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9 Hirschmanian Themes of Social Learning & Change The Balanced Growth Debate Within development theory, the best exposition of the alternative approach espoused here is the still classic work of Albert Hirschman. My purpose in this chapter is to revisit Hirschman along with some related thinkers from adjacent ‹elds to see if new light can be thrown on the current debate about the methods of development assistance. Today, the term development planning is of‹cially dead, but the dream of socially engineering economic development on a broad scale lives on in the programs of the major agencies such as the World Bank, the IMF, the regional development banks, and the major bilateral aid agencies. Debate rages about these agencies and about their structural adjustment programs, policy-based loans accompanied by a “Christmas tree” of conditionalities, project loans, and technical assistance or training programs. To map these issues back into Hirschman’s early work on economic development, we must revisit the theories that led to the idea of a “big push” to achieve “balanced growth.” Perhaps the golden thread starts with Adam Smith’s theory that development, as evidenced by the extension of the division of labor, was limited by the extent of the market. The modern treatment of this theme dates from Alfred Marshall’s notion of external economies (e.g., 207 in his treatment of industrial districts (1961, chap. 10) and from Allyn Young’s seminal 1928 paper on increasing returns. Nicholas Kaldor studied with Young in the 1920s and was later one of the principal exponents of Young’s view that “increasing returns is a ‘macro-phenomenon ’” (Kaldor 1966, 9) (in addition to any increasing returns at the ‹rm level).1 In the development literature, these increasing returns themes are emphasized by Paul Rosenstein-Rodan (1943) and Ragnar Nurkse (1967) in the concept of balanced growth. The economic interdependence expressed in the notion of balanced growth was not as controversial as the policy implications. “Whether the forces of economic progress are to be deliberately organized or left to the action of private enterprise—in short, whether balanced growth is enforced by planning boards or achieved spontaneously by creative entrepreneurs—is, of course, a weighty and much debated issue” (Nurkse 1967, 16). The ‹rst line of thought was based on development planning using the idea of a “big push.” The theorists of the big push had carried out the intellectual exercise of imagining all the mutually reinforcing economic processes that would seemingly need to be jump-started in a small time period to promote the liftoff to balanced growth. Hirschman perceptively criticizes the big push idea at the time, noting that if a country had the capacity to successfully carry out a big push industrialization program, then “it would not be underdeveloped in the ‹rst place” (1961, 54).2 Existing developed countries had not followed that imaginative route, so it might be more fruitful to attend to the actual processes of development and how they might be assisted or catalyzed. Nurkse himself broaches an alternative to the centralized big push using Joseph Schumpeter’s (1934) emphasis on entrepreneurship in the market process. “Schumpeter’s creative entrepreneurs seem to have what it takes, and as they move forward on a broad front, their act of faith is crowned with commercial success” (Nurkse 1967, 15). Hirschman agrees on entrepreneurship and vastly generalized the notion of entrepreneurship as induced decision making to mobilize often scattered and hidden developmental resources where the “inducing mechanisms” (rather than acts of faith) are provided by the same linkages or interdependencies emphasized in the increasing returns literature . Far from denying the interdependencies, Hirschman notes how the impulses of economic change were in fact transmitted through these 208 HELPING PEOPLE HELP THEMSELVES endogenous linkages (as opposed to the exogenous push supplied by a central government or an international development agency). Rather than imagining ‹ssion by having the state somehow coordinating the big push of splitting many atoms at once, the state might try to design its interventions to catalyze a sequential chain reaction using the linkages —and thus getting entrepreneurial forces moving “forward on a broad front.”3 Hirschman develops a similar metaphor: In other words, I do not deny by any means the interrelatedness of various economic activities of which the balanced growth theory has made so much. On the contrary, I propose that we take advantage of it, that we probe into the structure that is holding together these interrelated activities. As in the atom, there is...


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