Z: **Archived**: Political Economy 101

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Dani Rodrik at http://rodrik.typepad.com/dani_rodriks_weblog/2007/12/joe-and-i.html answers the review session question I could not answer: What are the differences between Joe Stiglitz's and Dani Rodrik's thoughts on development?

PE 101 students, I advise you to take note...

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Dani Rodrik's weblog: Joe and I: Brad DeLong reports that a student of his wants to know the difference, if any, between Joe Stiglitz's views on development and mine. Frankly, I had not thought about this quite in this way before, so the question set me thinking. I know that I have shaken my head many times at things that Joe has said or written, so I know there are differences. But what are they?

Leaving issues of rhetoric aside (which I am afraid are often important), here are a few points for future students who want to see the product differentiation a bit more clearly.

1. Joe sees the world economic system as grossly unfair to poor nations, and this unfairness as a severe constraint on their development. This has never been a big part of my own thinking, partly because I don't see things in quite the same black-and-white terms, and also more importantly because I do not believe the constraints lie in the external rules. I see the main constraints as being internal--domestic politics and policies. Consequently, our take on issues like Doha is quite different. Joe sees a one-sided set of commitments on the part of rich countries to open up their markets in agriculture and other goods as being very important. I see very little benefits from Doha for the poor countries under the best of scenarios.

2. Joe sees international organizations (in particularly the IMF) as being the driver of policy in many developing countries, with uniformly negative consequences. I think that to the extent that this is true, it is more because poor-country leaders choose to rely on their advice excessively than it is because these institutions have the power and ability to impose their will on the world.  Much of the bad economic policy in these countries has been self-imposed, and I don't think the fault should be placed at the doorstep of multilateral institutions. The truth is that developing country leaders have too often abdicated their own responsibilities. 

3. On the substance of development policy, I think Joe's approach is holistic and comprehensive, whereas mine is selective and sequential. As far as I am aware he has not articulated a vision of how developing nations should choose among competing priorities, whereas a lot of my recent work focuses on that specifically. He thinks of growth, development, and social policies as all one thing--whereas I think of them as distinct in terms of policy needs.

4. On macroeconomic policy, Joe has an instinctively dove-ish position on inflation, believing that central banks can always loosen up at the margin with little cost to overall macro stability. I think many circumstances demand a more hawkish position on monetary policy and inflation-especially when fiscal policy is not cooperative.

There. That should be enough to fill up an essay question.  

PE 101, "Modern" Political Economy, Final Exam

At the final review class, the most interesting question asked me was:

What is the difference between Joseph Stiglitz's Dani Rodrik's approaches to economic development policy and the proper structuring of economic institutions?

D---ed if I know the answer to that. Maybe one of them does.

Section reviews:

• Peacock/Durham W 1:30-4 Barrows 20
• Chaubey W 11-1 Wheeler 100

Final exam: S 5-8 2060 VLSB

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At the final exam we will give you three of the essay questions below--and ask you to write on two of them. That will be two-thirds of the three-hour exam. The remaining one-third of the exam will be eight short answers, no choice.

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PE 101 FINAL EXAM ESSAY QUESTIONS:

1. Consider all the thinkers we have read who have written about the relationship between political economy and war (i.e., Schumpeter, Hobson, Angell--but also Keynes--at the start of the course--and also people like Barber and Stern near the end). Whose analyses of the roots and functions of war and imperialism do you think are likely to be closest to being true in the twenty-first century? Why? Whose analyses do you think are most closely shaped by and bound to the historical context in which they lived, and thus are not likely to be accurate descriptions of the future?

2. In what ways are thinkers like Milton Friedman (in Capitalism and Freedom) and thinkers like James Scott (in Seeing Like a State) close intellectual allies? In what ways are they mortal intellectual enemies? How have the pieces of twentieth century history that they have lived through and focus on led them to their respective conclusions?

3. What are the most notable differences between John Maynard Keynes's and Karl Polanyi's respective analyses of the problems of Europe between the world wars? What were the problems of Europe between the world wars?

4. One way to understand almost all of the thinkers read in this course is that they are all trying in various ways to escape from the box history placed us in when history turned out not to follow the "pre-WWI classical liberal" path of steadily increasing prosperity, democratization, globalization, and peace. Take at least six of the thinkers read in this course and put them in their proper place in this perspective: What things in twentieth-century history made them reject or try to fix classical liberalism? How did they think that humanity should get out of the traps and problems that history was presenting?

5. James Scott argues in Seeing Like a State that attempts at state-led development is likely to lead to a disaster. Others we have read--for example, Milton Friedman--agree. James Fallows believes that state led development in East Asia has been a smashing success. Others we have read--for example, Joseph Stiglitz--are similarly optimistic about the positive role that the government can play in economic development? How would you reconcile these two points of view? What aspects of twentieth century history is each of these two perspectives keying off of?

6. Two of the people who we read--Milovan Djilas and George Orwell--make no pretense of being social scientists. Milovan Djilas is a soldier, a politician, and an apparatchik. George Orwell is a literary intellectual and a moralist. What--if anything--makes their excursions into political economy more penetrating and illuminating than the works of those who are social scientists by profession? Or was assigning them in this course simply a mistake?

7. A large number of the thinkers we have read are explicitly concerned not just with what is but with what ought to be--not just with the technocratic "what works" but with the moral questions of "what kind of people we are" and "who are we responsible toward." Consider John Maynard Keynes, Karl Polanyi, Milton Friedman, and Joe Stiglitz. How are each of their arguments and points of view "moral" rather than "technocratic"? Does the moral element strengthen or weaken the cases they make, in your opinion?

8. One way to understand Karl Polanyi's argument in his The Great Transformation is that the market system is efficient but not equitable: it produces enormous wealth, but does not treat people "fairly." What other thinkers that we have read in this course either make or reject that part of Polanyi's argument? What pieces of twentieth-century history that they saw led them to their positions?