Books this year: a book diary

I learned a lot from this book. It’s a cogently written analysis of the philosophy, theory, and practice of development. Rapley covers the history of development from the post World War II period to the present day postdevelopment movement.
The story begins in the postwar period, during which time the Keynsian consensus took hold. A model was adopted throughout the third world called Import Substitution Industrialization (ISI). The idea was to help foster the growth of an industrial sector by placing trade barriers on the import of finished goods from first world countries. Some countries went further by propping up local industry in various ways, such as reducing the number of firms able to produce a given product or import a given input, giving one firm a legal monopoly, or giving firms access to foreign exchange at concessionary rates.

Eventually, holes began to appear in this strategy. In 1954, W. A. Lewis published a paper which gave some of the theoretical impetus for state-led development. Lewis theorized that the wage rate would remain at the level of agricultural subsistence, thus providing a cheap source of labor for industry. In reality, urban wage rates grossly outstripped rural rates. These unequal gains precluded the emergence of a mass market for consumer goods, thus reducing demand and inhibiting the growth of the industrial sector.

Additionally, governments squeezed the rural agricultural population to prop up industry, making agriculture increasingly unattractive and giving rise to a rural-urban exodus. Squatter cities were born. This lack of focus on developing primary markets was one of the most serious omissions of ISI. From my own experience in Namibia, many families no longer even produce enough food to subsist, relying instead on the few of their relatives who have succeeded in gaining formal employment. These state-supported incomes then become stretched over many people.
In the late 1970s, state intervention was largely discredited and neoclassical theory came to the fore. It was posited by neoclassical theorists that the four “little tigers” or “dragons” of East Asia: Hong Kong, Singapore, Taiwan, and South Korea owed much of their success to a reduced role for the state.

Neoclassical theory also had problems. In insisting on state retrenchment, it seems the pendulum swung back a bit too far. It is not enough to lower inflation and interest rates to achieve increased investment. Infrastructure must be available as well. People will wait for paved roads, plumbing, and electricity from the government before tacking that cost onto their new factory. Investors, particularly from abroad, waited for governments to make the first move, but the orthodoxy of the day was that the state should not interfere, and the the governments never did.

Other problems included a tendency for neoclassicals to overestimate the extent of currency overvaluation, primarily because secrecy and black markets existed, thus making the official currency evaluations applicable only in some parts of the economy. In addition, it came to light that general theoretical assumptions such as the rational actor assumption and the efficient market assumption are sometimes far from true in the third world. People do not always behave rationally. One example of many is that laborers, because familial structures in some third world countries, often are not the recipients of the fruits of their toil. In this case, one can hardly expect someone to behave in a manner that would increase their economic gains. Rather, one would expect them to work far less than the rational actor theory would presuppose.

It would seem that bringing the state back into development would be the way to go. However, in most of the countries that could benefit from this, an increased role for the state is no longer possible. These states simply lack the strength to implement a strong state-led development model. First world countries are also not in the mood these days to give trade concessions and more aid to programs of this sort.
The most modern development is postdevelopment thought. Postdevelopment theorists question or reject the value of development. Some of them think that development is really just a way of integrating and globalizing people, and that achieving a net increase in welfare for the world’s poor has never been the goal of development projects. People may have been happily producing food for themselves instead of for the market, but because it was not monetized, it did not register on the most used statistics gauging welfare. Thus, when “development” takes places, gains are illusory and happiness may actually decrease. Postdevelopment thought is connected in some ways to the anti-globalization movement, but it’s not a perfect intersection. A major arc of postdevelopment theory is that we need to focus on the particular human cases and stop trying to develop grand theories for states.

I’ll stop here. I’ve touched on probably only a tenth of what I could say about this topic. In any case, despite my loathing for all things postmodern, there is something to postdevelopment thought. Before I came to the Peace Corps, it didn’t register to me that organizations like the Peace Corps only go to tribes that are “integrating” into the global system and trying to “develop”. They’re not going to send you to live with a truly traditional people like the Himba here in Namibia. In light of this, one wonders whether helping people is really the goal of development.

This entry was posted on Saturday, February 20th, 2010 at 9:20 pm and is filed under Books read by Levi, 2010. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.