The State of the Field Today
This blog entry attempts to put together a list of essential readings
that describe what emerges when mainstream economists in general, and mainstream
development economists in particular, reflect on the state of their fields. These efforts at self-reflection are often spurred by local, regional, and global economic crises, which constitute moments of awakening for economists as well as occasions for criticism from voices and scholarship outside of the mainstream. While many of the works selected in this list are not explicitly couched as responses to specific events or to alternative literatures, as stock-taking exercises, some of them end up addressing claims made by more critical approaches, while others fail to heed the shortcomings. All of them, however, provide a good indication of how the field defines itself, and the future course it has set for itself.
Why an essential readings list on mainstream development economics’ reflections on itself, in the broader context of Critical Development Studies of the Middle East? It is my contention that while much can be learned from Critical Development Studies (CDS) and Critical Political Economy (CPE) without dwelling on their contrasts with more mainstream approaches to development studies, some of the value of these critical approaches lies in how they situate themselves with respect to the dominant canon. Understanding the grievances with the mainstream that CDS and CPE have elaborated in turn requires some familiarity with the mainstream they are questioning, how it sees itself, and where it is headed.
Starting with two chapters from cornerstone volumes on CDS and CPE provides a useful and succinct overview of how critical approaches to development and political economy distinguish themselves from the mainstream. This is followed by a few selections of disciplinary introspection by prominent political economists and by giants of development economics. This list, while far from comprehensive, allows students of CDS to see the multitude of ways that the mainstream has evolved, partly in response to some of the grievances that critical approaches have raised.
In the introduction of
The Essential Guide to Critical Development Studies, Paul Bowles and Henry Veltmeyer explain what CDS does differently from the mainstream approach to development studies and, in particular, how the edited volume illustrates the way the CDS approach is distinct. The mainstream is portrayed as a field and practice that are continually evolving, but that are caught in a paradigm that stunts, blinkers, and biases their contribution to the study of development. The approach is captive to a capitalist worldview in a way that largely inhibits reflection about capitalism, including reflection that is directly relevant to questions about development with which the orthodoxy otherwise purports to engage. As the mainstream interrogates development outcomes, such as global poverty or inequality, its failure to recognize that the underlying system is co-constitutive of some of these outcomes means the approach’s scope will always be partial; its unwillingness to question the system as it seeks to understand the outcomes means the mainstream is effectively at best anemic and incomplete.
Although CPE engages with questions that are not restricted to development, it is otherwise similar in spirit to CDS in that it adopts an approach that recognizes the limits of the mainstream paradigm and seeks to remedy its shortcomings. In the case of CPE, the mainstream that it grapples with is more specifically mainstream
economics, including development economics. Some of the principal failings and shortcomings of mainstream economics that CPE takes on are listed and explained succinctly and systematically in the introduction of
A Research Agenda for Critical Political Economy by Bill Dunn in “What Makes Critical Research in Political Economy?”
What does the mainstream approach in economics look like today? The seminal texts that lay the theoretical foundations of the classical tradition in economics can be gleaned from the syllabus of any standard course on the History of Economic Thought, but it is not these works that best characterize the current mainstream approach that CDS and CPE are contending with, as explained by the introductions by Bowles and Veltmeyer, and Dunn respectively. Instead, the chapters speak of a continually changing and adapting mainstream, and Dunn in particular mentions the diversity of research and methodologies within economics today. What emerges when some of these “adaptable” mainstream economists reflect on the state of their own discipline? What has the mainstream become in development economics? What are development economists’ views of their field? What are economists’ views of inequality in particular?
In 2015, the British Academy published its
Reflection on Economics, based on a series of forum discussions by leading academic and professional economists on the state of their art, its relationship to policy, its weaknesses, and areas for stronger research. The volume includes concise chapters that provide a narrative synthesis of the forum discussions on various aspects of the discipline, interspersed with a series of short, boxed contributions by individual economists presenting their views on the question the chapter tackles. The scope of the volume is a reflection on the broad discipline and practice of economics (not only on development economics), so it is noteworthy that most of the individual economists’ contributions—whether on the state of the field, its weaknesses, or avenues for future research—focus on subfields and knowledge that are directly relevant to development economics. These include the study of growth, institutions, and inequality, which are singled out as the more pressing agenda items. There is also a widespread call for applying behavioral economics to other subfields as well as importing insights from other disciplines, namely history, political science, and sociology. It is worth noting, however, that despite growing interest in these topics, the British Academy’s field “reformers” still fall short of adopting a world system view, to use the language of Bowles and Veltemeyer, or a global perspective in integrating political, historical, and institutional insights.
This self-reflective awareness happens earlier in development economics. In his Prebisch Lecture of 1998 entitled “Towards a New Paradigm for Development: Strategies, Policies and Development,” Joseph Stiglitz presents a new broader conception of development as societal transformation. This transformation is brought about by development strategies, which Stiglitz explains, are arrived at through consensus, and therefore require society-wide participation, ownership, coordination, and prioritization. Development strategies must operate in a coherent and coordinated way at several different levels, including the private sector, the public sector, the community, the family, and the individual. They must address issues related to resources, economic management, knowledge management, sectoral development, and social and organizational capital. This proposed conception of development also serves to explain why until then, economists’ development paradigms—all of which fit Hirschman’s description of monoeconomics, concerning themselves with a narrow set of outcomes, and often confusing means for ends and cause for effect—had failed. But beyond his loud and clear call for abandoning the precepts of earlier paradigms, it is in Stiglitz’s “Rethinking Development Economics” that some of the practical implications of this broad conception of development and development strategies for economists are fleshed out.
In “Inside the Machine: Toward a New Development Economics,” Abhijit Banerjee’s reflection on the state of the field produces a different diagnosis, and one that, incidentally, he finds applies equally to critics of capitalism and to its proponents. Economists have spent much of the latter part of the last century trying to uncover the so called “laws of capitalism,” patterns sought initially through theoretical modeling, and subsequently through the analysis of ever-growing sets of international and comparative data, that are meant to reveal cause and effect relationships. The hope was that these patterns would then inform the question of what needs to be done. In looking for such “iron laws,” economists have asked the wrong questions and provided the wrong answers to them. In Banerjee’s reading, we are lured by the illusion that we can find answers that “save us the trouble of stepping into the machine. […] we avoid having to go looking for where the wheels are getting caught and figuring out what small adjustments it would take to get the machine to run properly.” What follows Banerjee’s exposition of this awakening is a review of work in development economics that asks far more localized, self-contained questions, the answers to which entail economists getting their hands dirty as they grease wheels and tighten bolts.
Critical voices question the relevance of the work of economists regularly, and perhaps more frequently so—at least for macroeconomics—since the global financial crisis of 2008. While
Reflection on Economics touches upon this, a more telling picture of how some economists view the role of their discipline and the nature of (at least some of) its contribution is Alvin Roth’s Fisher-Schultz Lecture from 1999 entitled “The Economist as Engineer.” Therein, Roth describes the field of design economics, which emerges naturally from economists being tasked with
designing markets and mechanisms rather than just analyzing them. If the game theoretic revolution came to dominate the work of economists analyzing markets, game theory alone remains too conceptual, rarefied, and abstract for the design of an implementable process. Roth explains the need for attention to detail, complexities, and institutions, as well as the importance of experimental and computational methods for designing markets or other economic mechanisms. The examples of market design provided in the lecture are somewhat niche, but the view of the economist that transpires from the intervention, as indicated from its title, is one of an innovative designer/craftsman with a problem-solving mindset, a technologist.
More recently, in her Richard Ely lecture of 2017, Esther Duflo offers a—perhaps less glamorous—view of the economist: as plumber. The first part of her address builds the analogy between the needs of policy makers in implementing programs and plumbing needs, while the second part argues that economists with field experience, with their training, the kinds of questions they ask, and their attention to detail, can be especially well placed to solve such plumbing issues. The argument for economist as plumber of choice is based on the centrality of issues of conflicting objectives and limited information, attention, and willpower to an economist’s understanding of the behavior of any agent, be they a citizen (on the receiving end of the policy), a government worker (on the implementing end of the policy), or a firm (on either end of the policy). Unclogging drains with these limitations in behavior in mind requires that the “plumbing details create a choice architecture for the final consumer” and an “incentive architecture” for the implementer (p. 12). This is the type of mapping exercise that falls squarely within an economist’s field of expertise. The natural methodological toolkit for plumbing, Dulfo argues, is field experimentation.
Where Do We Go from Here?
From even the more modest of the “reformers,” the call for a closer understanding of uneven growth, the role of institutions, and growing inequality indicates that much of the field has clearly departed from the market fundamentalism that prevailed in the 1980s and 1990s, a turn that was ushered by the emergence of critical voices from CDS and CPE.
The redirection of the discipline away from grand questions about “iron laws” and “drivers of growth” is also an implicit admission that the edicts of the Washington Consensus and the neoclassical model it rests on are poorly founded. The vision of a radically narrower and humble role for the economist as engineer, technician, or plumber too is an indication that the mainstream’s prior paradigms had failed. This rescaling and re-scoping of the discipline is perhaps also symptomatic of what CDS faults mainstream economics with: the failure to adopt a world system perspective in trying to understand development outcomes. By suspending larger questions about
which machine we are stuck in (and what other machines might look like), and confining the contribution to troubleshooting the wheel that is jammed, the mainstream that Banerjee describes is effectively
In averring that today’s unprecedented global and intrastate levels of inequality are the result of a plutocratic elite effecting policies that limit the reach of government, Stiglitz is more explicitly shunning neoclassical orthodoxy. In his quest for the determinants of growth, Stiglitz seems to be asking what Banerjee calls the “wrong question,” even though his answer is not what Banerjee would call a “wrong answer.” Stiglitz is also more willing to take a world systems perspective by commenting on the evolution of capitalism. “By eating up the state, capitalism eats itself,” he,
Todd Tucker, and Gabriel Zucman write in 2020, as they call for a revival of government and taxation as a means for correcting some of the ills of capitalism as it currently stands. But the correction is in the hope not of reforming the fundamental system, but of setting capitalism back on a better path in which markets function for the interest and benefit of society at large.
The practical questions that naturally emerge from such a call are then: How can we achieve progressive capitalism? What could be conditions under which players in an uneven playing field might collectively accept to make it level? With losers so exorbitantly outsized, why would winners agree to changing the rules? Ironically, and as Stiglitz, Tucker, and Zucman’s metaphor on capitalism’s self-cannibalism suggests, it may be precisely the unfettered excesses of the current system that will force even the beneficiaries from its grotesque imbalance to explore different rules. The plutocrats have not only run out of planet to exploit, they are now exposing themselves and their spoils to existential risk.