We live in a pre-Furtadian world

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By ALEXANDRE DE FREITAS BARBOSA*

Reflections on the structural void of western economic thought

The title of the article goes back to the structural void present in much of Western economic thought. Apparently there are no conceptual tools and a minimally objective and coherent method that enable us to capture the recent transformations of the capitalist world-economy.

I take the liberty of using an example of an economist who is not affiliated with orthodox thought and who enjoys appreciation among the heterodox, especially in Brazil, to emphasize that this void is not a privilege of hegemonic thought in economics.

I sympathize with Dani Rodrik, a professor at Harvard University's School of Government. He doesn't have the trappings of neoliberal economists full of certainties. He conducts rigorous research and does not believe in a universal economic theory. He knows the reality of several peripheral economies, also because he was born in Turkey and studied there. In summary, economic thinking is better off than it would be without their presence.

So nothing against Dani Rodrik. It does its job and does it very well. It turns out, however, that his conceptual universe is limited. It does not help us to understand the world, nor to transform it. And look at this: of the specimens of economists with international prestige, he is – I repeat! – one of the best we have.

I present below some of Dani Rodrik's ideas conveyed in an interview and three articles, published in the newspaper Economic value in the first half of 2022. When it comes to interventions for a wide audience, they do not reveal all of your thinking. But they are sufficient for our purpose, as they indicate how the author organizes his ideas around the concepts he deems important.

 

Dani Rodrik

For the Harvard economist, since the 1990s, the era of “hyperglobalization” has begun. As the author had already “prognosed” in previous works, hyperglobalization generated internal tensions in societies. Hence the need for another “type of globalization”, where a “balance point” is found between national sovereignty and integration into international trade and investment markets.[I]

In an article dated May 12, 2022, two months after his interview, Rodrik states that the solution to the ravages of “hyperglobalization” is not “deglobalization”, but a “better globalization”. That it be capable of reconciling “the prerogatives of the Nation-State and the requirements of an open economy”. Ultimately, it is about “resurrecting the spirit of Bretton Woods”, “when the global economy worked for domestic economic and social objectives”.

From what the author suggests, in the post-1945 period, there was another “globalization”, which he does not name, but which seems to have been healthier – for whom and in which countries, Dani Rodrik does not clarify. Finally, everything changed with the “hyperglobalization” of the 1990s, when logic was inverted: the global economy became the supreme end, while (global) society, or the various societies, began to serve as a means.[ii]

In a 2011 book, Dani Rodrik seeks to bring an innovation to the international economic debate by launching what he calls the “fundamental political trilemma of the world economy”. In his view, it is not possible to simultaneously combine democracy, national sovereignty and economic globalization [iii]. One of the “dimensions” must be mitigated in favor of the others. As one cannot sacrifice democracy or national sovereignty, precisely what would have happened with “hyperglobalization”, the alternative remains to make “globalization” more “intelligent” and subject to other determinations.

The argument is elegant, well-meaning and even sounds “progressive”. But it doesn't convince. Why? “Globalization” – “hyper”, “dis” or “better” – is just innocent fraud[iv] used in place of the term that matters in the debate, and which goes by the name of “capitalism”. The reader could rightly say that he uses the most common term in the debate. But allow me to counter by saying that this non-concept fits like a glove, that is, it is “convenient”. In what sense?

“Globalization”, as conceptualized by Dani Rodrik, evades the fact that capitalism in its long duration is concentrated in certain hegemonic centers of high accumulation, articulating around them through the most diverse mechanisms, and always in a subordinate manner, the semi-peripheries and peripheries.

And that, in these economies, the trilemma democracy, national sovereignty and globalization makes little sense. Instead of the balance between nation-state and open economy, the former is compromised by the imposition of certain patterns of external insertion, which, by the way, is not a product of the generic “hyperglobalization”, since it is based on historical roots.

Dani Rodrik overlooks the complexity of capitalism, producing a shallow interpretation. He goes so far as to claim that “globalization” is the worldwide extension of capitalism,[v] as if it advanced like a stain to reach all countries, which in turn must make use of national sovereignty according to their idealized conception.

Now, the expansion of the mode of production governed by capital, from Karl Marx onwards, can only be understood from its worldwide manifestation. Capitalist development strategies constructed “nationally” are only consummated when they succeed in overcoming the dependency relations historically constituted and structured through a hierarchical international system, as Celso Furtado demonstrates.[vi]

In the last article of the series, Dani Rodrik criticizes American exceptionalism – “what is good for the USA is good for the world”[vii] – and the way in which this power sees and reacts to the Chinese “threat”, which only contributes, in his opinion, to sharpen international tensions.

 

USA and China

The author does not understand this geoeconomic and political conflict as a result of the decline of US hegemony – as power now exercises domination without consent [viii] – and the corresponding Chinese rise, the only economy capable of reconciling national sovereignty with an external insertion guided by internal purposes. In this way, the “financialization” and “transnationalization” of the two other powers end up serving the interests of the rising power.

On top of that, China undertakes a profound structural transformation of its productive forces, thus altering the interaction between the old and the new center of the capitalist world-economy, with decisive impacts for the semi-peripheries and the peripheries[ix].

 

productive dualism

In another article in the series published in Economic value, Dani Rodrik recovers the concept of “productive dualism”, which according to his conception “is at the heart of development economics”. To then quote Arthur Lewis as one of the exponents of this “new branch of economic science”.[X]

Dani Rodrik refers to a classic article by the Caribbean economist, written in 1954. In the synthesis of the Harvard economist, a developed economy is one in which high productivity technologies prevail throughout the economy. In underdeveloped countries, on the other hand, there is a narrow modern sector that uses vanguard technologies and another traditional sector, with low productivity.

In the Lewis model, it would be possible to jump from “underdevelopment” to “development” by controlling economic variables. The modern would grow by expanding profits based on the surplus of labor power until it was exhausted. At this time, a brand-new developed country would come into the world.

It is not possible to know if Dani Rodrik has a penchant for reductionist didacticism, or if his understanding of “development economics” leaves something to be desired, but the insight he draws from the parallel with Lewis is interesting: “productive dualism has become a characteristic critical and visible view of advanced economies”.[xi]

Its problem lies in comparing socioeconomic situations that differ in time and space, as if history did not bring about structural transformations. In her interview, Dani Rodrik proposes to “join” history and economic theory to take the test of nine [xii]. What is quite different from starting from a “historically rooted view of economic development”, as proposed by Hobsbawm[xiii].

 

Celso Furtado

One of the main exponents of this new methodological conception of economic development during the XNUMXth century was the economist Celso Furtado. It does not seem to us that his conceptual tools and the historical-structural method, which with him reached its apex in Latin America, serve as a reference for internationally renowned authors and even for many of the Brazilian heterodox.

In the first case, Celso Furtado was largely relegated to the status of third-world marginal. In the second case, master Furtado does not seem to contribute to the good placement of papers in the international market of academic journals. It is thus confined to the field of Brazilian economic, social and political thought, with important contributions produced by the academy in the last two decades.

I could mention other intellectuals, not just economists, who shared the same refreshing perspective in methodological terms, taking reflection on (under)development to another level. But the motto of the text, inscribed in its title, is to launch the idea that we live in a “pre-Furtadian” world in analytical terms.

Like this? For Celso Furtado, for example, it makes no sense to think of “development economics” as a “new branch of economic science”. Already in a 1961 book – after revealing in the introduction that he had groped “almost unexplored lands” for a decade, when the simple reference to “structural differences” was seen as an insufficient assimilation of economic theory –, he is, finally, able to predict : development theory does not fit within the categories of economic analysis.[xiv]

By means of reasoning by contrast, instead of the analogical reasoning of much of the development economics produced by the center, he proves that the assumptions of the dominant theoretical model are restricted, preventing the expansion of its scope - and demanding, at the limit, its rupture – to account for the numerous special cases.

If his conception of development allows for the blurring of the boundaries between the economic and the non-economic, throughout the 1970s he tried to break down the transformation of relations between the center and the periphery based on the new economic and political command unit, represented by the transnational firms. The problem of development-underdevelopment, now subsumed under domination-dependence, points to a global vision of capitalism that engenders a constellation of heterogeneous social forms in the center and periphery.[xv]

In his last theoretical work, Celso Furtado defends an approximation between the processes of accumulation, social stratification and concentration of power, as essential to understand the process of historical updating of capitalism and its ramifications in the increasingly complex centers and peripheries. and multifaceted, as the mechanisms of subordination and dependence are diversified.

Thus, a process of reframing its fundamental concepts is imposed, based on an attentive look at discontinuities, as in the historical-structural method he improved. Otherwise we will be left to see ships, commanded by the nonsense dominant or by the common sense of columnists convenient to the system, without knowing how capitalism really works in its various historical and spatial configurations.

History is never far behind and is not ready to move forward, if there is no method that reconstructs theory and history simultaneously and prepares us for new endeavors of cultural invention and social transformation.

*Alexandre de Freitas Barbosa is professor of economics at the Institute of Brazilian Studies at the University of São Paulo (IEB-USP). Author, among other books, of Developmental Brazil and the trajectory of Rômulo Almeida: project, interpretation and utopia (Alameda).

 

Notes


[I] Interview by Dani Rodrik to Daniel Rittner, “The global economy has changed and will become more fragmented”, in: Valor Econômico, P. A22, 15 Mar. 2022.

[ii] RODRIK, D. “A Better Globalization May Come”, in: Valor Econômico, A19, 12 May. 2022.

[iii] RODRIK, D. The globalization paradox: democracy and the future of the world economy. New York, WW Norton, 2011, p. xviii-xiv.

[iv] GALBRAITH, JK The Economy of Innocent Fraud: Truths for Our Time. São Paulo: Companhia das Letras, 2004, p. 11.

[v] RODRIK, 2011, p. 233.

[vi] FURTADO, C. Creativity and dependency in industrial civilization. Rio de Janeiro: Paz e Terra, 1978, p. 114-116.

[vii] RODRIK, D. “The Other Side of US Exceptionalism”, in: Valor Econômico, A15, 9 June. 2022.

[viii] ARRIGHI, G. The Long Twentieth Century: Money, Power, and the Origins of Our Time. Rio de Janeiro: Counterpoint; São Paulo: Editora UNESP, 1996, p. 27-31.

[ix] For a deeper understanding of this argument, see BARBOSA, AF “The Chinese rise, the transformations of the capitalist world-economy and the impacts on trade patterns in Latin America”, in: Time of the World Magazine, IPEA, n. 24, 2020.

[X] RODRIK, D. “Development towards the North”, in: Valor Econômico, A15, 13 Apr. 2022.

[xi] Same, same.

[xii] RODRIK, D. “The global economy has changed and will become more fragmented”, in: Valor Econômico, P. A22, 15 Mar. 2022.

[xiii] HOBSBAWM, E. “On History”. São Paulo: Companhia das Letras, 2011, p. 107, 119-120.

[xiv] FURTADO, Celso. Development and Underdevelopment, 3rd. edition. Rio de Janeiro: Fundo de Cultura, 1965, p. 11, 16 and 87.

[xv] FURTADO, C. Introduction to Development: historical-structural approach, 3rd. edition revised by the author. São Paulo: Paz e Terra, 2020, p. 26-30, 75-76.

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