Sunday, April 16, 2017

“African Arguments” series from Zed Books


Zed Books (London) has a series of publications under the rubric, “African Arguments,” that I enthusiastically recommend to those with even the slightest interest in what has (recently) happened, is happening, and might happen on the African continent. I have several books in the series and plan on getting more (provided Di will indulge me!). They are published in conjunction with the International African Institute, the Royal African Society, and the World Peace Foundation. There is a diverse and stellar group of editors. The webpage for books published to date is here. 

What follows below is a taste of one of the books pictured above.

“The overarching question in the economic growth literature has been about why Africa has grown relatively slowly. This question has overshadowed other more important questions, such as how African economies have grown. If the question had been about how African economies are developing, there would have been more to explain and the literature could have given policy makers something useful to work with. Unfortunately, this question was not asked.

We currently have an economic growth literature that explains why bad policies mean that there is no growth in Africa. The trouble with this model is that the current explanation problem is not one of a lack of growth but rather of how to interpret rapid economic growth. With the help of the historical data sets on slaves, colonial settlers, and linguistic mapping, economists have been able to find different variables that can explain why African states have ‘bad’ institutions, have failed and are stuck in zero-growth traps. The difficulty with this analysis is that, despite all their shortcomings and despite all their institutional differences from their European counterparts, African states have experienced periods of economic growth.

The fact that mainstream economics continues to get this wrong is of great importance. This is not just an academic disagreement. International financial institutions such as the World Bank and the International Monetary Fund (IMF) give economic models and economists a central role in the decisions they make. Because of this, economists’ mistakes spill into the policy world. Indeed, the story of how economists explain economic growth in Africa is strongly linked to the history of policy making in Africa, and particularly to the role of external policy advice and policy directives.

The question ‘Why is Africa is growing slowly?’ appeared in the late 1970s and the early 1980s. The most influential answer was given in what is known as the Berg report, a World Bank report that firmly placed the blame for the slow growth in Africa with African policy makers. According to the report, African state intervened too much in markets, gave too low a priority to agriculture, and otherwise pursued misguided policies. The economic growth literature … went to considerable lengths to affirm this orthodoxy, and, despite empirical evidence to the contrary, has managed to present a history of African economic growth that finds a correlation between ‘bad’ policy—defined as state intervention in markets—and slow growth. The literature has thereby provided empirical ‘proof’ that the mainstream diagnosis and prescription for poor countries were correct and that there was a relationship between ‘good policy’—as embodied in the liberalization package termed the ‘Washington Consensus’—and positive economic performance. 

Yet the economic record tells us rather clearly that the liberalization policies of the 1990s failed in many ways, and that state intervention in the 1960s and 1970s was not always catastrophic. It is important to remember that state intervention does not always equate to states suppressing markets. Sometimes states substitute for nonexistent markets or they nudge economic actors to engage in markets. Therefore liberalizing agricultural marketing simply by closing down a state –run agricultural marketing board does not mean that a free market and fair market that organizes fertilizer, seeds, advances, purchases, transportation, forecasting and information will suddenly appear. It is not safe to assume this will happen. Economic growth did not revive after liberalization policies were implemented. Instead, the economic—and particularly the political—crisis deepened and arguably persisted for two decades.

Instead of engaging in wholesale reconsideration of the diagnosis made in the 1990s, with its emphasis on ‘good’ policies and the market mantra of ‘getting the prices right,’ the economics literature shifted its focus in the 2000s. In the second-generation growth literature, the emphasis of scholarly work changed from investigating relations between policy and growth to linking current development outcome with historical events such as colonialism and the slave trade. Instead of introspection about whether ‘bad’ policy was actually to blame for slow economic growth, some economists determined that advising ‘good’ policy was not enough. The root cause was not enough. The root cause was not ‘bad policy,’ it was ‘bad governance’ and ‘poor institutions.’

The second-generation growth literature focused on policy makers and policy implementation as the sources of the problem with economic growth. The refrain that it was ‘getting the prices right’ that mattered changed: now governance and institutions mattered. This is when the idea that some places were destined to fail at development was born, and this provided the foundation for the question and the answer in The Economist ten years ago. Do African states have a character flaw that makes them incapable of development? ‘Yes,’ said The Economist (and the economists on whom the magazine relied).

But while that analysis coheres well with the consensus in the economics literature, it does not match what is going on in the economies concerned. Some even say that Africa is rising. This book shows that there is nothing surprising or new about that.

This emphasis on finding what was wrong with the history and politics of Africa meant that ‘Africa’ itself was launched as an explanatory category. [….] African states were misdiagnosed and dismissed as being incapable of development based on observations made during the 1980s and early 1990s, a period when most African economies were experiencing the deepest recession of the twentieth century. The characteristics they exhibited during this period were not representative of longer trajectories. It is true that most states have not been perfectly efficient for the past five decades, but it is equally evident that their dealings have not been perfectly disastrous either. Herein lies the crucial error of comparison. The verdict about the quality of these states, or ‘governance,’ was made by comparing actual states in the Africa of the 1980s with idealized perfectly functioning states that do not exist.* While it is true that African states have fallen short of these kinds of expectations, such comparisons have not told us how serious these relative shortcomings have been in terms of economic growth.

[….] The question is not ‘Why has Africa failed?’ but ‘Why did African economies grow and then decline only to grow again?’ It is important to get the history of economic growth in Africa right, but perhaps it is more important to know that the right history fundamentally changes the policy implications for future growth on the African continent. The pessimism about policies and institutions in Africa has been overstated. In most cases, a wholesale change of institutions or governance is not necessary for economic growth.”—From the Introduction to Morten Jerven’s “highly readable and absolutely devastating critique,” Africa: Why economists get it wrong (London: Zed Books, in association with the International African Instituted, Royal African Society, and the World Peace Foundation, 2015): 6-8. **

* The “idealization” cited here by Jerven is symptomatic of a methodological approach that afflicts both neoclassical and heterodox economics (e.g., post-Keynesian economics) in general. As Anwar Shaikh explains in his recent book, Capitalism: Competition, Conflict, Crises (2016), the two prevailing “schools” of economics

“end up viewing reality through an ‘imperfectionist’ lens. Neoclassical economics begins from a perfectionist base and introduces imperfections to the underlying theory. Heterodox economics generally accepts the perfectionist vision as adequate to some earlier stage of capitalism but argues that imperfections rule the modern world. In either case, such approaches actually serve to protect and preserve the basic theoretical foundation, which remains the necessary point of departure and primary reference for an ever-accreting list of real-world deviations. After all, how can the basic theory ever be wrong if there is a particular ether for every troublesome result?”

Shaikh elaborates an alternative theoretical structure whose “object of investigation is neither the perfect nor the imperfect but rather the real,” that is, “the actual operation of existing developed capitalist countries.” 

** A helpful theoretical backdrop to Jerven’s argument is found in the discussion of “growth-mediated [socio-economic] security” and “support-led [socio-economic] security” in Jean Drèze and Amartya Sen, Hunger and Public Action (Oxford University Press, 1989): passim (see the subject index for the precise pages). 

[Please note: I am not being paid by Zed Books, I did not receive a (or any) free book(s) from the publisher, and I was not asked to promote the series.] 


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