Romer’s neoclassical colonialism
from David Ruccio
Paul Romer’s solution to underdevelopment, in countries like Haiti, is the creation of “charter cities,” like the British colony of Hong Kong.
True to his neo-neoclassical origins (Romer was one of the founders of the so-called new or endogenous growth theory), the problem of development can be reduced to ideas and rules. Not exploitation or unequal land ownership. Not abuse of power or the commodification of society. For Romer, it’s all about barriers to the dissemination of “good” ideas and a lack of enforcement of the rules. The latter refers to what he calls the “commitment problem”:
How can a developing country promise to keep the rules that govern investment fair? . . .
Rich nations use well-functioning systems of courts, police and jails, developed over centuries, to solve such problems. Two people can make a commitment. If they don’t follow through, the courts will punish them. But many developing countries are still working their way down the same arduous path. Their leaders can fight corruption and establish independent courts and better rules over property rights, but such moves often require unpopular measures to coerce and cajole populations, making internal reforms excruciatingly slow. Subsequent leaders may undo any commitments they make. A faster route would seem to be for a developed country to impose new rules by force, as they did in the colonial period. There is evidence that some former colonies are more successful today because of rules established during their occupations. Yet any economic benefits usually took a long time to show up, and rarely compensated for years of condescension and the violent opposition it provoked. Today, violent civil conflicts have led some countries to again consider military humanitarian intervention, but this can only be justified in extreme circumstances.
And from this he invents his solution, “a middle ground between slow internal reforms and risky attempts at recolonialisation”: the West should set up “charter cities,” modeled on “export zones” (such as in Mauritius, where they removed trade restrictions) and the British colonial experience in Hong Kong.
Romer admits that attempting to colonize entire countries might be “risky.” Instead, he proposes the creation of new colonial cities, where ideas are freely disseminated and the rules enforced by the state.
What Romer fails to understand is that countries like Haiti have plenty of ideas and state-enforced rules. That’s not the problem. The problem is, the ruling ideas are those that have benefited only a tiny minority of the population, both domestic and foreign. The problem, then, is to change the existing ideas and rules, not enforce them in a new form of neoclassical colonialism.