The Political Economy of Gunnar Myrdal: : An Institutional Basis for the Transformation Problem

Citation

Duhs, L.A. (1999), "The Political Economy of Gunnar Myrdal: : An Institutional Basis for the Transformation Problem", International Journal of Social Economics, Vol. 26 No. 4, pp. 570-571. https://doi.org/10.1108/ijse.1999.26.4.570.1

Angresano’s book is something of a paean of praise to Gunnar Myrdal, who died in 1987 and whose influence in the context of societal development appears to have waned significantly since then. Angresano’s concern is to argue that China has handled its post‐communist transformation better than the countries of Central and Eastern Europe (CEE). More to the point, his argument is that the neoclassical thought underpinning CEE transformation has been excessively narrow and a contributing cause to the poor results of post‐communist transformation in those societies (p. 121). The superior alternative model he endorses is Myrdal’s holistic, institutional, interdisciplinary approach.

In what is now a rare reference to, and deference to, Myrdal’s six‐part economic development model, Angresano endorses Myrdal’s view that it is the interaction of economics, politics and sociology that is the key to determining whether social systems as a whole will be lifted as intended. In keeping with Myrdal’s approach Angresano objects to the putative universal validity of neoclassical generalisations, which make no allowance for the cultural and institutional peculiarities of time and place. Accordingly, he objects to the uniformity of the policy measures introduced throughout Central Europe. “Shock therapy” was sold as a panacea in the apparent presumption that “one size fits all”.

Myrdal, on the other hand, would advocate that analysis should begin in each country with an analysis of the interdependence of extant values, attitudes and institutions, inclusive of various cumulative processes to which conventional analysis is blind. Only the naïve should believe that free market reforms will benefit everybody and hurt nobody. To Angresano it is apparent that a Myrdalian study of each pre‐1988 CEE society would have highlighted the inequalities and power relations at the root of central planning. Accordingly, the retention of power by the nomenklatura and the rise of organised crime in the quest for short‐term rents ‐ as distinct from Schumpeterian entrepreneurship ‐ would have been “easy to predict” in a Myrdalian framework. Transformation involves more than rapid privatisation, the elimination of subsidies and a passive role for the State. Angresano applauds China for managing its transformation more in accordance with Myrdalian principles. He concludes that China has outperformed CEE countries including Russia “in terms of nearly every conceivable performance criterion” (p. 125). Angresano laments that CEE authorities are not being taught that China has managed alternative, more successful transformation policies.

China faced even worse initial conditions in 1978 than Russia did in 1990, yet China has fared better. Angresano’s lament is that Myrdal is ignored these days, although his institutionalist perspective is still relevant and has currency as an alternative basis for transformation policy in CEE economies. Myrdal’s holistic perspective may be less deterministic than the neoclassical alternative but, being less reductionist, it is also less prone to inaccurate predictions of societal development (p. 97).

It is, of course, unlikely that Chinese authorities have consciously followed Myrdal. Even if it is allowed that the Chinese transformation has been better managed, with lower social costs, should Myrdal himself be projected to an unrivalled position as the architect of this more pragmatic, gradualist approach? Other institutionalist and evolutionary economists might also stake a claim, along with those who uphold “common sense” as a better guide to policy than supposedly rigorous, but fallible, social science. Colander and Klamer, for example, reported graduate cynicism in Ivy League economics departments as due to the excessive requirements of “analytical neatness” at the expense of institutional awareness and practical common sense. In the context of development theory Adelman and Morris likewise recently condemned “misplaced universalism” in calling for “situational relativism”.

Angresano does make a passing reference (p. 87) to the fact that Myrdal has been accused of being a “normative social scientist’, but he does nothing to convey the depth of feeling that Myrdal’s approach sometimes aroused. In contrast to what Angresano applauds as Myrdal’s vision and realism, Harry Johnson caustically dismissed Myrdal as “a soggy pseudo‐scientist” guilty of monumental self‐indulgence. Johnson objected violently to the teleological element in Myrdal’s writings.

To place Myrdal squarely at the root of all appeals for interdisciplinary, institutional understanding and squarely at the root of China’s superior transformation policy thus requires quite an exercise in rehabilitation of a largely forgotten reputation.