scholar-ship. It is worth sayingin passing,thotigh,thathe might as readilyhaveappliedhis gifts to otherbranchesof economics,suchas, say,industrial organizationand labor economics.In fact, his work indevelopmenteconomicsfrequentlyspreadsinto andilluminatesotherbranchesaswell.

By meansof a detailedstudy of the degreeof concentrationinvariouscategoriesofimportsandexportsinWestAfricahe examinedtherelationshipbetweenproductvarietyandmarketstructure,nota-bly the much higherdegreeof concentrationin standardizedprod-ucts comparedwith moredifferentiatedones.He hasexaminedindepththeeffectsofminimumwagelegislation,drawingonhisexten-siveknowledgeofmanyThirdWorldcountries.I believehe wasthefirst economistto recognizethe extentandeconomicsignificanceofwhathascometo beknownastheinformalsector,He demonstratedthescaleandsignificanceof the rubber-producingsmallholdingsofSoutheastAsia andthe rationaleof some of the methodsof theiroperationwhichbeforehisworkwereoverlookedor misinterpreted.

Bauer’s first steps—or,better,his first majorstrides—towardandinto developmenteconomicsweretakenduringWorld War II. Hehad worked in a London firm prominentin the Malayan rubberindustry.He thenuseda researchfellowshipto studythat industry,andatthesametimewascommissionedby theBritishColonialOfficeto preparea reporton rubbersmallholdingsin Malaya(now Malay-sia).Theresultingworks,TheRubberIndustry(1948)andReportona Visit to the Rubber-GrowingSmallholdingsof Malaya (1948),establishedBauer’sreputationasa scholar.The scholarlyqualitiesInotedearlierareseento flourish in theseworks.Theyareenlivenedwith detailedobservation;complexmaterialsare analyzedandsyn-thesizedwith expertiseandacuteness.A leadingnovelist,the lateJ.G. Farrell, acknowledgedBauer’s works on the rubber industryashavingbeenmostvaluableto him in his“attemptto recreatethe Far

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Eastof forty yearsago” in his novel The SingaporeGrip of 1978.This is a remarkablecompliment to be paid by a novelist to aneconomist,andreflectsBauer’sability to observecloselyandto makesignificantpatternsoutof his observations.

A few yearslaterBauerwasagaincommissionedby theColonialOffice, thistimeto studytradingactivitiesin WestAfrica with specialreferenceto monopolistictendencies.Bauerworked on this studyfor severalyears,part of the time in WestAfrica. The result wasamassivestudy entitled WestAfrican Trade, publishedin 1954. Iknow that Bauerthinks this a far betterbook thanhis book on therubber industry. It is certainlyunusualin its range,depth,andsus-tainedanalysis.Scholarson bothsidesof the Atlantic havewrittenthat it setsstandardsof writing on the organizationandoperationofthe trading systemin LDCs andrelatedsubjectsby which otherworks will haveto bejudged. Its scopeextendedwell beyondtheexaminationof monopolistic tendenciesin private tradein WestAfrica. Thus,forexample,heexploredtheresponsivenessofpeasantproducersto pricesignals.He explainedthe role of the multiplicityof traders in economizingresources,encouragingproductionandpromotingeconomicadvance.

In this areaBauerhas influenceda numberof studies,both byanthropologistsandby economists.He demonstratedthe analyticalandempiricalshortcomingsofthepreviouslywidely acceptedprop-osition,associatedprimarily with CohnClark andA. G. B. Fisher,abouttherelationshipbetweeneconomicadvanceandoccupationaldistribution.His work includesinformativeanalysisofthe rationaleof tradingmethodsin WestAfrica andother lessdevelopedareas,the factorsinfluencingthe extentof competitionin trade,therole oftradein emergencefrom subsistenceproductionandthesignificanceof the distinction betweenintermediateand final productsin theservicesector.

Baueralso studiedandanalyzedthe origins andoperationof thestateexportmonopoliesin Africa, sometimestermedthe marketingboardssystem.In a numberof LDCs statutorybodieswereestab-lishedin the 1940swith the sole right to buy agriculturalproduceforexport. Bauer’smeticulousenquiryinto thehistoryof theeventsleadingup to theestablishmentofthe monopolisticboardsandintotheir operationsis a model of appliedeconomics.His study, fastidi-ouslydocumentedandrelentlesslyargued,attractedmuchattention,andprovokeda long debate.It wasthe first of severaldebates,twoor threeconductedin print, in which Bauerwasthecentral figure.As regardsthemarketingboardsdebate,two pointsshouldbe made.First, Bauer’sanalysisof the damagingeffectsof the Board’s price

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policies andactivities on production andexports (andhenceeco-nomicadvance)hasbeenborneoutfully by events.

Second,the WestAfrican experience(and to a lesserextenttheearlierMalayanexperience)launchedBaueron his studiesof theeconomicsandpolitics of priceandincomestabilizationfor primaryproducers.In thiswork helaid baretheconceptualconfusionsunder-lying much of theprofessionalandpolitical discussionsof stabiliza-tion. He alsoanalyzedthe inherentdifficulties confrontingany sta-bilization authority or agency,andput forward the casefor the useof someformulathat would bind the handsof the authority so thatits pricing decisionsshouldnotlosecontactwith marketpricelevelsandtrends.

TheWestAfrican tradestudyheightenedBauer’sawarenessofthepoliticizationof economiclife in many ThirdWorld countries.Thisfeatureof life in much of the Third World has remaineda centralconcernof Bauer’s,andgives a particularcogencyandrealism,aswell as a distinctive flavor, to his work in developmenteconomics.He is surelycorrectin emphasizingthatextensivegovernmentinter-ventionsandcontrolsare rarelydesignedto achievesomeimprove-ment in “economicwelfare” in line with somepreceptor otherofpureeconomictheory.And he is surelycorrectalso in emphasizingthe various differentways in which the politicization of economiclife underminesthe economicendeavorsof the peopleandinhibitseconomicadvance.

A numberof Bauer’sfindingssuccessfullyrefutedwidelyacceptedviews, including academicopinion, andwentcounterto importantpolitical, intellectual,emotionalandcommercialinterests.His find-ings wereattimesthesubjectof sustaineddebate,for instancein thepagesoftheEconomicJournalandelsewhere,from which his oppo-nentsusuallyhadto retire,hurt.Oneexamplemustsuffice.His book,Dissent on Development,washeavily criticizedin a review articlewhoseauthoracknowledgedhelp of some15 namedindividuals,mostly prominentacademics.In his reply, requestedby the editorof thejournal,Bauerwasableto meeteachpointof criticism—in itswayit is a tour deforcethathasimpressedseveralscholarsotherwiseunsympatheticto Bauer’sgeneralpositionandapproach.

Bauer’sworkon MalayaandWestAfrica, on whichhe spentabout10intensiveyears,drewhim towardandinto theburgeoninggeneralsubjectof developmenteconomics.His observationsandreflectionsconvincedhim thatmuchofwhatwasbeingwritten andtaughtaboutdevelopmentwasseriouslymisconceivedandat variancewith thefacts.He embarkedon amoresystematicandsustainedstudyof theeconomicsof poor countries, uniquely founded on his firsthand

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knowledgeoftwo majorterritories,onein Asiaandtheotherin Africa.Hewrote(or in somecasescoauthored)aseriesofarticlesthatreviewedmajorpublicationsin developmenteconomics:theseincludedreviewarticleson threereports(respectivelya United Nationsreport,andthe reportsassociatedwith thenamesof LesterPearsonandWillieBrandt)andon majorbooksby ArthurLewis, BenjaminHiggins,W.W. Rostow,GunnarMyrdal,andJohnHicks.Thesearticlesarenota-ble contributionsin that they scrutinizedpublicationswhich eitherprovided synthesesof prevailing influential views andpolicy pre-scriptions or presentedinter alia, new approachesor ideas pro-poundedby prominentacademiceconomists.

In thesepapersBauerwasquick to acknowledgeany usefulnewinsightsor thought-provokingideas.Theirmainthrust,however,wasto confrontwhathereadwith whathehadseenandstudiedinvariousThird World countries,andto considernew ideasandpropositionsin the light of economicanalysisappliedwith rigor andprecision.He generallyfound little reasonto be impressedby new analyticalapproachesin developmenteconomicsor newprescriptionsforsolv-ing the supposedproblemsof the developingcountries—whethertheseinnovationsrelated,for instance,to the unlimited supplyofunskilledlabor in poorcountries,or to the stagesof growth throughwhich acountryhadto proceed,or to the imperativeneedfor thegovernmentof apoor country to “mobilize” its resourcesandplananddirect their use.

Takinghis work asa whole,Bauerhassuccessfullyrefuteda num-ber of the centralpropositionsof orthodoxor mainstreamdevelop-ment economics.The propositionsinclude the following: that thepovertyof poor countriesimposesconstraintsthat perpetuatethatpoverty;that the interestsof Third World countriesare damagedbycommercialcontactswith the West; that the termsof tradepersis-tently worsenfor Third World countries;that economicadvanceintheThirdWorldcannotproceedwithoutextensivegovernmentplan-ningandcontrol; thatpopulationgrowthandpopulationpressurearemajorobstaclestoprogressandprosperityin lessdevelopedcountries;that the emergencefrom povertyof Third World countriesentailsbalanceofpaymentsdifficulties; andthatforeignaid is indispensablefor ThirdWorlddevelopment.Bauer’sachievementhasbeentochal-lengesuccessfullyinfluential mainstreampropositions—fromwhichimportantpolicy prescriptionsarestill beingderived—bythe schol-arly methodsof carefulobservation,therigorousapplicationof eco-nomic analysis,andreferenceto economichistory.

ProfessorAmartyaSen,whocertainlydoesnotshareBauer’spolit-ical position, describedhim in the New York Reviewof Books

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(4 March 1982,p. 3) as”.. . oneof the mostdistinguisheddevelop-ment economistsin the world, andundoubtedlythe foremostcon-servativeone.” In that articleSendescribedoneof Bauer’sessays,“The PopulationExplosion:MythsandRealities,”as “probablythemostperceptiveandclear-headedanalysisof thisconfusingproblemthat canbe found in the literature”(p. 6).

Bauerhasdeviatedgreatlyfrom the mainstreamin his insistenceon thecrucial importanceof culturalandpolitical factorsineconomicdevelopment.Heemphasizesthesignificanceforeconomicadvanceof the attributes,attitudes,andmoresof peopleandgroups.Hehadobservedtheir importancein his own firsthandstudiesof themulti-ethnic societiesof Malayaand WestAfrica, andhe knows his eco-nomic history. Bauerhas shownthat thesefactors aremuch moreimportantthanthosewhich usuallyaresingledoutby developmenteconomists,suchasthevolumeof (monetary)investment,thesupplyof education,or thepresenceof naturalresources.Theneglectof thepersonal,cultural, andsocial factors is especiallysurprisingwhen,in recentyears,socialarrangementsandpersonalattitudesandmoti-vationshavecometo be consideredto explain differencesin eco-nomicperformanceamongadvancedeconomies.

Bauerhasalsoanalyzedtheinteractionbetweenthe conventionalvariablesof economics(and especiallyof mainstreamdevelopmenteconomics)with otherfactors disregardedor treatedasparametersin the literature.Someof his writings in this areaare rigorous andinformative, as for instancehis work on the economicsandpoliticsofpricecontrolin theabsenceofeffectiverationingattheretaillevel.

Bauerhasbeencriticized for notpresentinga theoryof develop-mentin thesenseofanoverarchingtheoryorexplanationof materialprogress.I think he met this criticism headon, mosteffectively, inhis reviewarticleof SirJohnHicks’sA TheoryofEconomicHistory.A theory of economicdevelopmentis tantamountto a theory ofhistory, andthis, Bauerhasremindedus, is a will-o’-the-wisp, how-everseductive.Hicks found Bauer’srathercritical review articleofsufficient interest that he had it included as an appendixin theSpanishedition of his book. I think you will agreethatthis reflectsmuchcrediton bothHicks andBauer.

In recentyearshisprominenceasa systematiccritic of foreignaidhasdivertedattentionfrom his othercontributions.He is much themostprominentacademiccritic of this policy. But in this areaalsoheis muchmoreof ascholarthanapolemicist.Hearguesrigorously,andhas madeseveral major distinctive contributions.Among hismanyinsightsis the recognitionthatthepolicy of foreignaid andtheconceptof the underdevelopedworld are inseparable.Withoutfor-

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eignaid therewould benosuchaggregateastheundevelopedworld,lessdevelopedworld, nonalignedworld, developingworld, ThirdWorld, or South. He has establishedthat foreign aid is the onlycommonbondor characteristicofthesecollectivities.Beforeforeignaid onedidnotlumptogetherAsia,Africa, andLatinAmerica(three-quartersof mankind)into one aggregate.This is a major insight.Moreover,hewasprobablythefirst topointoutthat itwasworldwideinterestin foreignaid thatgaverisetomoderndevelopmenteconom-ics,which did notexistasanacademicsubjector evenasanexpres-sion beforeWorld War II. There is thereforea causalconnectionbetweenforeignaid andthe largenumberofacademicdepartments,institutions,andcentersof developmenteconomicsthroughouttheworld.

I havetried toreviewthenatureandscopeofPeterBauer’sweightyandextensivecontributionsto the understandingof the economicsofpooror lessdevelopedcountriesandregionsandoftheir economicgrowthor decline.I mustremindyou, however,thatheis notsimplya specialistdevelopmenteconomist.In recentyearshe haswrittenenlighteningpaperson suchdiversesubjectsas the postwardollarproblem,the economicsandpolitics of incomeinequality (what herefersto, neutrally, asincomedifferences),andclassirs Britain.

In a reporton DissentandDevelopment(from which I havebeenauthorized to quote on an appropriateoccasion)Harry Johnsondescribedthe book as “a monumentalbook of greatscholarlydis-tinction.. . . It containsa level of broadscholarship,understandingof methodology,andrespectfor facts that shows up almostall thedevelopmenteconomists,andespeciallythemostpopularones.. .

The worksof PeterBauerwritten since1971 would nothavecausedJohnsonto havemodified his assessment.Bauer’s contributionstoeconomicshavebeenrecognizedin his inclusionamongthe smallbandof “pioneersof developmenteconomics”recentlyhonoredbythe World Bank, in his electionto a fellowshipof theBritish Acad-emy, and now in this splendidFestschrift.The distinction of hiscontributionshasbeenrecognizedrecentlyalso by the confermentofthedegreeof Sc.Dby CambridgeUniversity,thehighestdoctoratethereotherthananhonorarydegree.

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ON THE WORKS OF F T BM~ER

Then.are few branchesof development�conomscsin which Bauei-- - hasnothadsomethinginterestingand importantto say.And he has

genebeyonddevelopmenteconomiesinto the studyof comparativeeconomicsystems,international economic relations, and general

- political economy Ilauer’s political andeconomicanalysispow-erfully illuminates various aspectsof international economicrela-tions thatareoftenignored.

—AmartyaSen-Review of Equality, the Third

World,and EconomicDelusion,by P. T. llauer. NewYotk ReviewofBooks(4 March 1982): 3, 5.

Bayer’s messagehasbegunto be heard,notonly becauseof hisownpersevei-aneeandinsights,hutalsobecausethe repeatedfailuresandmassivedisastersof ‘‘developmentplanning have finally brokenthrough the smugunanimity that long substitutedfor eVi(lenceorcritical analysis.- - -

Batteris notamereScroogewho says‘‘Bah! humbug!’’ to thepoor.On the contrary,his visioti of the world accordsfar snot-c iespecttotheless—developedregionsandpeoplesthan doesthe conventionalviewpoint.

—ThomasSowellReviewof Realityand Rhetoric:Studiesin. the Economiesu/Development,by P. ‘i’I3auer, Reason(1)ecenll)cr1984): 45.