The trajectory of mainstream economics can be understood in terms of how the discipline historically responded to moments of crises by attempting to “theoretically fix” the understandings related to five core “questions” of capitalist political economy – namely land, trade, labour, state, and legal-institutional framework. This involved legitimising improvements in land that led to the dispossession and the destruction of the commons, justifying free trade based on comparative advantage as opposed to mercantilist state intervention, reducing labour to a factor of production that was supposedly rewarded based on its marginal productivity and hence not being exploited, legitimising state intervention to stabilise capitalism and developing a legal-institutional framework to protect markets from popular democratic pressures. These “theoretical fixes” served to ideologically legitimise, preserve, and perpetuate the core content of capitalist social relations even as it corresponded with the modification of the surface-level appearances of capitalism.Read More »
The Co-evolution of Diversity in Property and Economic Development: Evolutionary Economics and the Vertical Dimension (Part 2)
Having laid out the horizontal dimensions of diversity in property in Part 1, I here offer a critique of the assumption in mainstream economics that all kinds of property institutions need to be or will be transformed into private property to promote economic development. I also reflect on my previous work that applies and develops Darwinian mechanisms of variation, inheritance, and selection—which has been extensively discussed in evolutionary biology and evolutionary economics—to study property regime transformation in China.
While working on our co-authored paper, Professor Erik Reinert introduced me to two very important books and encouraged me to think about the relevance of the work of Darwin and Veblen to study property regime transformation in China: Full House: The Spread of Excellence from Plato to Darwin by Stephen Jay Gould (1941-2002), Harvard biologist and historian of science; Thorstein Veblen: Economics for an Age of Crises edited by Erik himself and Francesca Viano. Erik also introduced me to the work of evolutionary economists including Professor Richard Nelson of Columbia University.Read More »
The Co-evolution of Diversity in Property and Economic Development: Key Concepts and the Horizontal Dimension (Part 1)
This blog post builds on the ‘Institutions, Economic Development, and China’s Development Policy for Escaping Poverty’ piece and comprises two parts dealing with the key concepts (Part 1) and mechanisms (Part 2) for evaluating the co-evolution of diversity in property and economic development. I argue that diversity in property plays a key role in economic development and that there are two dimensions that are important for examining the co-evolution of diversity in property and economic development—horizontal (Part 1) and vertical (Part 2).
In this post, I offer a critique of the assumption in mainstream economics that private property is the only kind of property institutions that can stimulate and preserve economic development (I am, of course, not the first to offer critiques of this assumption; for existing studies, see e.g., Kennedy 2011). I focus on the meaning of ‘diversity in property’, which concerns the horizontal level analysis.Read More »
Institutions, Economic Development, and China’s Development Policy for Escaping Poverty
I recently have had opportunities to reread the works of Professors Erik Reinert and Peer Vries and to reflect on my previous work on the relationship between institutions, economic development, and China’s development policy for escaping poverty. Professors Reinert and Vries have studied, along with a few other distinguished economists and economic historians, ‘poverty traps’ at national and transnational levels for decades (eg, Serra 1613; Landes 1998; Reinert 2007; Reinert 2009; Vries 2013). Both argued that innovation and structural change are the keys to escaping poverty.
Professors Reinert’s and Vries’s work on economic development has brought the work of Joseph Schumpeter (1883-1950) to light. In this blog post, I will review how the work of Schumpeter, Reinert, and Vries helps us explore three key questions: First, what kind of development does a country need to escape poverty? Second, what kind of institutions can promote development? Third, how to develop? These three questions are crucial to understand China’s escape from poverty.
Professors Reinert’s and Vries’s arguments can be well supported by China’s national development policy. Below are a few highlights of rich empirical evidence. In 1984 the Chinese government proposed a development-oriented poverty reduction policy to replace the previous aid reliance policy (Central Committee of the Communist Party of China and the State Council 1984; for critiques of relying on massive foreign aid to escape poverty, see e.g. Moyo 2009; Hubbard and Duggan 2009; Banerjee and Duflo 2011). On 18 January 1992, Deng Xiaoping (1904-1997, leader of the PRC from 1978 to 1989) made a famous speech in his Southern Tour, emphasising that ‘development is the absolute principle’ (fazhan cai shi ying daoli). Since then, China’s economic development has entered a new stage. In 1994 the Chinese government fully adopted the development-oriented poverty reduction policy as a national policy.Read More »
A need to re-examine the temporality of anti-trust action
The structure of anti-trust laws is generally and neatly divided into ex-post enforcement and ex-ante regulation of market conduct and its participants. It is a matter of social and economic policy choice as to whether any regulation should precede ‘harm’ or follow it, as is the construction of ‘harm’ across statutes. For example, the requirement of a merger notification is an ex ante means to understand and assess the market impact of a merger. On the other hand, abuse of dominant position is an ex-post assessment once the dominance has set in, which may be in the long run. The determination of abuse is subject to a rule of reason and analysis by the competition authorities. Against this background, the question is what happens in the intervening period when an undertaking is slowly and surely inching towards domination, engaging in conduct which would be punished only once it becomes dominant ? What happens to the process of concentration of markets, along with the practices in concentrated markets? These questions are not borne out of academic interest alone and are not completely answered by a simple focus on anti-competitive agreements, as will be seen below. The analysis will zoom in on the Indian market conditions to make a case for questioning the timing of regulatory intervention and proceed to show that new economic methods may be required in this task.Read More »
The pathology of economics
COVID-19 exposes the deadly dominance of neoclassical economics in Africa.
On February 24, 2021 Ghana received a vaccine shipment (600,000 doses), the first to sub-Saharan Africa under the COVAX facility. It amounted to a tiny fraction of the hundreds of millions needed on a continent increasingly ravaged by the pandemic. Contrast this to the tens of millions already vaccinated in the UK and US. The optimism that Africa would be spared by “early lockdown”, “less dense population, “the effect of ultraviolet”, “a climate that meant people spent more time outside” and “Africa’s youthful population” has rapidly faded. Officially there are now more than 100,000 deaths on the continent, but the real numbers are much higher due to the paucity of testing and the lack of capacity to accurately track and evaluate causes of mortality.
The shortage of tests and vaccines are exacerbated by the West’s hyper-nationalism restricting the import of these two vital tools to combat the pandemic. The same forces have also generated a scarcity of personal protective equipment (PPE), the lack of monoclonal antibody and other treatments, and terrible shortages of medical oxygen so vital to keeping people alive. How is it possible, 60 years after independence, for African countries to be so highly dependent on the goodwill of the outside world for basic health goods? A good deal of the answer lies in the pathology of economics and related policies, which have spread like a pandemic globally and have come to dominate both the West and the continent of Africa. How did this come about? How does it relate to the strategies that have undermined African capacities to mitigate the effects of the pandemic on the health and welfare of its people? And what should be done?Read More »
The Strategic Logics of State Investment Funds: Beyond Financialization
State capital has increasingly taken on marketized forms. From state enterprises to sovereign wealth funds, it is increasingly difficult to find much difference at the operational level with cognate organizations in the private sector. Manager cadres have become professionalized, with many having spent significant time honing their skills in the private sector before taking up their positions in state entities. Business practices and corporate governance standards typical of private capital and the syllabi of elite business schools have become the norm. This includes, as to be expected, an embrace of a shareholder value logic. State entities in doing so are becoming increasingly financialized, not dissimilarly to their peers in the private sector.Read More »
Reflections on aid and regime change in Ethiopia: a response to Cheeseman
By Jimi O. Adesina, Andrew M. Fischer and Nimi Hoffmann
In a piece, published on 22 December 2020, that he describes as the most important thing he wrote in 2020, Nic Cheeseman penned a strong criticism of what he calls the ‘model of authoritarian development’ in Africa. This phrase refers specifically to Ethiopia and Rwanda, the only two countries that fit the model, which is otherwise not generalisable to the rest of the continent. His argument, in a nutshell, is that donors have been increasingly enamoured with these two countries because they are seen as producing results. Yet the recent conflict in the Tigray region of Ethiopia shows that this argument needs to be questioned and discarded. He calls for supporting democracy in Africa, which he claims performs better in the long run than authoritarian regimes, especially in light of the conflicts and repression that inevitably emerge under authoritarianism. His argument could also be read as an implicit call for regime change, stoking donors to intensify political conditionalities on these countries before things get even worse.
Cheeseman’s argument rests on a number of misleading empirical assertions which have important implications for the conclusions that he draws. In clarifying these, our point is not to defend authoritarianism. Instead, we hope to inject a measure of interpretative caution and to guard against opportunistically using crises to fan the disciplinary zeal of donors, particularly in a context of increasingly militarised aid regimes that have been associated with disastrous ventures into regime change.
We make two points. First, his story of aid dynamics in Ethiopia is not supported by the data he cites, which instead reflect the rise of economic ‘reform’ programmes pushed by the World Bank and IMF. The country’s current economic difficulties also need to be placed in the context of the systemic financial crisis currently slamming the continent, in which both authoritarian and (nominally) democratic regimes are faring poorly.
Second, we reflect on Cheeseman’s vision of aid as a lever of regime change. Within already stringent economic adjustment programmes, his call for intensifying political conditionalities amounts to a Good Governance Agenda 2.0. It ignores the legacy of the structural adjustment programmes in subverting deliberative governance on the continent during the 1980s and 1990s.Read More »