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Utopia and economic development

from David Ruccio

the-rostow-model

From the very beginning, the area of mainstream economics devoted to Third World development has been imbued with a utopian impulse. The basic idea has been that traditional societies need to be transformed in order to pass through the various stages of growth and, if successful, they will eventually climb the ladder of progress and achieve modern economic and social development.

Perhaps the most famous theory of the stages of growth was elaborated by Walt Whitman Rostow in 1960, as an answer to the following questions: 

Under what impulses did traditional, agricultural societies begin the process of their modernization? When and how did regular growth become a built-in feature of each society? What forces drove the process of sustained growth along and determined its contours? What common social and political features of the growth process may be discerned at each stage? What forces have determined relations between the more developed and less developed areas?

Rostow’s model postulated that economic growth occurs in a linear path through five basic stages, of varying length—from traditional society through take-off and finally into a mature stage of high mass consumption.

While Rostow’s model and much of mainstream development theory can trace its origins back to Adam Smith—through the emphasis on increasing productivity, the expansion of markets, and the definition of development as the growth in national income—the development models that were prevalent in the immediate postwar period presumed that the pre-conditions growth were not automatic, but would have to be engineered through government intervention and foreign aid.

Mainstream modernization theory was created in the 1950s—and thus after the first Great Depression and World War II, when world trade had been severely disrupted, and in the midst of decolonization and the rise of the Cold War, when socialism and communism were attractive alternatives to many of the national liberation movements in the Global South. It was a determined effort, on the part of academics and policymakers in the United States and Western Europe, to showcase capitalist development and make the economic and social changes necessary in the West’s former colonies to initiate the transition to modern economic growth.*

The presumption was that government intervention was required to disrupt the economic and social institutions of so-called traditional society, in order to chart a path through the necessary steps to shift the balance from agriculture to industry, create national markets, build the appropriate physical and social infrastructure, generate a domestic entrepreneurial class, and eventually raise the level of investment and employ modern technologies to increase productivity in both rural and urban areas.

That was the time of the Big Push, Unbalanced Growth, and Import-Substitution Industrialization. Only later, during the 1980s, was development economics transformed by the successful pushback from the neoclassical wing of mainstream economics and free-market policymakers. The new orthodoxy, often referred to as the Washington Consensus, focused on privatizing public enterprises, eliminating government regulations, and the freeing-up of trade and capital flows.

Throughout the postwar period, mirroring the debates in mainstream microeconomic and macroeconomic theory, mainstream development theory has oscillated back and forth—within and across countries—between more public, government-oriented and more private, free-market forms of mainstream development theory and policy. And, of course, the ever-shifting middle ground. In fact, the latest fads within mainstream development theory combine an interest in government programs with micro-level decision-making. One of them focuses on local experiments—using either the randomized-control-trials approach elaborated by Abhijit Banerjee and Esther Duflo or the Millenium Villages Project pioneered by Jeffrey Sachs, which they use to test and implement strategies so that impoverished people in the Third World can find their own way out of poverty. The other is the discovery of the importance of “good” institutions—for example, by Daron Acemoglu—especially the delineation and defense of private-property rights, so that Rostow’s modern entrepreneurs can, with public guarantees but minimal interference otherwise, be allowed to keep and utilize the proceeds of their private investments.

The debates among and between the various views within mainstream development economics have, of course, been intense. But underlying their sharp theoretical and policy-related differences has been a shared utopianism based on the idea that modern economic development is equivalent to and can be achieved as a result of the expansion of markets, the creation of a well-defined system of private property rights, and the growth of national income. In the end, it is the same utopianism that is both the premise and promise of a long line of contributions, from Smith’s Wealth of Nationsthrough Rostow’s stages of growth to the experiments and institutions of today’s mainstream development economists.

The alternatives to mainstream development also have a utopian horizon, which is grounded in a ruthless criticism of the theory and practice of the “development industry.”

One part of that critique, pioneered by among others Arturo Escobar (e.g., in his Encountering Development), has taken on the whole edifice of western ideas that supported development, which he and other post-development thinkers and practitioners regard as a contradiction in terms.** For them, development has amounted to little more than the West’s convenient “discovery” of poverty in the third world for the purposes of reasserting its moral and cultural superiority in supposedly post-colonial times. Their view is that development has been, unavoidably, both an ideological export (something Rostow would willingly have admitted) and a simultaneous act of economic and cultural imperialism (a claim Rostow rejected). With its highly technocratic language and forthright deployment of particular norms and value judgements, it has also been a form of cultural imperialism that poor countries have had little means of declining politely. That has been true even as the development industry claimed to be improving on past practice—as it has moved from anti-poverty and pro-growth to pro-poor and basic human needs approaches. It continued to fall into the serious trap of imposing a linear, western modernizing agenda on others. For post-development thinkers the alternative to mainstream development emerges from creating space for “local agency” to assert itself. In practice, this has meant encouraging local communities and traditions rooted in local identities to address their own problems and criticizing any existing distortions—both economic and political, national as well as international—that limit peoples’ ability to imagine and create diverse paths of development.

The second moment of that critique challenges the notion—held by mainstream economists and often shared by post-development thinkers—that capitalism is the centered and centering essence of Third World development. Moreover, such a “capitalocentric” vision of the economy has served to weaken or limit a radical rethinking of and beyond development.*** One way out of this dilemma is to recognize class diversity and the specificity of economic practices that coexist in the Third World and to show how modernization interventions have, themselves, created a variety of noncapitalist (as well as capitalist) class structures, thereby adding to the diversity of the economic landscape rather than reducing it to homogeneity. This is a discursive strategy aimed at rereading the economy outside the hold of capitalocentrism. The second strategy opens up the economy to new possibilities by theorizing a range of different and potential connections among and between diverse class processes. This forms part of a political project that can perhaps articulate with both old and new social movements in order to create new subjectivities and forge new economic and social futures in the Third World.

The combination of post-development and class-based anti-capitalocentric thinking refuses the utopianism of Third World development, as it constitutes a different utopian horizon—a critique of the naturalizing and normalizing strategies that are central to mainstream development theory and practice in the world today. It therefore leads in a radically different direction: to make noncapitalist class processes and projects more visible, less “unrealistic,” as one step toward dethroning the “development industry” and invigorating an economic politics beyond development.

 

*At the same time, the Western Powers attempted to reconstruct the global institutions of capitalism, through the triumvirate of the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade (predecessor to the World Trade Organization) that was initially hammered out in 1944 in the Bretton-Woods Agreement.

**A short reading list for the post-development critique of mainstream development includes the following: Wolfgang Sachs, ed., The Development Dictionary: A Guide to Knowledge As Power (Zed, 1992); Arturo Escobar, Encountering Development: The Making and Unmaking of the Third World (Princeton, 1995); Gustavo Esteva et al., The Future of Development: A Radical Manifesto (Policy, 2013); and the recent special issue of Third World Quarterly (2017), “The Development Dictionary @25: Post-Development and Its Consequences.”

***Building on a feminist definition of phallocentrism, I along with J.K. Gibson-Graham (in “‘After’ Development: Reimagining Economy and Class,” an essay published in my Development and Globalization: A Marxian Class Analysis) identify capitalocentrism whenever noncapitalism is reduced to and seen merely as the same as, the opposite of, the complement to, or located inside capitalism itself.

  1. Prof James Beckman, Germany
    May 12, 2018 at 5:20 pm

    David, I notice that nations who are trying the join the wealthy few are beginning to feel the effects of Mr Trumph’s tax changes–they are taking their dollars out of the devloping world to join the hoped-for Wall Stree frenzy. For me here in Germany, a $1.25 to 1 € exchange rate has changed within a few months to $1.20 = 1€. Just having heavily internationalized economies risks more than “stage of development” issues, focusing on the relationships BETWEEN nations at differing stages who use global currencies to buy/sell goods/services/money.
    Completely agree that capitalism has many social structures to offer. Just look at “Communism with a Chinese characteristic” (controlled private ownership) compared to Mr Putin’s “Communism with a Russian characteristic” (stealing from public assets). Social structures follow–such as fleeing with hot money to live enchanted lives in other nations.

  2. Helen Sakho
    May 12, 2018 at 8:19 pm

    Both accounts are true and informative in drawing from various multifaceted, interlinked, international contexts. I would only add to my previous comments and to these that the final frontier (be it modes of warfare and torture or resistance and comradery) are found in all human and animal communities; that the final frontier is always cultural; and that “winer takes it all” is nothing new.

    Winston Churchill (the drunken, manic depressive) ruler and writer of history (numerous volumes) does remind us that history will be written by the Victor. He or his familial agents and brokers of history were not by any means poor. They did, however, in the final analysis, claim history as their own private property/ inheritance and commodified it all…

    Please check for yourselves the “value” of other currencies and associated lives beyond immediate visions, and consider the very meaning of human tragedies, of resistance, and of survival right now. Shouldn’t human welfare, wellbeing, and survival – the essence of the basic teachings of all social sciences, and the interaction of macro and micro economics be the basis of all our analyses and teachings?

    • Edward K Ross
      May 13, 2018 at 12:08 am

      Helen Sako Firstly from experience in the real world I am very much against as what David Ruccio describes as the Washington consensus because, from the point of view of the disadvantaged; it is obviously a tool of the elite to rob the poor and the disadvantaged.

      Secondly the summing up in your last paragraph deserves serious consideration and discussion because it emphasises the important elements of equality and justice for all people in both the so called first and third world. Although there has been some conversations recently on micro and macro from my real world experience and the logic gained from that experience it is essential to begin with the truth and reality of a topic before departing into the mists of vague axiomatic assumptions and irrelevant theories.

      The last comment I wish to make is that before anyone can teach a subject they need to know the subject and that should include experience and even then some teachers with a political ideological biases need to be balanced by opposing views. I make this statement from the experience of speaking to some students who had apparently been told free trade was important ,without mentioning how it might affect their job prospects.

  3. Manuel Angeles
    May 12, 2018 at 9:37 pm

    Dear David: I am somewhat familiar with the post-development literature but am trying to look at development as the way to build the material base to support some kind of “human flourishing”, (or “florecimiento humano,” as the Mexican economist Julio Boltvinik puts it). Alternatively, one could look at development as a way to escape the killing fields of inequality that Therborn so vividly describes. Capitalist, especially neoliberal policies have indeed led to neo-colonialist, imperialistic domination of the Global South by the North. But I think that there are deeper ways of thinking development. While I agree with Escobar that every economy is a culture, I think that the reverse is also true: every culture is an economy. Have you any suggestions of a Marxian bibliography that touches on the culture-material relation in development?

    • David F. Ruccio
      May 12, 2018 at 10:27 pm

      You put your finger on a very important issue, Manuel Angeles. I try to do exactly that in many of the essays collected in my Development and Globalization, especially “Global Fragments: Subjectivity and Class Politics in Discourses of Globalization” and “Globalization and Imperialism.” Another important contribution has been made by Suzanne Bergeron in her Fragments of Development: Nation, Gender, and the Space of Modernity. I’ll return and list others as they occur to me.

  4. May 13, 2018 at 1:03 am

    Economies are graphs. A graph with “less poverty” is one where money flows through most of the nodes. So look for graphs that are like that. For example multiply connected nets, probably good. Hub and spoke (Feudalism, Google) maybe less good. Circulating flows, good. Accumulating, kind of bad. Looking at scalars might confuse production with prosperity. Looking at economies as graphs, it’s clear as day.

    • Prof James Beckman, Germany
      May 13, 2018 at 9:09 am

      Hi, Pavlos, as a Silicon Valley guy long resident in Germany, I see the world largely as a development/ application of new knowledge, with the economic consequences distributed later in some fashion. However, the world is in a more perilous situation due to the military tech coming which can sink every surface ship by missiles speeding just above the surface at 6,000-7,000 miles per hour & any object destructible by some sort of particle wave. We hear the Chinese focus especially on the former to be able to wave off American aircraft carriers, etc & the Russians especially on the latter to be able to knock all those F-35’s out of the sky. If one is dead or a real serf, all the rest is meaningless it seems to me….

  5. May 13, 2018 at 7:47 am

    Like Edward Ross, I am coming from more “practice” on the ground. The world is interconnected today. Concerns with regards to international pandemics (the biological type and not the radical political types) are real. The models, regardless of whether they are like Rostow’s or Sachs or the countervailing alternative development models are just that, models with the same basic problems that are laid at the feet of the Neoclassical, mathematical modeling, economists. This seems to hold whether the communities in question are in Africa, Indonesia or the United States “South” or inner city Baltimore. Smart phones in the general populations are ubiquitous across the income spectrum. Money flows from Silicon Valley to wherever and corruption, regardless of the political models is ubiquitous. Development, whether it’s the transfer of assets, knowledge or capital in both developing and developed countries is a microdot on the global economy and, perhaps, in the end, are a net benefit to the hearts, minds and bank accounts of the developed.

    As the recent and rising voices of the 90% show, the problem is on Wall Street, Main Street in the US or a village in Nigeria.

    Reductionist models in an interconnected world fail the spectrum of economic theories.

    • Prof James Beckman, Germany
      May 13, 2018 at 9:25 am

      Hi, Tabeles, having been a global consultant/prof for decades, I never find an academic economist in the fields of India or East Africa. Their development models seem to flow from their academic models of currently rich countries. The latter models are normally false, suggested as we read of the work of lobbyists in Washington, DC, for example.

      • Edward K Ross
        May 13, 2018 at 10:22 am

        Prof James Beckman have you read the World Economics Association Wealth and Illfare -An Expedition into Real Life Economics -C.T.Kurien (2015) Ted

      • Prof James Beckman, Germany
        May 13, 2018 at 10:37 am

        Hi, Edward,

        I have not. I will try to download it now. Thanks!

        Each of those who deal with the developing world in a face-to-face manner have experience from which I expect others can benefit.

      • Prof James Beckman, Germany
        May 13, 2018 at 10:58 am

        Edward, I have glanced at a review as time is short today: https://www.worldeconomicsassociation.org/newsletterarticles/wealth-and-illfare/ . I now recall I did my dissertation on economic development in West Africa just BECAUSE the local history was shallow in time as contrasted to Europe, & Europe a newbie contrasted to Asia. In the cited article CT himself speaks of his special concern for Ownership, Intermediation & Asymmetry of Information. In tribal societies, of course, ownership/control/use was by group normally & intermediation the same, as best we know the past before Western practices became known or used. Asymmetry of information continues to be normal today, less so perhaps due to Google, Wikipedia & researchers generally. You have given me homework.

  6. May 13, 2018 at 8:01 am

    To say that Banerjee/Dufalo and Sach’s efforts were experiments is sheer hubris. One can then write off all the “experiments” in development ignoring the human life expended or environmental consequences and that today stand like Ozymandias, skeletons on the souls of those who write them off whether medical experiments on prisoners in the US or the developing world failures described in “Aid on the Edge of Chaos.

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