Development Economics was Bright and Optimistic – Reflections on Early Years of the Discipline

1. Development Economics was Bright and Optimistic – Reflections on Early Years of the Discipline

2. One thought ever at the fore- That in the Divine Ship, the World Breasting time and space All people of the globe together sail, Sail the same voyage Are bound to the same destination

3. Assumptions and approaches which favoured optimism • Certainty about the trajectory development takes at all times and situations • Certainty about the infallibility of “discovered” economic models (specifically the Harrods –Domar model) • The assumption that the international environment was enabling, and supportive of late developers. • As corollary to the above, neglect of possible constraints posed by the international context • Disregarding structural impediments within developing countries to capitalist development • Disregarding political dimension of development • Disregarding social issues • Paternalism of “teachers” of the early development economics and inferiority complex of their adepts • The possibility of being caught up in the then prevailing “competition of the two systems” – capitalism and socialism

4. Certainty about the trajectory development takes at all times and situations

5. b) Certainty about the infallibility of “discovered” economic models (specifically the Harrods –Domar model)

6. “The Harrods-Domar model is a simple construct: the growth rate is given simply by s/v where s is the average saving ration and v the marginal capital output ratio. From the income Yo, the savings are yielded by the savings ratio s as sYo; when next turned out into investment, these savings increase income by {s/vYo} since the capital-output ratio is v. with fixed savings and capital output ratios, therefore, the economy is characterised by an exponential growth rate s/v; much as if you were telling someone to take the first left and the next right and to keep repeating the same sequence for ever”

7. c) The assumption that the international environment was enabling and supportive of late developers.

8. d) As corollary to the above, neglect of possible constraints posed by the international context (i.e. global economic & power relationships)

9. e) Disregarding structural impediments within developing countries to capitalist development

10. f) Disregarding political dimension of development

11. g) Disregarding social issues

12. h) Paternalism of “teachers” of early development economics and “inferiority complex” of their adepts

13. i) The possibility of being caught up in the then prevailing “competition of the two systems” – capitalism and socialism

14. Quotation 1: • …an explicit part of the scientific methodology is their recognition of uncertainty. By failing to convey to the developing countries the range of views, the sense of scientific uncertainty, we do them and ourselves a disservice; not only do we set back democratic processes and the developmental transformation, we undermine our own credibility. Critical reason and scientific methodology go in quite the opposite direction of fostering the “willingness to hold belief in suspense, ability to doubt until evidence is obtained; willingness to go where evidence points instead of putting first personally preferred conclusions; (and) ability to hold ideas in solution and use them as hypothesis to be tested instead of dogmas to be asserted…

15. Quotation 2 • Although neoclassical economics has failed to provide us with a theoretical framework for thinking about problems of development, it has played a critical role in the evolution of development theory. By arguing that institutions do not matter, it has forced us to think about why they matter. By arguing that wealth distribution does not matter, it has forced us to think about why it does. And by arguing that the main interactions in an economy are mediated by prices, it has forced us to think about the myriad of other important interactions in our ecosystem.”