[As usual, regrets for the delay before I can respond. Since no one else
has directly replied...]
Walt asks:
What does everyone think of ben fine's critique of endogenous growth theory?
I read it and it seemed quite good. NGT does seem in many ways like OGT,
and the methods used in empirical measures do proceed as if the Cambridge
critique never happened. But then again, I probably have a limited
understanding of NGT.
I also read Paul Romer's 1986 paper and it seemed like he used NGT to
explain the fact of why nations diverged so much over time (but I may have
misunderstood). Couldn't htis also be explained as well or beter by
Marxist theories of uneven development?
1) From a quick re-read the paper hits the right points in terms of
its first priority: a critique of New Growth Theory (a later slightly
refined version of this paper was published in the CJE in 2000 as a
'Critical Survey', people wanting a copy should contact me offlist). A
more recent article from Fine can be found in a book he co-edited with Jomo
*. As Walt points out, the Fine's critique does parallel the Cambridge
Controversies in Capital Theory and in the critique of "Bastard Keynesianism".
And this brings me to Fine's second point which may be outdated: that NGT
poses a major future challenge for radical political economy - and even for
other fields in social sciences, so (he seems to imply) we should focus on
it in the same way we did in the Cambridge Controversies. It may be easier
to be more sanguine about NGT today: the original paper was written in the
latter 1990s, in the UK, where NGT had been an important core of New Labour
economic policy** and also attracted parts of the Clinton/Gore
crowd. NGT's embrace of neo-classicism, but with the spin that suggests a
government role in human capital, promoting (subsidizing) R&D, new product
development and physical capital and infrastructure had an obvious
resonance for these circles. And, of course, some of the key players in
NGT participated in these political movements .
But the intellectual space that NGT bridged from old neo-classical growth
theory was very small. As Fine points out:
As recognised by many of its practitioners, it [NGT] is simply a market
imperfections theory of technical change in which, in contrast to static
general equilibrium or exogenous growth theory, the impact of the
imperfections are felt on the rate of growth rather than upon the level of
output or welfare for a given rate of growth.
Much of the rest of NGT was mostly of interest to "insiders" and for
technical/mathematical reasons. I have always felt that NGT's larger
impact had been because of the "political" timing - mostly as the younger
generation's replacement for the more "socialist" or "New Deal" strategies
of New Labour and the NDLC (although NGT also eased the transition out of
monetarism for some macro-oriented neo-classics such as Barro, etc).
2) My concern is that we not get too distracted by NGT and that the
Cambridge Controversy turned out to drain much effort that might have been
better spent in creating our own agenda. Our bigger priority today ought
to be to better establish our own views on the long run growth (or the lack
thereof) dynamics of capitalism.
In the 1950s, '60s and '70s the left scrambled to incorporate short run
considerations, drawing from the Keynesian tradition (post-Keynesian,
Neo-Marxist, etc) ...but too often at the expense of long run and
"structural" explanations. In addition large parts of the Keynesian
movement (left and non-left) came to see the long run analysis of classical
political economy as antithetical to their short run demand analysis (the
long run effects elaborated by classical political economy also argue for
limitations to the effectiveness of Keynesian policies - in some
circumstances). To these Keynesians the long run was a series of short
runs (or 'in the long run we are all dead'). Even the tradition of long
run analysis initiated by Harrod (of Oxford not Cambridge) was forgotten or
left to the distortions of neo-classical interpretations with the addition
of Domar.
But surely the problems of our current era, (now stretching for
over 30 years) have clearly not been limited to the sphere of Keynesian
short run demand management. IMO, the inability to provide clear
assessment of the long run problems - followed by proposals for ways
forward (!) - has been a major handicap (and seriously contributed to the
disarray of the left in the face of the economic disruptions of the 70's
that it could not explain well). Countries such as France and Japan that
have better resisted neo-liberalism did not have such faith in *just*
relying on short term "technocratic" Keynesian solutions. Their population
understood better the limitations inherent in capitalism and the need for
longer term efforts and struggles. While many factors come into play, the
non-rich of these countries have fared relatively better over the last 30
years.
It seems to me that we are left with three progressive branches
that focus on long run growth issues from a classical perspective (while
recognizing the relevance of Keynesian short run issues). Each branch has
an enormous workload ahead due to little theoretical work and practically
no empirical or applied work:
a) a minority group of the Sraffian School (Salvadori, Kurz,
etc). (Is anyone aware of ANY empirical or applied work emerging from this
wing of this school?)
b) a very small group remaining from the Marxist 2nd international
tradition rooted in reproduction schemes: in the US examples might be
Adolph Lowe after WWII (echoed perhaps Ed Nell's Transformational Growth)
and in Japan the work of Koshimura and others. Some of this draws on
Monopoly Capital, etc, some does not. Again, I have not seen much recent
applied work.
c) a mini-revival of work around Dumenil & Levy or Shaikh &
various collaborators, Moseley, etc. In this case with some applied work.
In short, as a "work programme" I would focus more on an intensive dialogue
within the left on classical political economy and the programmatic,
political implications. Fighting the forces behind NGT *from within their
paradigm* may be yesterday's battle (is fighting these forces *from within
their political structures* yet yesterday's battle?).
Paul
---------------------------------
*2006. 'New Growth Theory: More Problem than Solution', in ed(s) B. Fine,
K. S. Jomo The New Development Economics: After the Washington Consensus,
pp.68-86.
** see Labour Party and Econ Strategy 1979-97 Richard Hill
also see David Coates
http://www.warwick.ac.uk/fac/soc/complabstuds/confsem/coates.htm for a long
section on endogenous growth and New Labour
