In this paper we present a report on the papers and proceedings of the Conference on "The Need to Re Think Development Economics, convened by Thandike Mkandawire, Director of the United Nations Research Institute on Social Development (UNRISD), and hosted by the Ford Foundation in Cape Town, September 7-8 2001. The conference brought together some thirty development economists - from South and North - to exchange ideas on how to counter the hegemony of mainstream economics orthodoxy by heterodox developmental paradigms and policies, based on recent literature and, above all, on experience. All participants were required to submit brief "ideas" papers Additionally several communications were received by economists who could not be present. Subsequently, an initiative to establish an international network of development economic research, co-ordinated from the economics department of JNU, New Delhi was launched. The conference confirmed our assessment of the usefulness of the "old" development economics in the search for pro-active policies of development. In the context of "globalization", however, it is evident that "open-ness" must be built into models of large, as well as small economies. We conclude that the development economics of the 1950s and 1960s, which drew on the teachings of the great economists, are an essential element of programmes to train a new generation of development economists, and offer some suggestions for collective research programmes, and networking within and outside the Caribbean region.                   

Equitable Economic and Social Transformation
In the 1980s, development economics was hounded out of economics departments, international financial institutions and journals, in an ideological counter revolution which proclaimed there is one and only one true economics and it is valid in all times and places. Thatcher's TINA ("There is No Alternative"). The elimination of development economics was given official sanction by the US government.

In the 1990s, there were signs of revival of interest in development economics. The Washington Consensus", based on deflationary monetarist macroeconomics, and micro economics, predicated on unrealistic assumptions of competitive markets, perfect knowledge and no transactions costs, came under attack even within the BWIs. The Asian crisis and the failure of SAPs gave rise to proposals for "second generation" reforms" to " reinvigorate state capability" The World Bank proposed. Comprehensive development frameworks" reminiscent of the ‘development planning" associated with the old development economics.

Revisionist accounts of interventionist ISI policies Latin America and Africa in the 1960s and 1970s recalled growth rates which have not been equalled since, and great progress in health and education Revisionist accounts of the Asian "miracle economies" revealed a developmental state which appeared to be following the prescriptions of the old development economics, with emphasis on high domestic savings, high investment and .an active role of the state to manage coordination problems, by over all development programming. After 20 years of structural adjustment to external and domestic financial imbalances, structural transformation" of the real economy is returning to the development discourse

As noted by Joe Stiglitz in a communication to the conference, "there is a growing recognition that the liberalization agendas pushed by the IMF were counterproductive, there is no well developed theory upon which policy makers wishing to have a nuanced, gradual transition, can base their prescriptions". Although the world is too complex for a single overarching model to replace the competitive equilibrium model, there are a set of tools and perspectives, derived from models of imperfect information and incomplete markets which can be used to make more appropriate macroeconomic models. "The question is how can we institutionally facilitate the replacement of the old paradigm with new perspectives? Without stronger intellectual foundations, one can point out the weaknesses in the neoliberal paradigm, but cannot offer an alternative that is not equally subject to criticism" This was the central problem addressed by the conference: " The main objective of this initiative is to contribute to the revival of development economics, not as a deviant branch of mainstream economics, but as a subject whose role is to acquire understanding of the vital problems that developing countries typically face. There is also a need to produce a new generation of development economists."( Mkandawire)
 
How to reconstruct "development economics" to addressed poverty in an international environment which privileges finance over the "real" economy and has de-constructed the capacity of states to institute equitable policies of economic development? How to re-construct the developmental state as an effective and democratic institution? How to challenge a hegemonic ideology of methodological individualism whose influence reaches beyond mainstream economics to political science and sociology? Is it possible to halt and reverse a trend toward the dissolution of societies and effective nation states? Can normative values of civilized human relations and scientific reasoning prevail over the exercise of raw financial and military power? These were the principal themes addressed by the conference.

International Financial Liberalization
The expected gains of international financial liberalization have not materialized. The last two decades associated with globalization and liberalization have experienced significantly lower growth than the quarter century after World War Two. Latin America - the region where economic reforms were implemented earlier and with more enthusiasm - has grown at 3.2 per cent a year in the 1990s. That is far below the 5.5 per cent growth achieved in the 1950s and 1960s). As policy influence of financial interests has grown, (e.g. greater central bank independence) there has been a deflationary macroeconomic policy bias through the world economy, reflected in high real interest rates. This contrasts with the first post war decades suggesting that moderate inflation and mild financial repression were conducive to growth.
 
Currency and financial crises have become more frequent and severe; international economic inequalities have grown, and aid flows have reduced. Financial liberalization has undermined deployment of financial policy instruments to accelerate development, which even the World Bank 1993 East Asian Miracle study acknowledged was successful in promoting growth and structural change in the region "The Bretton Woods Institutions (BWIs) have been increasingly seen as obstacles to development because they have taken advantages of economic distress to push through policy agendas promoting economic liberalization favouring transnational - especially financial - ascendance". It follows that the big challenge for economic policy is ultimately at the international level. The governance of international organizations has to be fundamentally reformed to favour an equitable and sustainable development, rather than assuming that liberalization and globalization will somehow miraculously achieve this objective (Jomo).

"A New Financial Architecture as a Global Public Good" requires the following four conditions: transparency and regulation (including counter-cyclical elements) of international loan and capital markets; an increase in international official liquidity in distress conditions for middle and low income countries; standstill and orderly debt work out procedures, and sufficient development finance for countries that cannot receive private flows. Significantly, the author of these comments noted that if progress is not made soon, or worse if there are reversals in the existing financial architecture that would make it even less supportive of development, developing countries might need to seriously re-think their development strategies. This implies two elements: measure to limit or slow down opening of the capital account to protect themselves from volatility and reversals in capital flows; and increased reliance on domestic policy to generate growth "from within" (Sunkel) by " active productive development policies" (Ocampo) or "domestic investment strategy" ( Rodrik). A new development agenda needs to give thought to new policy instruments that can provide public resources and incentives to give support and guidance to the private sector. This "opening of spaces for development from within" would be particularly essential if the IFS is not reformed. However, it would be very valuable even if the IFS were reformed, in generating a positive dynamic of interaction between stable private capital flows and domestic growth quickened by national efforts. (Griffith Jones)

The mechanisms by which the free international movement of short term financial capital expose countries to disruptive structural fragility, and deprives them of even the most basic instruments of stability and austerity was described with exemplary lucidity by a contribution from the intellectual front line of a recent major casualty - Turkey. In an open economy, the central bank can choose only one of three of the following instruments: exchange rate, interest rate, and money supply, leaving the other two to the play of market forces. Raising the net differential of the interest rate and the rate of depreciation of the exchange rate over world levels, triggers large capital inflows. The exchange rate appreciates, exports become less competitive, import demand escalates, the current account deficit widens - until there is a loss of confidence in the domestic currency. To offset increased country risk and protect international creditworthiness, the monetary authority raises interest rates even higher and starts to hoard foreign reserves. This attracts further inflows of short-term capital. To check the surge in the value of the money supply, the central bank engages in monetary sterilization by restricting the domestic component - with a consequent rise in the domestic interest rates. The cycle recommences. The bonanza of debt financed public (Turkey) or private (Mexico) spending escalates - until finally the bubble bursts and a series of severe macroeconomic adjustments are enacted through very high real interest rates, and severe reductions of public and private expenditure. Meanwhile, the short term "hot" money has rushed out of the country, leaving a cascade of bankruptcies. The net earnings appropriated by the foreign portfolio investor is the difference between the (high) interest earned in the domestic economy and the (nominal) depreciation of the local currency. The conclusion of this story is that countries that are dependent on unrestricted external capital flows are obliged to adopt or maintain contractionary monetary and fiscal policies to secure investor confidence and international creditworthiness. They suffer from increased volatility of output growth, short sightedness of entrepreneurial decisions, and the informalization of labour markets.

It follows that many of the remedies suggested for avoiding future crises "will do no such thin" Among such measures are financial sector reform, better information, cleaning up corruption in lending, getting government out of the targeting business, and improving the governance of the corporate sector. "Notwithstanding the importance of these structural reforms, the single most important source in our analysis for a crisis to develop was short term financial markets open to international financial flows which are navigated by the herd behaviour induced by the speculative and short sighted portfolio investors. The primary remedy for attaining sustained development lies in regulating short term international flows." (Yeldan)

The Developmental State
In the low income countries of Sub-Sahara Africa, the multilateral financial/economic institutions controlled by the major western powers have directly promoted socio-economic policy ‘reforms" based on a market driven economy, curtailment of state intervention, and retrenchment of government expenditures. Debt rescheduling and new lending is accompanied by an array of conditionality and cross conditionality clauses which essentially compel countries in economic distress to embrace these neoliberal policies. Notwithstanding repeated acknowledgements by the World Bank of multiple shortcomings of these policies, orthodox structural adjustment programmes continue to be administered to African countries.
 
Since the Asian Crisis, various alternatives to neoliberalism have received increasing attention. At the heart of some of these alternatives is a concern to bring development back into the mainstream of economic and social policy making Contrary to the suggestion that African experience of state intervention in the first two decades of independence were wasted years, in the 1960s and 1970s Africa consistently achieved growth rates equalling the best performers in a world scale. Strong developmental agenda, linked with the nationalist independence project - whether officially described as ‘socialism', or "market/capitalism" or a "mixed" economy - contrast with the "maladjustment" of the 1980s and 1990s, characterized by a massive erosion of capacity in virtually all spheres of life. "The close inter-connection between the aspiration for rapid national economic development and the goal of nation building in Africa in the 1960s and 1970s represents a far cry from the adjustment years when every effort was made, as part of the rolling back of the frontiers of the state, not only to jettison national planning - and in so doing transform the entire continent into a gigantic laboratory for unaccountable and questionable experiments- but also to subordinate politics to the dictates of a narrowly defined notion of the market economic system"

National economic development, national unity, and independence are goals which were, and still remain impeccable. However, the tragedy of the post independence developmentalism was the assumption that only the state could attain these objectives. This provided the context for the restriction of expressions of political pluralism, and the eventual emergence of single party and/or military regimes. To place development back to the top of the agenda requires a dynamic model of state participation in the economic and social process and a system of democratic accountability. The popular quest for democratic representation will have to be taken fully on board in the policy making process.

"Given the extreme gap between the promises of market-based reforms and the actual achievements recorded, there is an objective basis for jettisoning structural adjustment in favour of more heterodox economic policy framework, more attuned to the realities and needs of African countries in all spheres of life. This will require a large investment in re-building the effective capacity of the state for policy formulation and implementation to revive the real economy of agriculture and industry, which suffered some of the worst setbacks during structural adjustment, and to make strategic decisions in the area of economic and social infrastructure to generate employment and produce skills necessary for national development". (Olukoshi)

The re-assertion of the role of the developmental state confronts a large body of literature on the "impossibility" of replicating the successful Asian experience in Africa. The African state is demonized as a "rent-generating institution" whereby special interest group manipulate politicians and bureaucrats to their advantage. . In an important article on "Thinking About Developmental States in Africa" Mkandawire observed that "rent seeking" has departed far from its original definition in economics and made to serve as an ideological weapon of neoliberal critique of the state. The concept has been stretched to include anything from Mafia like activities to lobbying by chambers of commerce. In the case of Africa, rent seeking is used interchangeably with corruption, patron-clientalism even the extended African family. In his introductory remarks to the conference, he noted, "The wide recognition of ‘government failure' has been used to override any argument for the need to correct for ‘market failure'. Even economists who have contributed to the elaboration of models suggesting the need for state intervention (endogenous growth theories etc) have either shied away from explicitly drawing the interventionist implications of their analysis, or have been constrained to negate the strategic implications of their models by arguing that the state cannot be trusted with the task since the likely outcome of government failure would be worse than ‘market failure' ". (Mkandawire).

Following repeated failures of the Washington Consensus, "second generation" conditionalities have been added on to standard macroeconomic adjustment programmes. These "governance" conditionalities include transparency, accountability, elimination of corruption, poverty alleviation, participation and democracy. All of this is supposed to be "owned" by states too weak and incompetent to determine their own developmental priorities!! While negotiations for HIPC debt relief now engage recipient governments and civil society in discussion of poverty reduction strategy papers (PRSP) and the World Bank has introduced "comprehensive development frameworks", the underlying macroeconomic policies continue to be set by the BWIs. "Unless genuine debate can be extended to the design of structural adjustment programmes, real ownership of programmes cannot be in the hands of recipient countries. Because "foreign aid and concessional loans are in short supply, ...the granting of debt forgiveness through HIPC facilities becomes a convenient de facto rationing device for aid allocation". (Nissanke)
 
The Male Breadwinner Bias and the Unpaid Care Economy
In the Golden Age of development economics, the stated policy objective was national development by industrialization and diversification of structures of production. In the era of the neoclassical counter-revolution, the stated policy objective was the efficient use of resources by freeing global markets for goods and capital (but not labour). In both cases the measure of success was growth of GDP, which was expected to reduce household poverty and international inequality between countries. Although, as already noted, in the first post world war decades growth stronger and finance less predatory than, poverty, marginalization and inequality have grown through the past 50 years, albeit more rapidly in the last quarter of the 20th century.

Both "state" and "market" oriented development deal with the "commodity economy" to the exclusion of the "unpaid care economy" in which people produce services for their families, friends and neighbours on the basis of social obligation, altruism and reciprocity. The care economy is important for two reasons: the first is that inputs of unpaid work and outputs of care are very important for human well being; the second is that although the unpaid care economy is outside the production boundary, its operations affect the quantity and quality of labour supplied to production, and the quantity and quality of goods demanded from production. It affects the social framework within which market and state are embedded.

Feminist economics has made a major contribution to the development discourse by exploring the relation ship between the social economy of care and the commercial economy of paid work. The former is predominantly done by the unpaid labour of women. , Gendered social norm's about "men's work" and "women's work" means that men's work tends not to be re-allocated to "women's work" when there is decline of demand for "men's work' and an increase in demand for "women's work" The likely outcome is unemployment for men, and overwork for women. Ignoring the contribution of unpaid domestic labour is tantamount to assuming that women's capacity for extra work is infinitely elastic. But it is not. If there is not enough female labour time to maintain the social reproduction, there will be a long run deterioration in health, nutrition and education. Gendered analysis beings together what has generally been thought of as "the economy" (monetized aspects of life) with what has often been thought of as the sphere of the "social" (non monetized aspects of life), without however dissolving the difference, as in the "new household economics" based on the application of rational choice theory to social life.

The approach offers important insights into the relationship between economic and social policy. As noted in previous sections, prevailing practice is to devise ‘sound' macroeconomic policies and then add on social policies to achieve desirable social outcomes. These macroeconomic policies are less concerned about real resource constraints than financial constraints which depend on ownership and control of financial resources, and willingness of different groups to pay taxes and buy government bonds. What is ‘sound' in terms of balancing budgets can be quite ‘unsound' in terms of destroying human capacities, as people loose access to employment and essential goods and services.
 
Elson favours a socio-economic approach based on (Amartya Sen's) entitlement success and failure, and a human rights approach of the accountability of states actors and international organizations for economic, social and cultural rights. Because entitlements can operate either through buying and selling in "liberalized' markets, or by universal state based rights, this discourse cannot escape tensions of "market and state". At this point Elson introduces the "technocratic calculation versus popular deliberation" argument. Macroeconomic policy is typically in the domain of an economic priesthood wielding mathematical models, while civil society is invited to discuss social policy planning without voice or choice in macroeconomic policy. This always leads to a situation where social and human development and equity takes a back seat to financial considerations. We are back to the effective veto of financial markets over autonomous policy formulation. With reference to experiments in Bangladesh and Canada (Culpeper), with participatory development of alternative national budget, taxation and monetary policies to achieve a range of social goals including gender equality and the protection of human rights, Elson concludes that this option is foreclosed not by the technical requirements of macro economic policy, but by the fear of pre-emptive exercise of the "exit" option by financial institutions The "openness " of capital markets is associated with an absence of "openness" in policy discussion.

Re Thinking Development Economics
The conference addressed the challenge of producing a new generation of development economists with professional competence and critical perspective. A spectrum of views was expressed. Van Arkadie pointed out that most working economists have to work within the terms of the prevailing paradigm of conventionally established economics. Few reach the level where they can demand the use of an alternative intellectual framework Moreover, when used sensibly, conventional economics provides a useful toolbox for many policy tasks. Therefore working economists have to have a solid command over standard economics, including basic principles and econometric techniques. Sophistication in required in understanding the hidden biases in received doctrine; comparative historical and contemporary experience and the national history of policy and economic performance. In that regard, we must ask how far knowledge useful for policy-making lies within conventional boundaries of economics, rather than in historical, political and social studies. What is required is a specific analysis of the forces that eroded the capacity of the African states and the requirements for change - both in terms of technocracy and political economy. (Van Arkadie).

A somewhat similar view is expressed by Helleiner who favours an approach of greater respect for and competence in applied economics in a variety of fields (public finance, money, trade, open-economy macro, health, etc.) with particular reference to developing economies in all their institutional, cultural, political and historical variety "I suspect that it may not be productive to try to resurrect the "grand theorizing" of the "greats" (Lewis, Nurkse, Rosenstein-Rodan, Hirschman, etc), or to try to build on the "new growth" literature. The material is far too general to have much policy influence. In his view, the root of the problem lies in mainstream post graduate economics programmes which train the teachers and practitioners of most developing economies today." We must try to reduce the relative importance assigned to purely abstract reasoning, re-balance economic theory courses to place traditional neoclassical assumptions into their appropriate context , restore economic history and the history of economic thought to the core curriculum and insist on greater relative emphasis on empirical and policy analysis" (Helleiner).
 
A more positive view of the contribution of development economics to heterodox alternatives to the mainstream policy discourse came from Jayati Ghosh. "Economics as a discipline has always been concerned with development. The early economists from the Physiocrats through Smith, Ricardo to Marx were essentially concerned with understanding the process of economic growth and structural change and to what extent they actually led to greater material prosperity and human progress" (Ghosh). Trying to understand the process of growth and development remains the basic motivating force for the study of economics .It would be misleading to treat (development economics) as a branch of the subject, since the questions raised touch at the core of the discipline itself. In the 1980s, development economics was first reviled, then ignored, and finally forgotten.

Recent times have seen a revival of interest and a spate of new textbooks, with sharper focus on "micro" efficiency reflecting the intellectual ethos prevailing in academic centres of the North. The new development economics literature remains firmly entrenched in the methodological individualism which characterized all the mainstream economics of today. It could be described as a sort of "National Geographic" view of economic development whereby snapshots of "exotic" institutions and activities are described and distances from the "‘norm' of developed capitalism are explained using the same analytical tools developed for the ‘norm" On the basis of this analysis, policy proposals are suggested to make the institutions of exotic countries more like those of the norm. She questioned whether this new apparently improved development economics is really not worth saving. A better way might be to find alternative ways of addressing the still fascinating and relevant issues of growth, development, structural change, and inequality in all economies, especially those not characterized as ‘developed".

A starting point of an alternative approach is the (political economy) idea that relative prices are neither determinants nor reflections of "efficiency" but reflections of different power configurations - compatible with chronic under utilization of capital and labour. Such patterns in national markets have a clear corollary in international (world) markets, which in turn affect the inter actions of national economies. Following a political economy approach, wages, profits rent and interest each have to be explained according to different principles, rather than coming out of the same wash as "factor payments". This gives history a very different role. It calls into question the role of ‘factors of production"' as somehow "natural" to the economic system. In this perspective, markets and governments are revealed as social institutions and we cannot escape politics - whether at the national or at the international level. The study of development is ultimately the study of all economies and can draw on a rich resource of theoretical and empirical work in many intellectual centres in developing countries (Jayati Ghosh). 

Because structural changes in the world system have altered some of the fundamental propositions of the earlier development economists, a reconsideration of development economics is warranted to address the following questions. Does easy access to large pools of international liquidity now permit developing countries to finance larger current account deficit? Does this mean that highly protectionist policies of the past to deal with external vulnerability are no longer necessary? Or does it expose them to new kinds of vulnerability which warrant different kinds of insularity? Do growing opportunities for the export of "new economy based" services require policies different from those of the 1950s and 1960s? Finally, has liberalization generated structures which make a substantial roll back of the liberalization process difficult? Or stated otherwise, does path dependence foreclose policies that derive from the existing set of stylized facts? (Chandrasekhar).

Gita Sen expressed the view that we have not adequately addressed the changes in the regime of accumulation and modes of regulation that underpin the neoliberal thrust, especially changes in the labour process associated with the information and bio technical revolutions. These deep and widespread changes have transformed the core of agricultural and industrial production, opening new frontiers for technology and research. This third (?) industrial revolution associated with "globalization" has broken three major social compacts of the post war World War Two mode of regulation: the compact between worker and employer (private or state); creating space for a new "flexibilized" younger female workforce; the social security/welfare compact of citizen rights to entitlements is weakening; and the development assistance compact between North and South has been eclipsed by focus on governance and corruption. All three of these compacts were gender biased. She noted positive aspects of new modes of regulation including the recognition of "informal" and home based work; the use of a tax on financial transactions in Brazil to finance a universal health system in which women's health has a central place; and South-South linkages to break the monopoly of pharmaceutical companies. She favoured a shift from traditional development economics to development studies, where an understanding of participatory approaches to rural development, the importance of sustainable livelihoods and the need for a gendered analysis of development have flourished, and a definition of development as means equitable improvement in the quality of life; genuine democratization, and the guarantee of full human rights for all.

In the paper summarized earlier in this report, Diane Elson called for an emancipatory socio-economics. Her starting point was the need to re-think all economics, not only the kind of propositions applied to developing countries. Neoclassical economics does not work well for any country. If neoclassical economics is allowed to appear (even by default) as appropriate for rich and powerful countries, any reconstituted development economics will continue to be marginalized." Reducing all observable phenomena to the outcome of an exercise in constrained optimization by representative individuals is not a mark of scientific rigour, but impoverished imagination". It ignores the evidence that human behaviour is much more complex. It grossly oversimplifies the interaction between agency and structure, and fails to understand complex social phenomena that are inherently unstable and subject to change, or social objectives which are an open-ended process, or how economic and social policy should interact.

Lim expressed the view that the revival of development economics should be outside the paradigms and methodologies set by dominant mainstream economics - without a complete break with mainstream economics practitioners, since our goal is eventually to win over the more sincere and good hearted of our colleagues. Beside, there are many things to be learnt from the work of good economists (of different ideologies) like, Keynes, Hayek, Tobin, and more modern ones like Amartya Sen, Douglas North, Joseph Stiglitz or Dani Rodrik. Some of the great economists or thinkers, discarded by mainstream economics, -Marx, Schumpeter, Mydral, Joan Robinson to name just a few - should be re-integrated into our new development economics. There is fertile ground for inter disciplinary work incorporating Keynesian, Marxian, structuralist, sociological, psychological and political theories, new institutional theories, and post-modern insights. Above all, the new development economics should have a historical context and take into consideration institutions, socio-cultural values and practices and governance structures. Whatever methodology is used, "the importance is a sincere effort to get at the essence of development in a historical and institutional setting" (Lim).

The critical role of institutions in the transition from socialism to capitalism was explored in a paper on the relation ship between economic liberalization, institutions of governance and economic performance in East Europe, the former republics of the Soviet Union (FSU), the Baltic States, China and Vietnam. A statistical analysis yielded "the important conclusion that " there is enough evidence that differing performance during transition, after factoring in initial conditions and external environment, depends mostly on the strength of institutions, and not so much on the progress of liberalization, per se" In the language of political science, "strong authoritarian regimes" (China, Vietnam, Uzbekistan) and "strong democratic regimes" (Central East Europe) exhibit better economic performance than "weak democratic regimes" ( the FSU and the Baltic states) The former two are politically liberal or liberalizing, i.e. protect individual rights, including those of property and contract, and create a framework of law and administration, whereas the latter, although democratic, are politically not very liberal because they lack strong institutions and the ability to enforce the rule of law. This gives rise to "illiberal democracies" where competitive elections are introduced before the rule of law is established".

While European countries in the19th century and East Asian countries recently moved from first establishing the rule of law to gradually introducing democratic elections, in Latin America, Africa and now the CIS countries democratic political systems were introduced in societies without the ability to enforce the rule of law and order. By focussing on liberalization and macroeconomic stabilization the conventional wisdom overlooked the impact of strong institutions. The importance of preserving strong institutional capacity of the state may be considered as the main finding of this paper, with strong policy implications. Liberalization alone, when it is not accompanied by strong institutions, cannot ensure good performance. The debate about the speed of liberalization (shock therapy versus gradualism) was to a large extent mis-focussed, whereas the crucial importance of strong institutions was overlooked. Vietnam (rapid liberalization) and China (gradual liberalization) both made a successful transition. The Gorbachev reforms (1985-91) failed not because they were gradual but due to the weakening of the state institutional capacity leading to the inability of the government to control the flow of events. The Yeltsin reforms in Russia, as well as economic reforms in most of the FSU states, were so costly, not because of the shock therapy, but due to the collapse of the institutions needed to enforce law and order and carry out manageable transition ( Popov) .

A fascinating paper by Mark Wuyts on changing perceptions of poverty and unemployment over 200 years of industrial capitalism illustrates the analytical power of a political economy approach to the rise and decline of wage labour in the capitalist world economy. A comparison of early industrial capitalism in England with mid 20th century "underemployment" reveals the "disguised" or "hidden unemployment" of the early development economists as a rediscovery of Marx"s earlier notion of the latent surplus population as part of the "reserve army of labour" as a latent surplus population. Before wage labour was institutionalized in the industrial capitalist countries, the concept of unemployment did not exist. In public debate in the 19th century, it was "pauperism", not unemployment that occupied centre stage. In the 1950s, the early development economists saw wage labour as a process in the making. They talked about economic growth in terms of the absorption of "surplus labour" by employment in the "modern sector". In the last two decades of the 20th century, however, there has been a marked shift away from these early concerns and from the concepts which embedded these concerns in theory (wage employment). "While the pioneers talked about employment and growth, the new "international consensus" talks about " pro-poor growth". Poverty, rather than unemployment, has become the key concern. "The transition from unemployment to poverty is interesting once we take note that about a hundred years ago the opposite transition took place - away from poverty (or "paupers") to unemployment. The paper addresses this conceptual reversal in economic discourse" from poverty to unemployment", to "from unemployment back to poverty" and situates it within the broader process of what Makoto Itoh has called a "spiral reversal" in capitalist development since 1980s." The aim of this paper is to re-assert the continued importance in development economics of looking at poverty, inequality and deprivation from the perspective of accumulation, the employment relation, and the dynamics of unemployment" (Wuyts).

After one hundred years of exposure to capitalism, the majority of the labour force remains underemployed in all the countries of Southern Africa. The formal sector accounts for less than 20 per cent, with the exception of South Africa, where it is as high as about 45 per cent. The low labour absorptive capacity of African economies is addressed in a paper by Mhone in terms of the legacy of "enclave growth" and the failure of policy regimes both of socialist and market type to address the structural roots of the problem by policies of omission and commission. The implication is that pro-active policies are needed in addition to the usual market friendly measures to undo the vicious circle of perpetual under employment that afflicts the majority of the labour force. The author finds the approach of Baran and Lewis useful in illuminating the internal constraints to market led growth in an economy dominated but not completed captured by capitalism, and in demonstrating the inter active nature of external and internal factors in perpetuating underemployment unless specific interventions are undertaken. (Mhone)

How to Promote a New Development Agenda?
The substantive content of these and other papers presented at the conference is proof, if proof were needed, of the critical importance of reclaiming and re-invigorating development economics within the broader framework of political economy and development studies. How to effectively challenge the neoliberal paradigm? How can we institutionally facilitate the replacement of the old paradigm with new perspectives? As Stiglitz noted in his communication to the conference, the competitive paradigm is taught in practically every graduate program in the world. Many of the ingredients of an alternative paradigm are hardly mentioned. However the time for challenging the current reigning paradigm may be ripe, as dissatisfaction with globalization grows and the spotlight placed on it highlighted many of its deficiencies. "A strategy of replacing the neoliberal agenda with an alternative requires more extensively "challenging" both the assumptions and the conclusions of the standard paradigm. By exposing more explicitly the incidence of the policies (who benefits; who bears the risk) and by analysing more explicitly the political economy (who makes the decisions; whose interest do they serve) the legitimacy and the credibility of the policies will be undermined, and thereby the support for them". 

It is crucial to achieve more visibility within the leading educational institutions. This requires two things. First "capturing" graduate students at an early stage, before they have fully ‘bought into" the neoliberal paradigm; secondly, because achieving tenure in leading educational institutions requires publication, and many journals are not as open to alternative perspectives as they should be, the creation of a high quality referred journal (partly internet based) may help to rectify this problem" Other suggestions include summer institutes to provide students interested in alternative paradigms with opportunities to become acquainted with perspectives which they would not normally encounter in more conventional graduate programs, and help them develop a research program for their PhD. while building a network of supportive intellectual relationships. To be effectives such institutes would have to recruit some of the world's leading development scholars (Stiglitz).

Helleiner's comments replicated much of the above, with the additional advice that we must win back socially motivated students who are at present completely "turned off" by postgraduate economics programmes. He also observed that current screening mechanisms for postgraduate studies in economics discourage many of those the profession now most requires, and attracts instead those with a predeliction for abstract reasoning, mathematics and avoidance of political or "value" judgements. This raises the question of where a reformed economics programme can be built, while at the same time "standards" and "prestige" are retained in the ‘job market". 

While the problem described by Stiglitz and Helleiner, and the suggestions they offer address the academic curricula in major academic institutions of the North, the relevance to the South in general, and the Caribbean in particular is threefold:

1) requirements for admission to Northern graduate economics programmes determine what must be taught to students aspiring to gain entrance to good graduate schools;

2) standards and practices of the North determine "best practice" in universities of the South; as pointed out by several participants, "economic development" will not be re-established as an attractive area of study in graduate schools in the South until it re-gains ground in the North;

3) the need to restore the history of economic thought and economic history of the world capitalist economy system to core economics curricula are equally valid for universities in the South, including the Caribbean.

In academic institutions of the South, "economic development" is - or should be - central to all policy discussion. In fact, a great deal of empirical and theoretical work is being done by scholars in the South. The problem is one of intellectual isolation of economists searching for alternative approaches in academic environments dominated by the hegemony of neo-classical economics, without resources to access to important new material or contact with like minded scholars on an international scale. To meet the evident need for institutional networking especially South-South, the Cape Town conference gave birth to an important initiative. The proposal is to create an International Development Economics Associates (IDEAs), headquartered at Jawaharlal Nehru University in New Delhi, as a pluralistic network of heterodox economists engaged in the teaching, research and application of critical analysis of economic development. While the organization will be South-based, the network will be open to all committed to developing more appropriate and progressive analysis s of development challenges. The proposed activities include

1) Setting up and managing a web site to facilitate the network. The website would warehouse existing and ingoing research work on development economics from heterodox perspectives; provide short analyses of current economic developments; make available and encourage the sharing of teaching materials such as reading lists and references on specific areas; provide links to other relevant websites; facilitate e mail based discussion on particular matters;

2) Organizing thematic workshops designed to bring together experienced researchers with younger academics and policy makers, around specific topics or areas. These workshops will have an important pedagogical component of enhancing knowledge and capability among a younger generation;

3) Facilitating exchange visits across developing countries by scholars of repute as well as by young researchers who will benefit from the experience. Such visits should be by those resident or working in developing countries, to other developing countries to widen comparative experience;

4) Developing, publishing and disseminating resource materials and the eventual planning and launching of a refereed journal.

Some Conclusions and Suggestions
There is much to be learned from the initiative by heterodox economists from the South, in responding to the monopoly of neoclassical economics in teaching and policy research.

Teaching programmes should introduce students to a variety of approaches to economics, including post Keynesian, structuralist, institutionalist, Schumpeterian, Marxist and neo-Marxist etc. in courses on the history of economic thought.

Development economics should have a central place in curricula, with emphasis on the fact that all economies are to a greater or lesser degree open to trade and capital flows (Development Macroeconomics). It should be taught historically, accompanied by a comparative review of the experience of economic development in Asia, Africa, Latin America and the Caribbean from 1950 to the present.

There is much to be learnt from the "greats" of development economics. For the Caribbean, the work of WA Lewis and Raul Prebisch are of special significance. The three great themes of development economics - "growth and equity"; "market and state"; and "trade and development" remain central to the economic development discourse. (See my paper on "Reclaiming The Right To Development").

We should explore links with the IDEAs project and take it as a guide for developing a Caribbean internet based network (website) for ACE.  

Caribbean Economics
I believe the time has come to break out of a provincialism which does not serve us well. We have to re-examine the idea of ‘Caribbean economics". What do we mean by this? Certainly, Caribbean economies have specific characteristics due to common geographical location and historical experience (as plantation economies). It is increasingly recognized in the literature of "socio-economics" that markets are institutionally embedded in a social/legal/cultural matrix. Mainstream economics abstracts from the political and social environment, and the historic legacy. That is a valid critique. Caribbean economists of a previous generation (the plantation economists) were pioneers in identifying some of the institutional characteristics of Caribbean economies. The ultimate purpose behind our work was to point the way to a more self-reliant development "from within". Excepting Cuba, experience in that direction has not been impressive. Indeed, there has been regression and a serious loss of policy autonomy. This is not unique to our region. There is a growing opinion in the South that "globalization' is a straightjacket which privileges financial investors at the cost of policy autonomy of developing countries to determine development objectives and priorities. See among others, Ocampo (2000)     
 
In the 1980s and 1990s, a fundamentalist strain of neoclassical economics gained a hegemonic position in the Anglo American academic establishment, with feedback to graduate programmes in the South - including the Caribbean. A defensive reaction to protect the traditional of "Caribbean economics", together with the influence of funding agencies in determining research priorities on Caribbean social issues, has created a climate of provincialism, and almost wilful ignorance of larger issues in the rest of the world. As implied in my WALewis memorial lecture, we have been quite parochial in our treatment of Lewis, focussing exclusively on his writings on the Caribbean, ignoring the fact that Lewis, more than any other economist, established "development economics" as a discipline within economics - with all its faults and shortcomings. (I received several comments on the Lewis memorial lecture from economists all over the world, but (excepting Mark Figuaro) none from the Caribbean).   
 
Parochialism is inexcusable, especially in the Caribbean which has multiple links with all four corners of the world - Africa, Asia, Europe, and the Americas. There are useful models of collective and comparative research programmes - including a CEPAL project, with an interesting historical component (in honour of Raul Prebisch). We might consider a similar comparative/historical study of the countries of the Caribbean, with (collectively agreed) historical phases; or, a more topical comparative study on "export oriented development" in the Caribbean since 1980. Or comparative experiences of macro-economic stabilization (why is Barbados successful and Jamaica such a mess); or experiences of privatization of public services and infrastructure. In all these cases, the first step would be to organize a workshop where participants would share their knowledge of relevant literature and experiences in other (non Caribbean) developing countries, applicable to the subject under investigation.

Finally, while empirical research is essential, we should not be afraid to confront big questions and big issues - globalization, environmental degradation of soil, air and water; diseases - old and new - which consume and ravage lives; and violence in its aspects - domestic, criminal and military.

I believe it was Keynes who said: "let ideas be international, but above all let finance be national. Perhaps that is no longer possible. But it is clear that global capital cannot be permitted unstrained freedom to enter and exit economies, leaving a trail of bankruptcies, treasuries drained of foreign exchange, and livelihoods destroyed. Ideas, however can - and should - circulate freely across the globe. Knowledge is power - a foundation for the solidarity of peoples struggling for a better life for the Caribbean - and the world.

References:
Thandika Mkandawire: "Thinking About Developmental States in Africa" Cambridge Journal of Economics, 2001, 25, 289-313
Kari Polanyi Levitt, " The Right To Development", Fifth Sir Arthur Lewis Memorial Lecture, Castries, St Lucia, November 2000.
Kari Polanyi Levitt "Reclaiming The Right To development" UNRISD Conference, Cape Town,
Dani Rodrik The New Global Economy and Developing Countries:: Making Openness Work,
Overseas development Council and John Hopkins University Press, Washington 1999.

November 6, 2001.