Why so Hostile? Busting Myths about Heterodox Economics

Call-for-Application-Pluralist-Economics

By Ingrid Harvold Kvangraven and Carolina Alves

“Economics is unique among the social sciences in having a single monolithic mainstream, which is either unaware of or actively hostile to alternative approaches.” (John King 2013: 17)

What does heterodox economics mean? Is the label helpful or harmful? Being outside of the mainstream of the Economics discipline, the way we position ourselves may be particularly important. For this reason, many around us shun the use of the term “heterodox” and advise against using it. However, we believe the reluctance to use the term stems in part from misunderstandings of (and sometimes disagreement over) what the term means and perhaps disagreements over strategies for how to change the discipline.

In other words, this is an important debate about both identification and strategy. In this blog, we wish to raise the issue in heterodox and mainstream circles, by busting a few common myths about Heterodox Economics – mostly stemming from the orthodoxy. This is a small part of a larger project on defining heterodox economics.

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Sudan’s national salvation

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Omar al Bashir has fallen in Khartoum. Beyond regime change–managed by the military– there’s a deeper economic crisis.

In April 11th after five days of sustained protests outside of the compound of the Military High Command in Central Khartoum, the Minister of Defense and First Vice President of Sudan,  Ahmed Awad Ibn Auf made a televised broadcast to the nation, announcing the arrest of President Omar El-Bashir and an unspecified number of other high ranking officials primarily associated with Islamist Movement. Ibn Auf declared the military’s intention to form a transitional government, the makeup of which would be announced later, and a three month state of emergency including a curfew. His demands have been rejected by the Sudanese Professional Association and other groups like Girfna, which have declared that only a civilian transitional government would be acceptable. The Sudanese Professional Association have published a Declaration of Freedom and Change which outlines a plan for a four year transitional government made up of civilian technocrats. Chants of tsgut bas (Just fall) changed overnight to sgut (fallen).

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Economic development in Palestine and beyond

Palestine-blog-image-TSuccessful economic development in Palestine will require an adequate theory of development, industrial policy, and institutional reforms.

Recently, the Palestine Economic Policy Research Institute (MAS) published a comprehensive study on Palestinian economic development. In this report, co-authored by my colleagues Heiner Flassbeck, Michael Paetz, and I, we explore possible solutions as to how Palestine could sustainably finance its deficits. Now, after the Israeli elections, Jared Kushner, the US President’s son-in-law and senior advisor, is set to announce the details of the US Peace Plan for the Israeli-Palestinian conflict. Given that the Peace Plan is expected to include a large economic component to solve the conflict, it will be interesting to see to what extent it addresses the fundamental problems we identified in our research.

Our results suggest, succinctly, that under current conditions of excessive imbalances in the external sector (trade and current account), any issuance of debt securities requires fixing these imbalances first, for which, in turn, strategic public intervention is critical. This finding may come as a surprise to most policymakers, as orthodox economic theory suggests that the most efficient ways for countries to develop is through market led (as opposed to state led) policies. Historical evidence demonstrates that none of the advanced countries followed this path in their own development, yet the idea of ‘the market’ as the most efficient development tool is still widespread. Based on this belief, Western institutions wreaked havoc in developing countries during the 1980s and 1990s, and continue to do so (although some institutions, notably the IMF, show significant progress in learning from past experiences).Read More »

Islamic Finance and Financial Inclusion: Who Includes Whom, in What, and on Whose Terms?

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By Lena Rethel, University of Warwick.

With the rise of financial inclusion as the new buzzword in global development circles, it has replaced earlier items on the reform agenda such as financial modernisation or financial deepening. By their very nature financial inclusion projects are inherently political – their underlying rationale is to change who has access to what forms of credit and at what conditions. Financial inclusion is both a multi-scalar and multi-faceted phenomenon. Needless to say that its dynamics play out differently in different countries and regions. However, before uncritically embracing the financial inclusion agenda as a means to achieving a more equitable economic order, more attention should be paid to what constitutes a fundamental set of questions: who includes whom, in what and on whose terms? In this blog entry, I want to highlight some of the key issues that have emerged in relation to Islamic finance. Read More »

Samir Amin and Beyond

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By Ushehwedu Kufakurinani, Ingrid Harvold Kvangraven and Maria Dyveke Styve

When the sad news came of Samir Amin’s passing on August 12th, 2018, a plethora of beautiful obituaries were published in his memory (see for example hereherehere or here). These have made it more than evident not only how important his scholarship and work through the World Social Forum is, but also what an extraordinary person he was. We never had the privilege of meeting Samir Amin in person, but he was very kind to grant us an interview over Skype for an e-book we put together in 2017 on the contemporary relevance of dependency theory (since published by the University of Zimbabwe Publishers). Now we wish to unpack his contributions to our understanding of political economy and uneven development, and explore how his ideas have been interpreted and adopted in different contexts, and their relevance today.

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Harvesting data: Who benefits from platformization of agricultural finance in Kenya?

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By Gianluca Iazzolino and Laura Mann.

Getting access to credit is a critical challenge for small-holder farmers all over Sub-Saharan Africa . A new breed of financial-technology firms (fintech) promises to address this issue, claiming that digital technologies can lower the barriers for borrowers and cut transaction costs for lenders. As part of our ongoing project on digitisation and data in US and Kenyan agriculture, we have been examining these claims, studying how tech companies translate them into business initiatives and exploring the implications for knowledge production, economic growth and value redistribution.

In rural Kenya, fintech innovations are premised on greater efficiency and transparency and inspired by narratives of digital disintermediation. Similarly to what argued for migrant remittances by Vincent Guermond in a previous post of this blog series , digital lenders harness data (extracted through digital infrastructures) and algorithms to make farmers more legible and, therefore, more predictable. In order to expand their pool of data, Kenyan fintechs are increasingly embedding themselves into inter-connected digital infrastructures, or platforms. These platforms provide farmers with end-to-end solutions, and thereby bundle together financial services with the provision of agricultural inputs and information extension services. In so doing, lenders recalibrate and harmonize their risk-assessment procedures, and construct an ideal type of farmer whose financial behaviours and importance in the local value chain can be clearly pinned down.Read More »

Financialising migration? Remittances, algorithms and digital finance

photo-1492940664705-726225a992a9.jpegHow are things “datafied?” This blog post aims to answer this question by offering a critical reflection on a wide range of recent initiatives that attempt to “datafy” remittances, i.e. leverage migrants’ and recipients’ money as a means to facilitate access to digital financial products and services for individuals and households, with a specific focus on Ghana. A handful of scholars have started to critically assess the political economy of the “financialisation of remittances”, calling into question an agenda that is animated not by the needs of migrant men and women but rather the political and financial concerns of a broad coalition of global and national actors relating to the socio-spatial expansion of markets (Datta, 2012; Cross,  2015; Kunz, 2013; Hudson, 2008; Zapata, 2018). Here, I want to focus on the yet neglected aspect of the construction of these remittance markets, rather than treating financialization as “an explanation in and of itself” (Fields, 2018:119).

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Does one size fit all when it comes to financial inclusion? Scrutinising the effects of class, race, gender, and age

524195139_1c8a3ec97c_b.jpgIn recent decades, market-based solutions such as financial inclusion have become more popular in developed countries to reduce inequalities and boost wealth and incomes of the poor. There is no better example of this than the recent thrust of low-income families, women, ethnic minorities, and the young into the subprime mortgage lending expansion in the USA since the early 2000s. Higher access to formal loans for these households was argued to enable them to climb the magical ladder of homeownership and achieve their American Dream. But as we know, the picture didn’t turn out to be quite so rosy.

10 years since the Great Recession, many families are not seeing recovery as the impact of the crisis was substantially harsher for the subprime borrowers (Young 2010; Henry, Reese, and Torres 2013). Financial inclusion in the subprime period turned out to be predatory. In this post, I explore how things went wrong when policy makers failed to account for the institutional conditions in the US economy, which led to dramatically different experiences of financial inclusion across social classes, gender, race, and generations.Read More »