Re-embedding the economy to rethink (sustainable) development

‘On ne développe pas ; on se développe.’

This famous sentence from Joseph Ki-Zerbo could be translated as ‘we do not enforce development; we develop ourselves.’ However, development paradigms have been largely influenced by external views, mainly those of Western countries. “Development” is considered as a moral concept. Many people around the world suffer and don’t have access to welfare programmes that are fundamental to strive, hence the need for development, through the improvement in terms of basic needs and democratic institutions. However, development as a concept is far from having a universal definition, on how to develop and the ultimate goals of this development. Development paradigms are fundamentally linked to ideologies. In particular, the connection between the economics discipline and the dominant development paradigm is deep. Thus, rethinking development also calls for rethinking the assumptions in the economics discipline. In this blog, I summarize the main ideas of a recent paper I published (“From economic growth to the human: reviewing the history of development visions over time and moving forward”).

The holy triad of economics: ‘market-scarcity-rationality’

Karl Polanyi established two different definitions of economics: a formal one, used to justify the rise of self-regulated markets, and a substantive one, trying to show that markets are not a universal truth in the history of human exchanges. The formal definition refers to the logic of rational action and decision-making based on alternative uses of scarce resources. This formal approach has gradually become the dominant definition of (mainstream) economics, through the theory of utility value, based on the subjective utility associated with the consumption of goods and services. In this view, the primary focus is the individual, captured through the market relationships that he or she enters into. Resources, as natural resources, are allocated through market mechanisms, the main instrument of efficiency in what is called neoclassical economics. The implications of these assumptions are very important for development.

Since the process of formal decolonization began, the mainstream view of development has been founded on the assumption that post-colonial economies can develop in the same manner that Western countries did. In this sense, they are assumed to simply be at a later stage of Western economic history. In this context, economic growth is often considered an indicator of progress. This idea gained currency with modernization theories that started to dominate mainstream development discourse after the second World War, conceiving development as an imitative process, establishing from the onset a distinction between a modern sector (capitalist economy derived from the Global North) and a traditional sector (considered as a subsistence economy, that should be abolished). With the Washington consensus in the 1980s and the resulting structural adjustments, pulling developing countries towards stability, getting them as close as possible to the market ideal was the new goal for development, society becoming an auxiliary of the economy. In the 1990s, the discourse of international financial institutions evolved, as they incorporated political and social dimensions to their economic analyses to better explain the failures of the past. However, instead of challenging the fundamental assumption of this narrative, the new incorporations simply include more ways in which the developing countries need to ‘catch up’, such as through developing better institutions. We went from economic determinism to institutional determinism and not much has changed over time.

However, the mainstream view of development has been challenged from many quarters. For example, as scholars from the Global South long understood, underdevelopment and development are actually two sides of the same coin, based around the uneven accumulation of capital on a world scale. Dependency theorists, the regulation school, and post-developmentalist theorists all recognized this. Economic growth and capital accumulation in the Global North still relies on continuous patterns of colonization. Even alleged attempts to become more sustainable, as with electric cars or renewable energy, rely on continuous extraction of raw material in the Global South.  It is time now for new frameworks for development thinking.

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The Uncomfortable Opportunism of Global Development Discourses

Since the 2008 financial crisis and the end of the Millennium Development Goals, academics and practitioners working in ‘development’ have been groping for a new development paradigm. Yearning for the end of neoliberalism and stumped by the rise of China, academics hopped on the Sustainable Development Goals (SDGs) bandwagon to call social scientists to think ‘globally’ beyond national-centric analyses. This was, of course, a noble goal – no different from the motives of the hopeful SDGs. New ‘Global Development’ proponents argued that we must think globally and relationally, surprising some within development studies that this had not been happening already (think Dependency theory).

As Development Studies departments found themselves new names and new networks were established, some academics took the opportunity to stake claim over the meaning of Global Development. New scholarship argued that a new Global Development paradigm would rescue us from development studies’ oppressive past, which obsessed over distinguishing between a backward developing world and a utopian ‘developed’ heaven. They reasoned that this was necessary because the ‘South’ was actually rising in comparison to the ‘North’ on the basis of growth and human development indicators. But in presenting this trend as a paradigm shift, these scholars misdiagnosed the problem. They presented the entire ‘South’ as rising, failing to isolate China’s rise and obscuring the fact that countries may have experienced very different trajectories.

In a Forum section that appeared in Development and Change, the case for Global Development was subjected to open debate. The case for Global Development is based on ‘converging divergence’, which suggest that there is increasing convergence between the North and South while there is increased evidence of sustained within-country inequalities (divergence). This elaboration of ‘Global Development’ selected 1990-2015 as the time series within which convergence was identified in terms of growth, health and education. The paper was roundly criticised for its sloppy use of indicators. For example, generalisations of wellbeing were based on the widely-criticised (in every intro to development studies course) Human Development Indicators. In selecting the time period 1990-2015, the paper implies that convergence resulted from the implementation of market-led policies, implicitly condoning neoliberalism, as Andrew Fischer argued. Of course, such claims stand directly opposed to the experiences of most countries in ‘the South’ where structural adjustment and the legacy of market-led reforms has limited prospects for structural transformation.

The paper was also criticised within the Forum on several other counts (see Jayati Ghosh’s contribution for example). For their part, Global Development proponents acknowledge most criticisms. However, they refuse to nuance their claims of converging divergence. They replied that the study was a purely empirical exercise and converging divergence was a stylized fact. It is as if selecting which data you use, as well as the time period, is not a choice.

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What is a Developed Country?

Any discussion of economic development – either implicitly or explicitly – contains the distinction between developed countries and developing (or under-developed) countries. While there are many theories on what promotes development and how best to achieve it, in all cases the goal is for a country to eventually become ‘developed’.

This begs the question – what is a developed country? There are at least three common definitions, which are presented below. These definitions overlap in many cases, but in others they are at odds. This piece argues that a broader definition is needed in light of recent failures of several ‘developed’ countries to cope with shocks ranging from the COVID-19 pandemic to natural disasters.

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Smithian or mercantilist nations? Two opposite models of development

1024px-The_Battle_of_Cape_Passaro.jpgWhile classical political economy has been considered outdated by many social scientists, I argue here that it can provide insights about the world today and the challenges we face.[1] One of these insights has to do with the early disagreement that existed between Adam Smith and the mercantilists of his era with regards to the wealth of nations, a topic sometimes captured under the label “development”. Based on this disagreement, this blog post develops a typology of Smithian and Mercantilist nations as different models of capitalist development that may be considered alternatives for developing countries today.Read More »

Revisiting the Battles and Cycles of Development

Cycles.jpegWalt Rostow (1959) infamously put forth a five-stage theory of economic development, extrapolating from the experiences of the great industrialized nations. However, as dependency theories strongly pointed out, the conditions under which those countries industrialized is significantly different from those that prevailed after decolonization. In addition to this, democratic capitalism experiences turbulence, which I argue makes development under this global system a struggle against powers and against what I call “Burawoyan Cycles”.Read More »

Why I refuse to rethink development – again (and again, and again…)

Image result for rethinkingThis summer I attended several academic conferences, and while I was initially extremely enthusiastic to be given the chance to put my work out for discussion, exchange with and learn from colleagues, by early autumn I am fatigued and disenchanted.

Maybe the reason for this is that several of these events where claiming to be “rethinking development”, yet by the end I fail to recognize what was essentially new in the arguments exchanged and the discussions led and what will move us forward.[1]

The root of my discontent is that while everyone continuously debated “development” and attempted to “rethink” it, not once it was clarified what the (minimum) common denominator of the “development” to be rethought would be. Were we talking about intervention, projects, stakeholders, cooperation? Were we rethinking technical modes of intervention? Ways of studying or researching? Or were we questioning the roots of persistent inequalities, the sources of poverty and the causes of injustices (e.g. the legacy of colonialism, global capitalism and our imperial mode of living)?

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Towards a Critical Pluralist Research Agenda in Development Economics: Some Bricks from Berlin to Build Upon

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By Svenja Flechtner, Jakob Hafele & Theresa Neef

Much has been said about what’s going wrong in development economics – on this blog (for example by Adel Daoud, Ingrid H. Kvangraven, or Jacob Assa) and elsewhere (for example by Angus Deaton, Dani Rodrik, and Benjamin Selwyn), as well as in newspapers. Much has been written, too, about alternative perspectives and approaches to economic development thinking (this recent compilation by Reinert, Ghosh and Kattel gives an overview of many of them). But is it possible to build a coherent pluralist and critical framework out of these approaches? If so, what could a critical and pluralist research agenda for development economics look like?Read More »