Economic Neoliberalism and International Development

Michael Tribe

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000282597
• Edition: 1
• Topic: Política y relaciones internacionales
• Subtopic: Derechos humanos

This book provides a robust theoretical and empirical exploration of the interrelationship between economic neoliberalism and international development.

Putting the experiences of developing and transitional economies centre stage, the book investigates how their economic policies compare with the nature of economic liberalism during and after the significant economic reforms which took place from the mid-1980s. Beginning with two chapters which provide an introduction to the concept of economic neoliberalism, the second section focuses on its application to 'practice', and the book moves on to country/regional case studies, taken from Sub-Saharan Africa, South Asia, Latin America, China, and Eastern Europe. The book closes with some concluding remarks summarising some of the principal findings.

Bringing together a wealth of expertise, this book clarifies controversial economic and political issues which have been significantly misunderstood in public discourse, and as such, it will be of interest to a range of researchers interested in the economic, social and political dynamics of developing and transitional countries.

Part 1

Introductory

1 Introduction

Economic neoliberalism and international development

Michael Tribe

Preamble

The objective of this book is to consider the extent to which economic neoliberalism has been central to economic policy in developing and transition countries globally. It is first necessary to have a clear view of what is meant by economic neoliberalism. The concept was formed in developed market economies in the 1940s, but with a considerable pedigree from parts of classical political economy and works written within that tradition. While economic theory is a set of intellectual tools which enables the rigorous study of economies, economic neoliberalism is a set of ideological principles setting out how its proponents think that economies should be organised. The use of the word ‘should’ in the previous sentence is significant. ‘Should’ means ‘ought to be’ – and therefore implies a value judgement which is not necessarily shared by all people. In discussion about the ‘rights and wrongs’ of economic policy some judgements are based on ‘disinterested analysis’ which involves little or no ‘political bias’. However, other judgements may be based on sincerely believed values – where these values are not universally shared, and different sets of people have different sets of value judgements so that discussion is not value-free and a range of alternative and contradictory conclusions are based on the same evidence.

A particularly good example of this phenomenon of contradictory conclusions is the literature relating to Asian economic development in the 1970s and 1980s – amongst the ‘Tiger Economies’. On one side we have the ‘neoliberals’ represented by the World Bank’s study The East Asian Miracle: Economic Growth and Public Policy (World Bank, 1993: Chapters 6 and 7), which, broadly speaking, attributed economic success to minimal government intervention in the economy. On the other side we have the ‘structuralist economists’ or ‘heterodox economists’ represented by Lall’s Learning from the Asian Tigers (1996: Chapter 4) and Wade’s Governing the Market (1990: Introduction and Chapter 1), which attribute economic success to selective government intervention and support.¹ This ‘contradiction’ resonates especially well with this book’s focus on the interpretation of contemporary economic development.²

In this introductory chapter, alternative ideological approaches to the nature of government economic policy are seen as lying on a continuum. At one end of this continuum is state planning of a largely state-owned economy and at the other end is light-touch state action in a predominantly market-based and privately-owned economy (the ‘neoliberal’ model). This continuum consists of a range of views with a change of balance between the principle characteristics from one end to the other. For example, a largely ‘capitalist’ economy which has significant state planning and direction of resources (which applied in many former colonies before independence) can be described as ‘dirigiste’ in nature (Toye, 1985) and would lie somewhere in the middle of the continuum.

This mode of thought, which is by no means original, extends to an understanding of economic policy as a range of disaggregated activities. The implications of this are that some areas of policy might exhibit ‘full liberalisation’, others ‘partial liberalisation’ and yet others no ‘liberalisation’ at all. Whether government economic policy embraces economic neoliberalism is therefore not absolute, but is instead a relative concept. Whether economic policy in a country can be characterised as ‘neoliberal’ cannot be answered by a simple ‘yes’ or ‘no’, but requires judgement considering different parts of policy against the principles of economic neoliberalism.

An example of the disaggregated approach to economic policy is given by a question which was received within one of the more academic parts of ‘social media’ following the publication of a recent jointly-authored book on the Ghanaian economy (Huq and Tribe, 2018). The question can be paraphrased as: ‘which approach to economic policy for Ghana is better – the “dirigiste” approach, which applied before the introduction of the Economic Recovery Programme (ERP) in 1983, or the “neoliberal” approach, which has followed?’ The question is, in many respects, unanswerable as it is too simplistic, being based on a bipolar conceptualisation – the positing of two extremes with no attention to what lies in between these extremes. The ‘dirigiste’ approach clearly failed in Ghana – it led to significant economic decline, to acute balance of payments and foreign exchange problems, and to dysfunctional economic policy. However, the introduction of the ERP was not like the flick of a switch, and the period since then can hardly be described as representing a ‘textbook’ form of neoliberalism. Economic policy since 1983 has certainly been more successful in achieving sustained economic growth, and a more functional approach to economic policy with many markets being ‘reintroduced’ and ‘liberalised’ (for example, the foreign exchange market, agricultural markets and interest rates), has emerged. However, as will be clear from Fosu and Gafa’s chapter in this volume, economic policy since 1983 in Ghana and other sub-Saharan African countries only partially embodied the principles of neoliberalism.

The notion of economic neoliberalism not being adopted at ‘the flick of a switch’ can also be related to the detailed discussion of economic policy in the chapters on Latin America by Weiss and on Poland by Millward. Progression between the application of different ideological approaches to economic policy does not occur instantaneously. There are institutional factors to be allowed for, there is resistance from a variety of interest groups, and the inertia of history also plays a part in affecting the outcomes of changes in the approach to economic policy formulation and implementation. Changes to economic policy are not applied to a tabula rasa (‘clean sheet’) situation.

Another issue is that much of the literature produced in recent years has interpreted ‘neoliberalism’ not as a set of principles of economic policy but as a set of principles (or modus operandi) covering large swathes of society (Tribe, 2017a). For example, the Routledge Handbook of Neoliberalism (Springer et al. (eds.), 2016) contains over 50 chapters, only three of which can be described as addressing economic issues. A recent article Venugopal (2015: 168) states this issue clearly: ‘Before 1980, neoliberalism was an esoteric term, used scarcely, and then only by economists. Since then, it has become one of the most widely used terms across many social science disciplines, except in economics where it has disappeared’. Venugopal provides chapter and verse evidence of the disappearance of ‘neoliberalism’ from contemporary ‘core’ economic literature (2015: 180). However, the even more recent Sage Handbook on Neoliberalism (Cahill et al. (eds.), 2018), with 48 chapters, has a very significant economic focus, with ‘non-economic’ chapters amounting to less than half of these. In this context it was decided that this book would be entitled Economic Neoliberalism and International Development – quite explicitly not addressing non-economic issues directly.

Saad-Filho and Johnson’s (2005) edited collection of papers contains a balance between the economic and non-economic dimensions of neoliberalism. Jomo and Fine’s (2006) edited collection reviews the state of development economics in the early 2000s following the onslaught of Structural Adjustment and the Washington Consensus (WConsensus) on the economies of developing countries, with more than a nod to economic neoliberalism. Just over a decade earlier Colclough and Manor (1991) published a collection of papers which focused on economic neoliberalism very explicitly. These proceedings from a 1988 conference surprisingly did not significantly raise the profile of development discourse around the concept of neoliberalism; however, Colclough’s introductory chapter and Toye’s conclusion provide refreshing reading three decades later. Toye himself had published the first edition of his Dilemmas of Development in 1987, followed by a second edition in 1993. Without giving the concept of neoliberalism a high profile (the word does not appear in the book’s index), the ‘counter-revolution’ which Toye articulates refers to his experience researching Structural Adjustment and ‘economic reform’ (Mosley et al., 1991). In a later publication Toye (2003: 30–32) is more explicit about the role of neoliberalism within the development of the WConsensus. In his edited collection, entitled Rethinking Development Economics, Ha-Joon Chang provides a stimulating overview of the role of the state, of markets and of institutions in economic development (2003).

Another central issue relates to the nature of the ‘principles of economic neoliberalism’. What are they, and what is their origin? For this question the book edited by Mirowski and Plehwe (2009) is very significant, and Mirowski’s summing up at the end of the book (Mirowski, 2009) provides the basic building blocks which were needed, basing his discussion particularly on discourse relating to the 1947 statement by the Mont Pèlerin Society (MPS, 2019; Butler, 2014). The WConsensus gives significant clues to the...