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Dirigisme and development economics

1985; Oxford University Press; Volume: 9; Issue: 1 Linguagem: Inglês

10.1093/oxfordjournals.cje.a035561

1464-3545

John Toye,

Income, Poverty, and Inequality

Readers of Treasure Island will recall the fate of 'Captain' Billy Bones. Laid up at the Admiral Benbow Inn, he knew that, sooner or later, Blind Pew would tap-tap his menacing way into the inn and pass him the black spot. In August 1983, to the sound of the tap-tapping of a Times journalist typing flattering articles about an intellectual counter-revolution,1 the Blind Pew of development economics materialised in the form of Deepak Lai, now a Professor at University College, London. The black spot which he offered to his professional colleagues was a one hundred and twenty page Institute of Economic Affairs pamphlet, entitled cunningly, The Poverty of Development Economics. Its conclusion was damning: 'the demise of development economics is likely to be conducive to the health of both the economics and the economies of developing countries' (Lai, 1982, p. 109). This death sentence of a subdiscipline is based on the judgement that development economists as a group subscribe to a set of general propositions which Lai calls 'the Dirigiste dogma'. The dirigiste dogma is then defined as the beliefs that the price mechanism should be supplanted (and not just supplemented); that the gains in efficiency from improved allocation of given resources are quantitatively small; that the case for free trade is not valid in developing countries; and that government controls on wages, prices, imports and the distribution of productive assets are necessary for the relief of poverty in developing countries. Development economists are further charged with attempting to sustain these beliefs by the invention of a set of theoretical curiosities, that is, perversions of standard economic principles, which are held to be applicable in developing countries only. They are perversions, Lai argues, because they falsely deny the universality of rational economic behaviour and the existence of marginal substitution possibilities, on which standard economic theory relies for its familiar results.