The need to rethink development economics

Abstract

"Although there was little in common between the actual analytical content of Keynesian doctrine and that of development economics, the two approaches shared critical views of neoclassical economic theory, and the related acceptance of state intervention. They also had in common the understanding that the economy described by neoclassical economists was a special case , and there were many other economies that could be stylized by entirely different models because they were characterized by different structural features. Furthermore, they shared the view that the state could play an important role in addressing these structural features, which often resulted in market failures . Both were induced by the need to solve policy problems and were not merely formal theoretical disciplines whose modelling was based on real economies trapped in a particular equilibrium (unemployment or underdevelopment) from which they had to be extricated. These positions opened them to attack from neoliberalism. It is perhaps not surprising that the neoclassical counterrevolution and the ascendancy of monetarism in the advanced industrial countries during the late 1970s and early 1980s led to the rejection of development economics in the South. For the neoliberal economists, development economists falsely denied the universality of rational economic behaviour and, by their focus on perversions of standard economic theory, opened doors for dirigisme. For some, the whole enterprise of development economics was a futile one, and the dirigisme associated with it was blamed for poor economic performance."(pg 2)