The myth of economic development – 50 years later

03/12/2024

Brazil 200 • Authors • Ecology • Economy • Books

By LEDA PAULANI*

Introduction to the new edition of the book “The myth of economic development”, by Celso Furtado

If there is one distinctive feature in Celso Furtado's work, it is the idea that there were no objective restrictions preventing Brazil from becoming a strong, sovereign country, master of its own destiny, with its own economy and culture and with a place in the sun in command of the world's direction. But, in his view, this was never a reflection of a grandiose but empty national imagination, which lazily relied on the fantasy of the “country of the future.”

On the contrary, his perception was based on his analysis of the socioeconomic process that was taking place here, an analysis that was theoretically grounded, always placing as a backdrop the connection between the Brazilian economy and the progress of capital accumulation on a global scale. Celso Furtado was a political economist. But, more than that, he was an activist who never stopped fighting for this hope to become a reality and it was in this capacity that he held important positions in several governments. He therefore became a privileged interpreter of the fortunes and misfortunes of this periphery.

But to speak fifty years later of this great little book called The myth of economic development, I want to raise a somewhat rarefied issue and, at first glance, distant both from the theme of the book and from the purpose of writing about it half a century later. I refer to the methodological, or metatheoretical, or epistemological issue, as you wish. To show to what extent this book can be understood as a singular effort at interpretation, it is necessary to consider not only that Celso Furtado was a political economist, and that he had concrete possibilities, as a statesman, to further refine his analyses.

It is also necessary to take into account what the process of knowledge production meant to him, especially in the field of social sciences. The deviation will not be very great, not only because the book itself also contains a methodological essay, which indicates the importance that Furtado attributed to the subject, but also because, given its object, the very reflection on the metatheoretical question will quickly bring us back to the myth of economic development.

Although there is much of this discussion in his autobiographical triad,[1] I will use here, for this purpose, an interview that I had the privilege of doing with him in 1997, and from which a statement was extracted that was published in the magazine Economy Applied,[2] then from ipe-usp.[3] That afternoon, spent in Rio de Janeiro, in conversation with the great economist, who impressed me with his intense and strong, but equally serene figure, I heard that he had been influenced by three types of influence: positivism (he had a positivist library at home, according to what he said), which allowed him to adopt a sort of “constructive metaphysics” that gave him confidence in science; Marx, through Karl Mannheim’s sociology of knowledge, which projected him into history; and, through Gilberto Freyre, American sociology, which alerted him to the importance of the cultural dimension and the relativism that derives from it.

Of the three sources of influence, he said that he later refuted the first, because he was losing confidence in science. What remained very strong in him was the “historicism” of Marxist origin, that is, the perception that history is the context that encompasses everything and that gives man a frame of reference for thinking. For him, “those who do not have this historical thinking will not get very far. This is what separates a thinker from the modern economist, who claims to be a social engineer”. Along the same lines, he will state a little later that “economics is becoming an increasingly formal science, which is exactly the negation of social science”.

In any case, the combination of the three legacies resulted in a vision of the production of knowledge about the social world that, in addition to the inescapable consideration of history, also associates the necessary theoretical and analytical knowledge with imagination. For him, science is constructed, in large part, by those who, confident in their imagination, are capable of, pushed by intuition, going beyond certain limits.

For Celso Furtado, all the theorizing that was constructed, from the Economic Commission for Latin America and the Caribbean (ECLAC), between the 1950s and 1970s, about the uniqueness of Latin America was the result of this stance: “I believe that the extra step we took in Latin America was precisely this: we imagined that we were capable of identifying our problems and developing a theory for them, that is, we imagined that there was a Latin American reality, a Brazilian reality, and so the fundamentals had to be captured from this reality.” The myth of economic development is also a result of this spirit.

In addition to imagination, there is another element that Celso Furtado points out as essential. According to him, it is necessary to be committed to something, that is, if the object of knowledge sought is social reality, dilettantism is not enough for the image of noble activity that science carries to be effective: “Social science has to respond to the questions posed by society […], we cannot exempt ourselves from broader commitments, because there are many areas that do not deserve attention from science, and these are vital areas”. Thus, despite the awareness of the limits to the development of knowledge that are intrinsic to it, that is, created by society itself, it is necessary to insist on the production of a pure social science, which is not hostage to specific interests and clienteles. But it is not easy, he warns.

For Celso Furtado himself, however, this was never a problem. O myth of economic development, written at a time when praise was being sung for the so-called “economic miracle” – six years of growth at rates that today we would call “Chinese” –, did not allow itself to be seduced by the climate of euphoria (built, moreover, under the boots of the military).

Considering the moment of his birth, it was no small feat, amidst so much pride, to introduce a book that insisted that, for peripheral countries like Brazil, economic development, if understood simply as the possibility of poorer countries eventually reaching the standard of living of central countries, was a myth; moreover, a myth that was configured as “one of the pillars of the doctrine that serves as a cover for the domination of the people of peripheral countries.” His commitment to the country forced him to say that it was better to take it slow, to avoid abstract objectives, such as pure and simple “growth,” and to carry out the basic task of identifying the fundamental needs of the collective.

And with that we come to the book that is the subject of this preface, not without first emphasizing that it would never have been written if the pen that wrote it had been written by a conventional economist, who elaborates his models without shame, oblivious to the history and needs of his country, forgetting, as Celso Furtado said in the aforementioned interview, “that social science is based on the idea that man is, above all, a process, not a given, an inert thing.”

There are four essays that make up the book. The first, the longest and previously unpublished, whose fifth and final section gives the book its name, deals with the structural tendencies of the capitalist system during the period of dominance of large corporations. Alongside it are three other pieces: a reflection on development and dependence, which Furtado himself considers, in his introduction, as the theoretical core of the others, a discussion on the Brazilian model of underdevelopment and, finally, the so-called “methodological essay”, in which the author, not by chance, digresses on objectivity and illusionism in Economics.

What connects the four essays, besides having been written between 1972 and 1974 – a period in which Celso Furtado worked as a visiting professor at American University (United States) and the University of Cambridge (England) – is the author’s militant spirit and his unwavering willingness to analyze, warn and point out the wrong paths that Brazilian development was taking, based on immense inequalities and dependent on them to be “successful”. Hence all his effort to support the analysis in the discussion on the structural tendencies of the capitalist system. How can we think about the development of a peripheral country like Brazil without linking it to the international plane?

The initial object of examination in the essay that gives the book its title is the study The Limits to Growth [Os Limits to growth], work carried out by Donella H. Meadows, Dennis L. Meadows, Jorgen Randers and William W. Behrens in 1972, at the Massachusetts Institute of Technology (MIT), in the United States, for the Club of Rome.

In the study, which would become quite famous (translated into 30 languages, it sold more than 30 million copies), there is what Furtado would call the “prophecy of collapse”. The central thesis is that if economic development, as it was occurring in the most advanced countries, were to be universalized, the pressure on non-renewable resources and environmental pollution would be such that the world economic system would collapse.

Celso Furtado disagrees with the thesis, not because he disagrees with the issue itself, that is, the problem caused by the excessive consumption of non-renewable resources and the environmental deterioration that results from it. On the contrary, he even goes so far as to say that “in our civilization, the creation of economic value causes, in the vast majority of cases, irreversible processes of degradation of the physical world”, and that, therefore, it is necessary to recognize “the predatory nature of the process of civilization, particularly the variant of this process engendered by the industrial revolution”.

His disagreement stems from the assumption of the thesis, namely, that development was a linear process, through which all countries would pass, so that, at some point in history, all would have the same type and level of development then in force in the central countries. For our author, the thesis, completely mistaken, clashed with what he considered, in the interview, as “the most important contribution I have made to economic theory”, namely, his theory of underdevelopment, which he had developed a decade earlier. If underdevelopment was not a stage, but a specific type of capitalist development, the linear thesis was discarded by definition, which made the prophecy of collapse unrealistic.

Deeply influenced by what was happening in Brazil, Celso Furtado concluded that, given the international division of labor, enshrined with the consolidation of capitalism, socioeconomic structures began to exist in which the product and productivity of labor grew by a mere rearrangement of available resources, with insignificant technical progress, or, even worse, through the depletion of reserves of non-reproducible natural resources. Thus, the new surplus was not connected with the process of capital formation, and such economies tended to specialize in the export of primary products.

However, for Celso Furtado, more than the tendency to produce primary goods, especially agricultural goods, what established the dividing line between development and underdevelopment was the orientation given to the use of the surplus generated by the increase in productivity. In these economies, with weak capital formation, the surplus, transformed into the capacity to import, remained available for the acquisition of consumer goods. Thus, it was through the demand for consumer goods that these countries entered more deeply into industrial civilization.

Import substitution industrialization, when it arises, at the hands of subsidiaries of companies from central countries, ends up “reinforcing the tendency to reproduce consumption patterns of societies with a much higher average income level”, resulting in “the syndrome of tendency towards income concentration, so familiar to all those who study the industrialization of underdeveloped countries”.

To this trait, which, in the second essay of the book, Celso Furtado relates to what he calls “cultural dependence” (especially of the elites), he associates the characteristics adopted by the accumulation process at that time, namely, the fact that large international companies set the tone for it. Among these characteristics are the dominance of oligopolies (with consumption patterns becoming homogenized on an international level), operations in decision-making centers that escape the control of national governments, and a tendency to construct a unified space for capitalist action.

In this context, peripheral countries, in the midst of import substitution industrialization, will witness a process of worsening of their internal disparities. By using technology that is generally already amortized, large oligopolistic companies were able to overcome the obstacle created by the incipient formation of capital, but they industrialized the periphery, perpetuating the backwardness reflected in inequality. Without the economic dynamism of the center of the system, characterized by a permanent flow of new products and rising real wages, peripheral capitalism, in contrast, “engenders cultural mimicry and requires permanent concentration of income.”

In short, for Celso Furtado, the evolution of the capitalist system that he had witnessed was characterized by “a process of homogenization and integration of the center, a growing distance between the center and the periphery and a considerable widening of the gap that, on the periphery, separates a privileged minority and the great masses of the population”. Hence why the prophecy of collapse was not likely to come true, since the standard of living of the countries in the center would never be universalized on the periphery of the system.

Brazil, with its significant demographic size and a highly profitable export sector, shows Celso Furtado in the third essay of the book, had become a success story in the industrialization process, but had not managed to operate with the rules that prevail in developed economies, so that the system that was then created was spontaneously benefiting only a minority.

Having made this quick inventory of Celso Furtado's main observations and analyses, what can we say about O myth of economic development fifty years later? It is clear that there is a dated context in the work, for example, when our author states that the privilege of issuing the dollar “constitutes irrefutable proof that this country exercises exclusive guardianship over the entire capitalist system”. Five decades later, even though the privilege continues to exist, and has been reinforced by the policy of Paul Volcker, president of Federal Reserve, in the late 1970s, American leadership has been under constant controversy, mainly due to the astonishing evolution of China.

Likewise, considering the way in which Celso Furtado conducts his analysis, it is implicit that he considered at least industrialization, even if not the overcoming of backwardness, as something that had been consolidated in Brazil, which, we know today, is not true, given the evident process of premature deindustrialization suffered by the country.

That said, however, Celso Furtado's successes are astonishing. It is not necessary to consider his concern with the permanent depletion of natural resources, the inevitable pollution and the frequent use of “predatory comparative advantages”, especially on the periphery of the system, which runs through the entire book, maximum evidence of the correct harmony in which Furtado's political economy operated.

What seems most important to mention here is his correct perception of the unifying tendencies of the capitalist system. Note that this was 1974, still a long way from the fall of the Berlin Wall and the beginning of talk of globalization, and yet he states that “the tendencies towards a growing unification of the capitalist system now appear much more clearly than was the case in the mid-1960s.”

Associated with this, there was also the clear perception that a kind of large and unique reserve of labor was being formed across the globe at the disposal of international capital, given the ease with which large companies could avoid salary increases, especially in the periphery, by shifting investments to areas with more favorable conditions.

However, what is truly most astonishing is the accuracy of his predictions, made fifty years ago, regarding the fate of the modernization underway in Brazil. Since then until today, with the occasional relief brought by high-impact social policies implemented by popular governments, the delay has only increased. This unique effort of interpretation would not have been possible without Celso Furtado's understanding of the true constitution of the process of producing social knowledge, combining theory and the perception of the historical character of the phenomena under analysis with imagination and commitment to the collective.

In the aforementioned interview, Celso Furtado says: “My life was simultaneously a success and a frustration: a success because I believed in the industrialization, in the modernization of Brazil, and this happened; and a frustration because I perhaps did not perceive with sufficient clarity the resistance that existed to the firmer consolidation of this process, that is, that, despite industrialization, social backwardness was accumulating.”

I don't think I need to say more about the importance of reading again today. The myth of economic development,reissued good time.

*Leda Maria Paulani is a senior professor at FEA-USP. Author, among other books, of Modernity and economic discourse (boitempo) [https://amzn.to/3x7mw3t]

Reference

Celso Furtado. The myth of economic development. New York, New York: Routledge, 2024, 160 pp. [https://amzn.to/3Zdg2Ky]

Notes

[1] Cf. Celso Furtado, autobiographical work (3 vols.). Rio de Janeiro: Peace and Land, 1997.

[2] Id., “The Long Search for Utopia”, Applied Economics, v. 1, no. 3, 1997, p. 545-63.

[3] Previously linked to the Institute of Economic Research at fea-usp (ipe-usp), responsible for postgraduate studies in Economics at the University of São Paulo (Butantã campus), Applied Economics A few years later, he moved to the management of FEA-USP in Ribeirão Preto.

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