Book Review by Heilbroner, Robert L. in the Journal of Economic Issues; Mar68, Vol. 2 Issue 1, p122, 4p
I suppose every future economist has wondered whether, from the vantag point of the future, economics will someday be regared as one of the more remarkable intellectual triumphs of the present era, or as one of its crueler jokes. Certainly anyone who has ever been confronted with an eager student from Tanzania or Pakistan or Jordan must have asked himself silently, "What have I to teach this young man?"
Hence it was with more than routine interest that I opened the book under review, comprising the papers and proceedings of a conference on teaching development economics held in Manchester, England, in April 1964. The conference was divided into two sections, "The State of Knowledge" and "Teaching Economic Development," with papers from Dudley Sers, Hla Myint, E.E. Hagen, Paul Streeten and Thomas Balogh adressed to the first questions, and Peter Ady, L.J> Zimmermand and Kurt Martin on the second. These papers were followed by a discussion among all ot the above plus Joan Robinson, Nicholas Kaldor, Colin Clark, Alec Nove, Phyllis Deane, G.D.N. Worswick and others. An impressive gathering.
As is nearly always the case with such papers-and-proceedings, it is not so impressive a book, uneven and somewhat meandering and inconclusive. Yet any reader who has aksed himself the disconcerting question that I posed in the first paragraph will follow the book with interest, if only becasue it forces him to confront a central question to which there does not seem to be a very satisfying answer.
In the initial position paper from which the conference took its bearings, Dudley Seers puts the issue squarely:
I wuld put in evidence...a point on which there is widespread agreement, that economists are very little use working on the problems of under-developed countries, until they have done so for some years, and then only if they are unusually adpatable. Enginerrs are probably more useful than economists in these parts of the world, at least unturl the latter have had two or three years' experience. There is so much for economis graduates to unlearn - and unfortunately, the abler the student has been in absorbing the current doctrine, the more difficult the process of adaptation (pp.4-5)
Seers is not merely being contentious. His paper gives a careful diagnosis as to why economics, which he sees as relevant enough to the "special case" of highly industrialized market societies, fails to come to grips with the porblems of underdevelopment. The problem is that economists assume that the categoris with which they organsie the complexity of the monetized, unified, industrial world will accurately describe the characteristics of the unmonetized, dual-sector, non-industrialized, backward world. These categoris begin with such "hard" abstractions as the factors of production, sectors, firms and so forth, and go on to behavioural constructs such as saving, investment, profit maximisation and the like. And the trouble is that both institutionally and behaviourally the concepts of the developed world not only fail to fit, but grossly misrepresent or oversimplify their counterparts in the developing world.
What is lacking, in other words, is the sharpness of description and pertinence of observation without which prescriptions of economists become ludiscrously wide of the mark. A few instances drawn for the proceedings underline Seer's point. Colin Clark notes that Indian statistics revealing a high elasticity of family consumption are based on the fact that the number of people lving under one roof rises sharply when the income of one memebr of the "family" increases. Streeten observes that the construction of irrigation dams (investment) will not only tend to raise output, but can also lower it by increasing the exposure of farmers to debilitating schitosomiasis. Balogh attacks the balnd assumption that eduction builds "human capital" by remarking that education can be dysfunctional if it results in an unwillingness to work with one's hands. E.F. Jackson tells of the construction of an elegant input-output matrix by Morrocan economists who had no statitical information on agricultural production. A.H. Hansen mentions the incorporation within the Indian planning frame of a presmise of a six-million-ton output of steel whose "source" was an optimistc public relations statement of the Ministry of Industry.
These disconcerting departures of reality from the kind of orderly and reliable foundation on which prevailing economic theory is based are by no means surprising to encounter. The question is what to do about them - or rtaher, since very little can be done with the recalcitrant realities, what to do about the theory byy which economic developers seek to steer their course? Here the papers and proceedings begin to lose their cutting edge. All participants agree that the rules of the "special case" must be rid of their parochial assumptions before they can be applied to the general case of backward nations, but the manner in which this is to be done inot easy to state. After all the obeisances have been made to "country studies," to disabusing ourselves of hidden assumptions in much theorising (Streeten is very good on this), we are still left in the end with a general agreement that supply and dmeand, marginal analysis nd, above all, "well constructed" mdoels do have relevance and usefulness for a backward nation seeking to grow.
What usefulness, what relevance? What underdeveloped country has benefited by economic or econometric techniques? The embarrassing question posed by Seers goes largely unanswered. When the economists ascend to theory, despite all their good resolutions they become increasinlg vistims of their own highly specialized conceptual vocabulary - even Streeten talks of a high "self-sustaining" rate of growth (whatever that is) as the porper goal for an underdeveloped country (p.131). And when they descend to reality, as when Balogh describes an interesting plan for adapting education to development in a backward nation, they are realistic enough - but are they talking as economists?
Is there a way out of this muddle? Perhaps not. It amy be that there is realtively little need for economists in lands where the pressing call is for agronomists, engineers, political leaders and secular missionaries of all kinds. However, it is possible that a task reamins for the economist nontheless - a task hinted at by a number of participants, although developed by none. This is the reorientation of economics not only away from aggregative and towards structural models - away, that is, from an emphasis on financial aggregates toward a much greater stress on the linkages and relationships, temporal and technical, of industries and sectors - but also an orientation away from "predictive" theory toward "instrumental" application. Following the thought of Adolph Lowe (see his On Economic Knowledge, 1965), economics cannot hope to produce much useful policy guidance when it operates from initial premsises whose behavioural and institutional nature is either shaky or ill-understood. In these circumstances, economics, if it is to be relevant, must become the explicit servant of the goal-setting political structure, limiting its counsel to an analysis of what structural or other changes will be needed to achieve, or will be incompatable with, a postulated target. Economics will then not pretend to tell you that given such-and-such inputs, output will be some predictable amount, but will try to specifiy what inputs will have to be generated and in what sequence, if you wish such-and-such a pattern of output.
That may be a more modest task for the economist (although it is certainly not an easy on). But is could also hold the promise of future conferences on themes less despairing than the question of whterh economics has anything at all to contribute to development.
ROBERT L. HEILBRONER
New School for Social Research