A
new development paradigm should recognise diversity
of circumstances, provide space for policy experimentation,
and validate learning as integral to development.
Regionalism can be an important support strategy for
such a paradigm. The rationale for regionalism in
this context lies in its potential to strengthen the
bargaining power of the regional grouping vis-à-vis
the global system in order to bolster the claim for
the recognition of diversity and enhance the space
for experimentation, while enriching the learning
process through exchange of experience. This concept
note poses questions related to this theme and that
of the panel.
Universalism
A notable aspect of the neo-liberal paradigm is its
claim to universalism, i.e. a single over-arching
explanation of the way economies work and a single
prescriptive principle for good policies in time and
place. The market economy is both abstracted from
society and assumed to be dominant over society. An
extension of the paradigm conflates market economy
with political democracy and good governance.
As opposed to this there is a tradition which I characterise
as historical/institutional/structural (HIS). Economies
are seen as rooted in history and social structures
and are the products of evolution over time. Inherited
institutions and structures are not a straight-jacket
for the present, but they do condition the responses
of economic agents to policy instruments. Hence what
"works" for one country at one time may
work differently in another country at the same time
or in the same country at a different time. Accordingly,
there is no universally applicable prescriptive principle
regarding the appropriate role of market and state.
There is no substitute for a close and detailed examination
of specific circumstances, informed by a sense of
humility.
The problem with this approach, of course, is that
it is messy. It does not easily lend itself to formalisation
and the kind of rigor that is permitted by mathematical
theorems. And the room for subjective interpretation
is wide. But is our concern with "truth"
(however defined) or with convenience? One is reminded
of Sen's observation to the effect that it is
better to be partially right than to be exactly wrong.
One also suspects that the influence of formalism
may be as much about power relations in the production
and reproduction of knowledge as it is about concern
with rigor. One of the characteristics of formalism
is that it allows ideology to masquerade as science.
The degree of abstraction is so great and the assumptions
underlying the theorems so deeply buried that the
ideology of the market takes on a neutral appearance.
And since advanced mathematical analysis is accessible
only to a few, its practitioners are hardly ever called
upon to justify their assumptions and value judgements,
let alone held accountable for their policy prescriptions.
The proposition that a HIS is not amenable to formalisation
is also questionable. It needs to be investigated.
A better way to pose the question is, what are the
appropriate criteria by which any analysis of the
human economy is to be validated? What would constitute
acceptable procedures for investigation, the generation
and validation of propositions, the derivation of
policy prescriptions, and the monitoring and evaluation
of their application? Surely formalism will be part
of the answer. But once again I refer to the need
for humility. We are dealing with the livelihoods
and welfare of people, indeed of their very lives.
Recent history is so replete with examples of the
terrible costs of the inappropriate application of
mistaken theories-both of the right and the
left-that it should give cause for sober reflection
and contemplation.
It is here, perhaps, that universalism does have a
role to play. If trans-paradigm intercourse is to
go beyond a dialogue of the deaf, then there should
be common agreement on rules of procedure. If analysis
of the specific is to minimise the room for subjective
judgement and interpretation, then there ought to
be commonly accepted methods of investigation and
verification. But there cannot be any final word on
this. What is universally accepted will itself be
the subject of continued experimentation, debate and
enrichment. Universalisation, therefore, may be seen
as continuous and unending process of expansion of
consensus on method. Basic to the process are recognition
of diversity, mutual cross-cultural respect, and rejection
of dogma in all its forms.
We know, of course, that what I have called the HIS
approach has a long and distinguished progeny. It
dates back at least to Adam Smith through the 19th
century political economists (including Marx) to the
20th century with Polanyi, institutional economics,
economic anthropology and so on. We also know that
at a certain point this tradition became marginalized
from mainstream economics. It is now being revisited
as a result of the collapse of Sovietism and the equally
disastrous policy failures of neo-liberalism. So there
is now a window of opportunity, which if fully utilised,
can become a means of escape from the intellectual
ghetto.
Learning
A note here on learning. In economics the subject
has been treated mainly, if not exclusively, in the
context of productivity growth, technical change and
technology transfer. The focus, therefore, is the
firm level. But what about social learning for policy
analysis? What I am proposing here is that societies,
like individuals and organizations, can learn to do
better; but only if they organise themselves consciously
for the task. This goes beyond the learning that comes
from repetition and mastery of a given task, a la
learning curve. It embraces the elements of trial
and error, policy experimentation, evaluation, further
policy innovation, and so on in a continuous loop.
This is a highly idealised, if not utopian, model
of development and change. In the real world societies
have interest groups that fight for their own advantage.
Still, is it not an ideal worth opposing to universalistic
claims of policy prescriptions often advanced by the
IFIs? Certainly, to this writer it suggests a healthier
model for development "partnerships" between
the north and the south. The goal of partnerships,
then, should be to support and facilitate indigenous
social learning for the attainment of mutually agreed
development objectives.
Regionalism
What role, then, for regionalism? To begin with, regionalism
comes in different shapes and forms. "Open"
regionalism was invented as part of the model of neo-liberal
globalisation. Its alternative is neither "closed"
regionalism nor an outright rejection of globalisation.
I have argued that, especially for small countries,
the ideal role of regionalism is to strengthen the
bargaining position of the group vis-a-vis the global
system and to enlarge the space for policy autonomy
within the region. The two are closely linked, insofar
as the new dispensation of the WTO and regional agreements
(FTAA, ACP-EU, etc) is for trade agreements to extend
deeply into the sphere of domestic policy and institutions.
How can regionalism help? First, through functional
cooperation in extra-regional relations. The pooling
of bargaining power and negotiation resources in global
agreements in trade and finance is one area. Key issues
here are special and differential treatment in trade
agreements, timing and sequencing of trade liberalisation,
debt, conditionality, regulation of international
finance, and IFI governance. Functional cooperation
will aim to secure outcomes more favourable to LDCs
by preserving and expanding the internal space for
policy-making and social learning.
Second, through intra-regional functional cooperation
in the development effort. This goes beyond the liberalisation
of intra-regional markets that is the prime objective
of open regionalism. For instance, a regional group
can cooperate in strategic planning for participation
in international markets, in industrial policy to
build up firm-based technological and managerial capabilities
among national firms, in socio-economic economic policies
to empower the poor, in science and technology and
research and development, and in higher education.
The greater the technology, capital and skilled resource-intensity
of these activities involved in responding to the
challenges of the global economy, the greater the
potential returns from resource pooling through functional
cooperation.
* Prepared for Annual Conference for Development and
Change Antigua, Guatemala, 28-30 July, 2003 Session
II: Rethinking the role of the State, Markets and
Institutions in the Era of Economic Globalization
October 1, 2003.
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