Public policies, corporations and social needs: rethinking development
from Maria Alejandra Madi and the WEA Pedagogy Blog
The target of economics education is the comprehension of the reality in its economic dimensions, that is to say, the understanding of the practices and ideas that support the evolution of the reproduction of material life. However, following John Kenneth Galbraith, we can say that economics is overwhelmed by an “uncorrected obsolescence”. Consequently, each generation faces many new economic and social challenges. As Alfred Marshall wrote in the preface to his Principles of Economics, “economic conditions are constantly changing and each generation looks at its own problems in its own way”.
Indeed, the current political, economic and social features of globalization configures a rupture in relation to the Bretton Woods institutions. The contemporary institutional set up is the result of deep transformations that characterized the outcomes of the crisis of the accumulation pattern in the 1970s and 1980s. The financialization of the global economy produced great transformations in the growth dynamics since the decisions related to investment, production and employment are increasingly subordinated to the short-term financial commitments of big corporations. Besides, further deep structural changes have involved increasing capital mobility and the growing importance of institutional investors as managers of “financial savings”.
As a matter of fact, the current developmental scenario is completely different from the “Golden Years” where national states were supposed to reduce social inequality by means of economic growth. Under the current global order, there is a trend to the corporatization of national policies on behalf of the implementation of government actions that turn out to reinforce the concentration of corporate power. In particular, as most Western national states give support to the increasing competitiveness of corporations outside their national frontiers, these competitiveness’ strategies could turn out to be dissociated from the needs and vulnerabilites of their populations. In other words, public policies happen to be subordinated to global financial and trade private strategies, instead of mainly facing social needs. Consequently, the interaction between economic growth and development policies reveals new social conflicts that have arisen from the dynamics of global capital reproduction.
Considering this background, two main questions should be addressed to students of economics: Which are the main examples of policy resistance to the neo-liberal agenda? Which policy recommendations should contribute directly to economic and social development within national frontiers?