The Veblen-Commons Award: Gunnar MyrdalAuthor(s): Howard ShermanSource: Journal of Economic Issues, Vol. 10, No. 2 (Jun., 1976), pp. 210-214Published by: Association for Evolutionary EconomicsStable URL: http://www.jstor.org/stable/4224484 .

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J JOURNAL OF ECONOMIC ISSUES Vol. X No. 2 June 1976

The Veblen-Commons Award

Gunnar Myrdal

Economics as Social Relations

Gunnar Myrdal began his career in the neoclassical tradition in the 1920s, but he was soon very critical of its antiequality political bias.' In the early 1930s, in the midst of the Great Depression, Myrdal swung toward a Keynesian position even before Keynes, writing from the vantage point of the Swedish Wicksellian tradition. He has always col- laborated closely with the Swedish social democratic government, first helping it with Keynesian tools in the depression, then turning with it to the problem of equality of income distribution.

By the end of the 1930s, he saw the issues of equality and discrimi- nation as some of the foremost economic problems, and he later extend- ed a similar analysis to the inequality between the underdeveloped and developed capitalist countries. These new issues brought him to ap- ply-explicitly in his later writings-the institutionalist approach of Thorstein Veblen, John R. Commons, and Wesley Mitchell. Myrdal found that, in studying problems of equality, "all the 'non-economic' fac- tors-political, social and economic structure, instituitons, and attitudes, indeed all interpersonal relations-have to be included in the analysis."2

Strengths of Gunnar Myrdal

The great strength of Myrdal's mature writings is his consistent view of economics as the study of political-social-economic relations. Whereas the neoclassicists write narrow, purely economic analyses of

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211 Gunnar Myrdal

such topics as discrimination and underdevelopment, Myrdal explores these subjects in the full depth of all their interconnections in the social sciences. Myrdal's American Dilemma,3 published in 1944, when segre- gation was still legal in the United States, was an immense pioneering study of white racism in many of its dimensions. His Asian Drama ex- tends a similar analysis so as to present an in-depth picture of all the in- stitutional chains holding back the development of the neocolonial world.4 Myrdal shows in both cases how the narrowly economic and supposedly nonpartisan neoclassical approach always tends to produce reactionary, antiegalitarian conclusions.

Myrdal's methodology, combining detailed institutional analysis and a partisan viewpoint, is a great advance over the narrow theory and phony nonpartisanship of the neoclassicals. Myrdal himself went through a long evolution on the relation of values to facts. Thus, in 1954 he criticized his own book, The Political Element in the Develop- ment of Economic Theory, which he wrote in 1929, in the following words:

But throughout the book there lurks the idea that when all metaphysical elements are radically cut away, a healthy body of positive economic theory will remain, which is altogether inde- pendent of valuations. Political conclusions can then be inferred simply by adding to the objective scientific knowledge of the facts a chosen set of value premises.

This implicit belief in the existence of a body of scientific knowl- edge acquired independently of all valuations is, as I now see it, naive empiricism. Facts do not organize themselves into concepts and theories just by being looked at; indeed, except within the framework of concepts and theories, there are no scientific facts but only chaos.... Questions must be asked be- fore answers can be given. The questions are an expression of our interest in the world, they are at bottom valuations. Valu- ations are thus necessarily involved already at the stage when we observe facts and carry on theoretical analysis, and not only at the stage when we draw political inferences from facts and valuations.5

Thus, while Myrdal maintained his critique of the hidden ideology in neoclassical economics, he renounced the idea that anyone could write about "pure facts" without some prior viewpoint. His own viewpoint was stated openly many, many times. In writing about discrimination or underdevelopment, he says: "The value premises applied are the desir- ability of democracy and of equality of opportunity."6 He is a consistent liberal and always concludes in favor of Swedish-type social democracy

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The Veblen-Commons Award 212

and a vague kind of national economic planning. He explicitly says that Sweden has extensive social welfare reforms, but even less nationaliza- tion than the United States and that he approves that situation.7

Limitations

As Myrdal emphasizes, all social science is written from some point of view. From a conservative, neoclassical standpoint, Myrdal is not an economist, but a sociologist, while John Kenneth Galbraith is not an economist, but a journalist (although one must note that professional envy also enters these evaluations of two of our most widely read econ- omists). From the liberal, institutionalist view, Myrdal has no weaknesses. From the radical, Marxist viewpoint (which is my own view), Myrdal has limitations. Of course, I completely agree with his critique of the dogmatism and economic determinism of many vulgar Marxists (particularly, although not exclusively, in the Stalinist model). Myrdal, however, has never discussed many of the insights of the more sophisticated Marxist tradition, now reemerging in the United States. Naturally, he does not use a class analysis and advocates egalitarian re- forms rather than socialist revolution.

Myrdal stresses that neoclassical economics is mired in ideology, yet he refers to the vested interests in the ideology as only one of many fac- tors. He does not give any emphasis to the possibility that a class-di- vided society tends to produce an ideology to justify the domination of the ruling class. Therefore, perhaps he underestimates how difficult it is to change that ideology. He believes, as does Galbraith, that it is possible to change the consciousness of the U.S. Congress (and of most economists) by further education and rational discussion without abol- ishing the basic institutions of capitalism.

As one instance of this approach, his American Dilemma presents the problem of racist discrimination as a moral dilemma in the minds of whites between their democratic egalitarian views and their racial preju- dices. According to Myrdal, we must (1) re-educate whites, and (2) raise the status of blacks by reform legislation. He denies the deep roots of racism in the present capitalist system. Speaking of racism, he says: "In my contacts with businessmen in many fields-bankers, insurance people, industrialists, and directors of department stores-I have been told time and time again that they have nothing against employing Ne- groes, and I believe they are telling the truth. What holds them back are the considerations they have to take about the attitudes of cus- tomers and co-workers."8

This viewpoint omits the power of businessmen, who make the hiring

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213 Gunnar Myrdal

and firing decisions. In the Marxist view, racism is fostered by the capi- talist class as a means to justify the greater exploitation of blacks and to divide white from black workers so as to rule both easier. The fact that so many white workers believe in racism testifies to the efficient control of the media and education by the ruling class.

Myrdal's Asian Drama is a magnificent empirical description of the neocolonial system, and in later works he makes a passionate plea for "radical egalitarian reforms" in the underdeveloped countries.9 Further- more, in the Vietnam War period, when Myrdal was Chairman of the Swedish Vietnam Committee and of the International Commission of Inquiry into the United States War Crimes in Indochina, he condemned U.S. "imperialist adventures" in Vietnam and Latin America.10 He also states clearly the relationship of foreign imperialism to the internal rul- ing classes in the neocolonial world:

In the worldwide colonial power system as it functioned until the Second World War, there was a built-in mechanism that al- most automatically led the colonial power to ally itself with the privileged groups. Those groups could be relied upon to share its interest in "law and order," which mostly implied economic and social status quo.

To support its reign, the colonial power would thus generally feel an interest in upholding or even strengthening the inegali- tarian social and economic structure in a colony. . . . Often it even happened that new privileges and new privileged groups were created by the colonial power in order to stabilize its rule over a colony.

There is no doubt that a similar mechanism has been operating after the liquidation of colonialism and that, now as before, it also has its counterpart in relation to those underdeveloped countries that were politically independent, primarily in Latin America. This is the main justification for the use of the term "neo-colonialis,ni" (italics in original) .11

Despite all this excellent analysis, Myrdal does not view the "privi- leged groups" in the neocolonial countries as a ruling class that would be adverse to egalitarian reforms; therefore, he sees no need for socialist revolutions. Moreover, he visualizes U.S. imperialism as a series of iso- lated adventures, not as a world-encompassing system which is an or- ganic part of capitalism. Therefore, he believes that the imperialist countries can give aid without strings. He says: "This problem depends solely on the in,tportance that people in the developed countries attach to aid for the underdeveloped countries" (italics in original).'I Again,

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The Veblen-Commons Award 214

he focuses on the moral problem of convincing the capitalist countries through education and discussion that they should abandon imperialist adventures, not tie aid to neocolonial privileges, and give plenty of aid for the love of humanity. Once again, he appears to underestimate the power and tenacity of vested class interests-perhaps because of the easy acceptance of many welfare policies in Sweden.

Conclusion

Myrdal gives generous recognition to Marx as one of the first great institutionalist economist.13 Similarly, a radical or Marxist may acknowl- edge that Myrdal is one of the greatest living economists. His powerful contributions to the critique of neoclassical economics, his pioneering analysis and exposure of racist discrimination, and his description of the institutions and miseries of underdevelopment, all fully qualify him to be a highly deserving recipient of the Veblen-Commons Award.

Howard Sherman

Notes

1. See Gunnar Myrdal, The Political Element in the Development of Economic Theory (Cambridge, Mass.: Harvard University Press, [1929] 1954).

2. Gunnar Myrdal, Against the Stream: Critical Essays on Economics (New York: Pantheon Books, 1972), p. 10.

3. Gunnar Myrdal, An America Dilemma: The Negro Problem and American Democracy (New York: Harper and Row, 1944).

4. Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, 3 vols. (New York: Pantheon Books, 1968).

5. Myrdal, The Political Element, p. vii. 6. Gunnar Myrdal, Development and Underdevelopment (Cairo: Na-

tional Bank of Egypt, 1956), Prefatory Note. 7. Myrdal, Against the Stream, p. 42. 8. Ibid., p. 303. 9. Ibid., p. 12.

10. Gunnar Myrdal, The Challenge of World Poverty (New York: Pan- theon Books, 1970), p. 384.

11. Ibid., pp. 72-73. 12. Ibid., p. 365. 13. See Myrdal, Against the Stream, p. 316.

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