Friday, March 11, 2011

Kenneth Galbraith and the Historical Process of Economic Development

I recently ran across an interesting book at our local library. It is called "The Voice of the Poor", and consists in a written version of a series of lectures given by the economist Kenneth Galbraith in India in the early 80s. The author introduces the work as a reversal of the typical flow of advice from rich countries to poor, but in the end it seems more like Galbraith's own reflections on the appropriateness or inappropriateness of the development advice and investment proffered by rich countries. Most of the essays weren't groundbreaking for me, though it was of course interesting to read something written during the depths of the Cold War, and at times I was impressed by what then must have been new insights but have become common knowledge since the end of the Cold War.

Anyway, I felt that the best essay was chapter 2 of the book, entitled "The Constraints of Historical Process". In it Galbraith argues that each country's economic development goes through a series of stages, and that much development advice from rich nations to poor is inappropriate, as it attempts to apply measures fitting an advanced country to a country unable to utilize them well. Below I offer a summary of the essay, with my own reflections.

Galbraith says that both the US and the USSR make the mistake of trying to transfer designs from their advanced economies to poor countries. Both the capitalist and socialist models in the late 20th century assume that economic development consisted primarily in the strengthening of agricultural and industrial capital. They consequently promote such investments instead of promoting democracy and education.

Galbraith attributes this erroneous thinking to an ignorance of historical process. In the history of all the advanced economies, they first passed through a period of political advances, then cultural advances, and only after these first necessary conditions were met did they embark on economic development. It is impossible and ineffective to apply the later stages of development to a country that is in an earlier stage. The imposition of the socialist model on countries like Angola or Ethiopia was especially inappropriate, because socialism (more than capitalism) requires an educated, conscientious corps of bureaucrats, hard to obtain in agrarian, uneducated countries. This ignorance of historical process is especially odd considering that Marxism is based on the idea of historical progression through different steps of development.

Political development is the first condition of prosperity. With an open democracy, society is more stable, which allows and forces people to act with integrity. Galbraith points out that few wealthy countries do not have a representative political structure (he includes the USSR in this reckoning as a wealthy, politically representative country), and few representative governments do not give rise to wealthy societies. The military's involvement in politics is inimical to this goal. Galbraith calls us to imagine if Cromwell had stayed in power in Britain, or the Union had continued to occupy the US South. The surging of a vibrant democracy, and thus a vibrant society, would have been impossible. On this point I have to wonder if Galbraith would then consider the post-Reconstruction South a vibrant democracy or economic engine. I wouldn't. The South is still the US's most economically and politically backwards region.

The next step is cultural development, particularly in the form of education. General education allows people to live and work more efficiently and participate better in political life. Galbraith says that no widely-literate country is poor, though I don't think this is exactly true. Indeed, it seems like the thirty intervening years since Galbraith's essay have seen the rise and fall of many economies, thus complicating his linear vision of a progression from poor country to rich. I do agree though with his assertion promoting technical education before general education is a mistake made by many countries. Technical education has its place in a more advanced country, but general education is primordial. It makes everyone better off, from small farmers to CEOs. For Galbraith though, the importance of general education lies in its breaking what he calls the complacence of poverty. Learning about the world drives people to want a better life than they or their parents have.

I guess I agree with this point, but in most times and places this is in large part due to a misled model of society and education, not to something inherent about either education or poverty. Children in modern societies are indoctrinated by the state, schools, corporations, and sometimes their own families to reject rural life and to strive for a consumerist urban existence. This has left the countryside neglected and the cities burgeoning with slums, as people move en masse to big cities. This can not be considered a true economic development but rather a pathological idiosyncracy of modern consumerist culture.

If the prevailing model of education teaches our children that they must leave their impoverished homes, then the continued poverty of these places has less to do with a supposed complacence of the local people in their own poverty, and more to do with the flight of the brightest kids from their homes. If education doesn't teach children to stay in their home regions and improve them, then it is a piss-poor education indeed. And the economic development ensuing therefrom will be one focused on congested cities, and leaving behind masses of rural people.

So I wouldn't qualify flight from the countryside as a positive trend, but rather a rejection of rooted traditional culture in favor of a more shallow, consumerist set of values. Often this accompanies economic development, but it is not the same as economic development. And indeed, in this new century we are seeing many of the limits of the modern consumerist lifestyle (ecological catastrophe, social breakdown, and economic crisis). So it seems foolhardy to me to uncritically endorse the rejection of millenarian agrarian traditions for new ways of living that are already tearing at the seems after only a few decades.

Galbraith says that though many governments have not yet understood the importance of education, individuals have. This is manifested when farmers put a major emphasis on sending their kids to school, and getting them out of farming. Again, I would not qualify this as a positive trend. In Haiti, the US, or Colombia, we see farming neglected as the brightest young people go to the cities to work in things like accounting or selling steel wool sponges or driving taxis. I am firmly convinced that Haiti, the US, Colombia, or any other country would be better off with more productive farms and healthy small towns, and fewer street salesmen and corporate stooges.

At the end of his essay Galbraith reiterates his thesis. Rich countries are obsessed with physical capital, as they should be given their particular stage in the process of economic development. But poor countries must challenge this obsession when the rich try to donate, advise, or force this focus on physical capital upon them. Economic development must be appropriate to the particular historical stage in which a country finds itself.

My general impressions of the essay are positive. I agree that economic development advice must conform to the reality of a given country. I can also respect Galbraith's idea that political and cultural development usually precede economic development.

However, almost thirty years after its publication, the essay must be held up against the results of its own advice. From the 80s to the present day, most rich countries have largely dropped agriculture from their development aid portfolio. As Roger Thurow points out, agricultural aid to poor countries from the US has gone from about 25% of total aid in the 80s to only 1% in 2008. What made up the difference? Aid to projects in themes like "governance", "gender mainstreaming", "capacity-building", and other nebulous concepts, in addition to things like AIDS control and other health care. It seems the development community took Galbraith's advice to heart, dropping a focus on hard projects like agricultural development, factories, and infrastructure. I don't know if this change was precisely because of the thinking of people like Galbraith, or because of the neoliberal paradigm that prejudiced donors against direct involvement in the economy, or simply because for many development workers and administrators, it is more comfortable to work with other bourgeois, urban professionals in the big cities of the Third World, as opposed to working in the dusty villages where most poor countries' people live.

As an agronomist, I have been frustrated at the lack of focus on agriculture in the development aid sector, and especially the lack of jobs for people with my skill set. Do people in Haiti, 65% of whom are farmers, really need more workshops on governance and gender, or better yields in their fields? Even the noble area of medicine is pretty silly in countries where farming is unproductive and people are hungry. The first line of defense against most diseases is a good diet.

It seems that many donor countries are now getting the message, and shifting their focus back to agriculture. This is a good thing. While I conceptually understand Galbraith's warning against focusing too much on physical capital and not on education or political development, I can't practically see how the people of a poor agrarian country can improve their lot without improving their agriculture. Perhaps small-scale, basic agriculture development is a precondition to Galbraith's thesis, a step even prior to his historical progression through political, cultural, and economic development. Indeed, Europe's Enlightenment-era political advances, as well as its Industrial Revolution, were preceded by steady trend of greatly increased agricultural productivity throughout the Middle Ages and the Early Modern Age.

So maybe my focus on basic agrarian development is fully compatible with Galbraith's vision. It's just that he didn't see that agrarian advances were a prior step to the three he enumerates. If this is so, he would be happy to complete and flesh out his thesis (though perhaps unhappy at the thirty years of misled development advice it took to get to this point). Now the question is if rich countries will really follow through with the resources they've promised to agricultural development, and if the type of agricultural development that gets promoted will be agrarian and poor-friendly, or subsidies for the unproductive model of high-capital, high-tech agriculture.

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