A REALLY big picture look at at what works--pragmatism vs. ideology in economic development--Pt 1

by: Paul Rosenberg

Sat Apr 24, 2010 at 13:00

The latest Real World Economic Review (#52) has just been published [in early March], and the lead article by David Ellerman is sophisticated look at the relative failure of ideology vs pragmatism in economic development. Titled "Pragmatism versus economics ideology: China versus Russia", Ellerman's focus is actually much broader.  It's just that China and Russia provide us with as close to a controlled experiment as we're ever likely to get in the field of economic development at the large-economy scale.

But the evidence is so stark--China has grown so rapidly, while Russia has not just seen its economy shrink, but is in the midst of drastic population decline as well--that what makes this paper so significant is not the data, which he barely mentions (or needs to), but the penetrating analysis of what's behind it: not just the specific failed policies of "shock therapy" as prescribed by Jeffrey Sachs, but the physics-derived model of social science fused with social engineering that assumes a "one best solution" that is already known--at least in basic outlines.  (This is also, need I say, a useful expansion of the field of vision embodied in Naomi Klein's Shock Doctrine.)

Ellerman contrasts this approach with the pragmatist vision, particularly as embodied in Dewey, which differs systematically at every level, from its basic conception of what science is to what knowledge is, how it is generated and dispersed, and how it relates to the individual and social creation of value, be it moral, spiritual or material.

Among other things, Ellerman invokes the model of a binary search tree, and the different strategies called for if one has a strong belief (justified or not) that what one is looking for can be found in a certain narrow range, versus how one should act in a condition of genuine uncertainty, and he also invokes the model of population genetics, which serves to elucidate the role of diverse sub-populations in enhancing adaptability to realize maximal fitness.

Ellerman first describes the social engineering approach:

The Social Engineering Vision of Scientism and Modernism
Pragmatism may be best seen as a reaction to the Enlightenment vision of modernity inspired largely by the triumphs of Newtonian physics and by the advances in technology and engineering associated with the Industrial Revolution. This technical engineering vision of the world is variously called "modernism" or "scientism."2 The controversy is not about mathematics or physics; it is about the extension of that engineering vision of the physical world to the social world. Just as science and engineering can enable us to solve physical problems-to dam rivers to control floods or to irrigate deserts to make them bountiful-so, according to this vision, the social sciences will eventually allow us to engineer solutions to social problems. This is the vision of social engineering (whether or not that particular phrase is used).

What are the primary characteristics of the social engineering view of the social world? Just as a mathematics problem has one correct solution, so a social problem has a best or "optimal" solution. For instance, Frederick Taylor applied this mentality to the workplace as "scientific management" [1911], now known as "Taylorism." He was so obsessed with finding the "One Best Way" that this phase was used as the title for a recent biography of Taylor [Kanigel 1997].

In the paper, Ellerman highlights the role of this vision in the neoliberal "shock therapy" approach that decimated Russia in the 1990s. But it's clearly applicable to neoliberal ideology in general, including not just Obama's economic team, but his entire elitist approach to governing--subjects that Ellerman does not address.  What was particularly striking to me as I first read this paper was reflecting on how Obama had been exposed to--and still expressed--the contrasting vision described next, but had turned it into a mere marketing device for pushing the opposite, top-down social engineering approach.  Here's how Ellerman begins his description of the very different vision that pragmatism provides:

The Pragmatist Alternative

The Pragmatist vision is juxtaposed to the social engineering vision of human society promoted by scientism and modernism. Pragmatism views the social world as being actively constructed by people so, at each point in time, it is radically incomplete and in a state of becoming. People's values and opinions, their preferences and beliefs, are always incomplete and in a state of changing in a process of probing values and testing beliefs. Hence the notion of there being some predefined "One Best Way" does not occur, and the notion of a "solution" to a social problem without the active involvement of the parties seems out of place. As people find out more about the possible means to their ends in a social learning process, their conception of the ends may change as well. Hence Pragmatism sees a unity of knowing and doing giving a two-way interaction betweens means and ends in contrast to the engineering vision of finding the optimal means to reach the ends given by some assumed moral consensus.

In view of the incompleteness of values and beliefs, a solution to a social problem or conflict is something that needs to be constructed by the active involvement of the parties, not something that can be abstractly determined (e.g., through the articulation of rights or the maximization of wealth) and then imposed on passive parties. John Dewey was best known for his active learning (or constructivist) theory of education [Dewey 1916]. His vision of social problem solving and change was essentially active learning writ large as activist or constructivist forms of social learning. A solution that arises out of the active involvement of the parties will be the "fruits of their labor" and thus they will have an "ownership" of the solution that would otherwise be lacking.

Ellerman is also the author of Helping People Help Themselves: From the World Bank to an Alternative Philosophy of Development Assistance (Evolving Values for a Capitalist World), and in a precise of that book on his website, he provides the following list of "helper-doer relationships and prominent authors or 'gurus'" who represent the pragmatist vision in various different fields:

• Albert Hirschman on the relationship of a development advisor and a government,
  
•  E.F. Schumacher on the relationship between a development agency and a developing country,
  
•  Saul Alinsky on the relation of a community organizer to the community,
  
•  Paulo Freire on the relationship between an educator and a peasant (or urban poor) community,
  
•  Søren Kierkegaard on the relation between a spiritual counselor and a student,
  
•  John Dewey on the teacher-learner relationship,
  
•  Carl Rogers on the therapist-client relationship, and
  
•  Douglas McGregor on the (Theory Y) relationship between a manager and workers.

I'll have more to say below about how & why I think Obama deeply failed to "get" Alinsky, even as he very much learned how to superficially simulate him.  For now, I'll just say that this list serves to indicate how broad, and well-developed an alternative viewpoint the pragmatist approach represents, despite the very real dominance of scientism in our culture over the past several centuries.

The Failure of Development

Turning back to the paper, Ellerman goes on to observe that development as a whole has proven to be a failure:

Over the decades, the major development assistance institutions have run through a number of development foci (or fads).... [which he then briefly describes]

After six decades of attempts to socially engineer development, the various efforts cannot be judged a success. Where development has been most successful in the East Asian countries, the standard model (e.g., "Washington Consensus") has not been followed and outside observers do not credit the development agencies with a key role [e.g., Wade 1990]. Where the international agencies have had the freest hand to try to impose solutions, e.g., in Africa and Latin America, there has been the least success [e.g., Van de Walle 2001 on Africa]. This was the conclusion of even the World Bank's own respected researcher William Easterly [2001].6 Thomas Dichter [2003] came to similar conclusions after a lifetime working in some of the large development agencies and NGOs.

Against this background, Ellerman turns to his discussion of the transition to capitalism of Russia and China:

The transition is a wonderful case study for our theme of social engineering versus pragmatism for two reasons. One reason is that the transition and the role of the major development agencies in it took place largely in the decade of the 1990s so that we have a little perspective of history. The other reason is that there was a remarkable natural experiment in the transition; the two major countries, Russia and China, each used opposite philosophies. Russia chose the social engineering model of institutional shock therapy offered by the international development agencies and the most prominent academic advisors. China chose pragmatism after "learning the hard way" the lessons from using bolshevik methods to try to engineer social change (e.g., the Great Leap Forward and the Cultural Revolution).

The difference in results could hardly be more striking. Since the Chinese reforms started with government support in the early 1980s, China has had around 8 percent per capita annual growth [McMillan 2002, 204], perhaps the largest growth episode in history.

Russia using the shock therapy strategy went the other way. In the first year of shock therapy (1992), production fell by 19 percent with a further 12 percent and 15 percent in the ensuing two years [McMillan 2002, 202]. In all, the country bottomed out at about a 50 percent drop in GDP. Experts can argue about the interpretation of the economic statistics, but the demographic trends tell an even more worrisome story. The population has actually declined over the 1990s in such a precipitous manner-now for every 100 babies born, 170 Russians die-that the government projects a 30 to 40 percent drop by 2050 [Feshbach 2003b]. In her preface to Feshbach [2003a], Laurie Garrett noted that:

There have been few times in human history when a vast region, encompassing a militarily, if not economically, powerful nation has been depopulated to the extent Russia has-and will. It is difficult to find a precedent from which to draw a comparative reckoning about Russia's future.

The causality behind these trends is very hard to disentangle-which is why the side-by-side comparison with China is so revealing.

I won't try to go through everything he has to say about how China succeeded while Russia failed.  Instead, I'll take the shortcut of presenting this chart he includes, derived from Joseph Stiglitz's "Whither Reform?", the 1999 Keynote Address to the World Bank Annual Bank Conference on Development Economics:

Applying The Pragmatist/Social Engineering Distinction To Our Own Current Political Situation

There's an awful lot encapsulated in the above chart, and it could well be the subject of longish diary all by itself. But I just want to point out something that may not be immediately obvious.  On the surface, it seems quite plausible to accept Obama's self-characterization as a "pragmatist," and to see progressives as "ideologues".  After all, going to a single-payer system would constitute a leap across a chasm.

But, that's exactly why Jacob Hacker developed the idea of the public option in the first place--to provide a means for bridging the chasm, allowing people who were satisfied and well-served with their existing private insurance to keep it, while providing a means for everyone else to join into a public system that would ultimately become one with Medicare in a somewhat altered form at some point in the future.  And so if Obama were actually a pragmatist, then he would have been a strong, consistent and articulate advocate of the public option--and not just any old public option, but one fully capable of fulfilling the role of bridging the way to a single-payer system at some point in the future within one or two decades.  This is true because the America's system of private insurance is not just wasteful in itself--contributing virtually nothing but costs to the system, but also because it stands in the way of gaining other efficiencies.  Similar problems exist with climate change legislation and financial regulation legislation as well.

The reason that the above chart may be a bit misleading is that it was specifically constructed with the notion of transition in mind, and for the purpose of contrasting two approaches--one ideological, the other pragmatic.  But in our case--and not just with health care--the real polarization is between those who see the necessity of a transition as a pragmatic necessity, and those who wish to avoid it based on an ideological belief that no such transition is necessary or desirable.

This dovetails neatly with Stirling Newberry's "Petroleum Paradigm" analysis I discussed last week in "Triangulating progressive change: Adding Stirling Newberry's 3-polar petroleum politics to the mix" and "The Democratic Party & the dying empire of oil--further elaborations on Stirling Newberry's thesis".

Of course, that's not how it's always played out in terms of how people have argued with one another.  In particular, there's been a lot of animosity from certain single-payer advocates directed at those who've pushed for a public option. This animosity is justified in part by the fact that the Obama Administration and others in the Democratic establishment have intentionally sought to weaken the public option so that it would not be a very bridge to  single payer in the future.  They are, in effect, trying to ensure the survival of the current broken system,  either by dropping the public option altogether, or crippling it so that it can't evolve naturally into becoming part of Medicare.

For political purposes, therefore, it seems important to some advocates not to go along with a public option, but to push exclusively for a single-payer system--even though that approach really does have significant transitional problems that will make it difficult to establish, not just because of special interest opposition, but because there are millions of people who still feel more comfortable with their private insurance, for all its shortcomings.

My argument here is that all of us who agree on the pragmatic need for transition ought to see that agreement as more salient and fundamental than anything else--and, in light of all the above, that we ought to acknowledge the wisdom and necessity of taking a pragmatist approach to getting there, which can include a variety of options, such as a robust public option, as well as a single-payer option for states and local/regional governments, such as San Francisco is already doing.

There is room in my view for people to differ about the micro-strategies in all sorts of ways, but we ought to be able to form some sort of basic agreement, because we are in fact, already in basic agreement, we just haven't successfully organized ourselves to reflect our shared long-term vision and values instead of our short-term political positions and strategies.

It's my hope that by reflecting on the lessons discussed in this paper, we can begin to apply them as well to our somewhat different circumstances, and start to cooperate more effectively based on a deeper shared understanding of what the most fundamental dividing lines are.

While Part 2 will appear tomorrow, delving into a more detailed analysis of what constitutes the pragmatist alternative, this diary also serves to set up a return to the discussion begun two weeks ago in "Regaining focus: Growing a progressive majority-Part 1 " and "Regaining focus: Growing a progressive majority-Part 2".  I will take up that discussion in my next post.