The Joy of Capitalism

DEVELOPMNET ECONOMICS is a faddish field. While other practitioners of the dismal science study the herd mentality, development economists practice it. But despite many voices, consensus is hard to come by. The field's single universally accepted truth may well be the assertion that despite 35 years of attention, the problems of the Third World seem as intractable as ever. But in this mercurial field. P. T. Bauer has remained an academic constant.

Bauer is the field's iconoclast. For more than two decades he has provided a counterpoint to whatever tune others in his discipline happen to be playing. In his latest work, Reality and Rhetoric he goes back to grinding his familiar over the belief that the Third World's problems can be solved by a return to the free market.

This trip down the memory lane of neo-classical economics has several elements. First Bauer writes, the rote of government in economic hie must be reduced. Prosperity will be created by the free enterprise system, "in which firms and individuals largely determine what is produced and consumed." Bauer also promotes the ideal of comparative advantage, the concept that nations should produce what they can make most cheaply. For most poor nations this means exporting raw materials and agricultural products. Bauer deems the idea of Third World industrialization inefficient and declares that it is "more likely to retard economic development than to promote it."

The solution to Third World problems suggested by Bauer represents a unique vision of less developed nations. While most development thinkers regard the effects of economic relations between rich and poor nations as a mixed bag, Bauer views the role of trade through rose-colored glasses. For him, the Third World ought to be thankful for the role the West has played in pulling it out of the stone age. He dismisses foreign aid by rich nations as guilt offerings for a crime they did not commit, and characterizes Third World groups generally as parasites organized to such dry their former colonial masters. This and is used Bauer writes, to lengthen the time poor nations can spend in economic fantasyland, unaware of the ruinous consequences of their socialistic policies.

The 10 essays in Reality and Rhetoric are full of promises of doom should the Third World continue on its present course. But Bauer's failure is that he never displays a full under standing of why these countries act the way that they do now, and whey an economic logic stronger than Bauer's prevents them from changing course as radically as he proposes.

For example, in an essay on Niggrlan development, Bauer denies the need for poorer nations to industrialize. This is in agreement with the classical economic view that a nation should do what it is best at. But Bauer's recommendation suggests that Third World nations join a system rigged against them. Much like American farmers. Third World nations find the prices they receive for their products seldom keep pace with the prices of the things they must buy to satisfy their populations. They export items whose prices are largely dictated to them by richer industrial powers. The only group of exporters who were for a time, able to escape from this trap was the OPPC nations, who used monopolistic practices that a free-market Tan like Bauer would surely not encourage. Bauer's idea is Hawed in another way as well it assumes that nations which are most efficient in producing a given good today till continue to be most efficient. If Japan, for example, had adopted this idea after World War II, the names Toyota, Sony and Nikon might be a bit less meaningful today.

Bauer also refuses to acknowledge, that his economic policies could have unfortunate social consequences. Nations which have followed the agricultural product or raw-material based path that he advocates have often found themselves with repressive political systems needed to maintain societies in which there are few rich and many poor. Overly careful adherence to Adam Smith often Produces Anastasia Somoza.

But the most pernicious aspect of Reality and Rhetoric is Bauer's view of culture. The process of development he indicates requires that poorer nations surrender their culture and accept that of the West. This treatment of one of the major non-economic issues of development is cavalier at best. Whereas for Bauer culture may mean nothing more than the ability to accept capitalism others have a richer conception of it.

His chauvinism is particularly evident in his discussion of the importance of ethnic discussion of the importance of ethnic minorities in African development While it would be difficult to understate the role prayed by groups such as the Lebanese in the poor nations of West Africa, the praise that Bauer heaps on these successful businessmen reveals that his view of culture extends to little more than the ability to turn a profit.

What Bauer offers is Reaganomics for the Third World, with all the simplistic faith in market solutions of its American relative. But no one is quite so arrogant as to suggest that there is nobody starring in Africa or Latin America in nations where so many people live at the brink of subsistence, there is little patience with policies which endorse present suffering for a rosier future. In the short run, many may die.

While Bauer points out many. Third problems he tails to convince the reader that his solutions are better than anyone else's. Along the way his faulty analysis underscores the weaknesses of narrow. Purely economic approach to the problems of the Third World. Bauer's analysis ultimately does not use above the level of verbiage in a field long on words but short on solutions. P. T. Bauer is happy to be a voice in the wilderness. Now if only he would top howling.