THERE was a recent kerfuffle in developmental economics circles. On one hand you have one of the giants of the field, William Easterly who has been a consistent critic of foreign aid and has been sparring with people like Jeffrey Sachs.
Believe me, that is more entertaining than it sounds. On the other hand you have…well virtually everybody else.
Easterly recently gave a lecture at London School of Economics in which he stated that we still did not know how to solve poverty and that was a good thing (I’m not paraphrasing here…that was basically the title of the lecture).
His argument is that development economics had been studied ad nauseam for decades and the world still had few unassailable facts about economic growth and its relationship to other factors like democracy.
However, because many experts claim that they know these things, wrong remedies tend to be applied in the developing world. In other words, claims of certainty create bad results for the poor and for the field itself.
One of his core points is that we cannot- or have not-found global concrete rules for economic growth and so formulas along these lines are wrong or misguided.
He seems to be taking a sort of Socratic approach to the whole affair (Socrates once supposedly said ‘The only true wisdom is in knowing you know nothing.’)The lecture delved into other related issues but we’ll stick to this key point for now or else my editor will carry out a hatchet job on this article.
The backlash was not long in coming and other experts alleged- with varying degrees of eloquence and forcefulness- that Easterly did not know what he was talking about.
The most common response was that Easterly was underestimating what we know about economic growth. With the right will and capacity, a country can create the right conditions to accelerate economic growth and development.
Research in the field has given us a few constants- trade policies, entrepreneurial-friendly conditions and an enlightened approach to the markets are just a few of the things that have proved to be successful when properly applied.
Evidently these factors don’t have the certainty of scientific theories and principles, but few economists and development experts would argue so.
The point many of his opponents are making is a fair one- that economic growth is not quite as unknowable or as anarchic as he claims. One critic pointed to South Korea as a shining example.
Its IT policy in the 90’s eventually turned that country into a powerhouse and its’ success could clearly be captured in cold hard data.
You might think these kinds of debates are stuffy and boring, but you’d be wrong—it’s like a really geeky version of The Matrix but with economists.
Easterly is right to promote skepticism as a creative force, and to flag morality and compassion as important tools in the fight against poverty.
Overconfident experts can indeed apply wrong solutions and be stubborn to alternative theories and that can be dangerous. However there is the danger of being so overly skeptical as to ignore all the data and theories that sum up our knowledge.
Taken to its logical conclusion, it could leave us stationary and slow to react to development problems. Socrates was wrong- knowing and understanding what we know is very important indeed.
Minega Isibo is a lawyer