Development as Anarchism?

Continuing through the fantastic Hobsbawm book I’m currently reading, I was struck by the similarities between a current debate in development and one that Hobsbawm wrote about in the 1960s.

William Easterly conceives the battleground in development policy as a fight between ‘planners’ and ‘searchers’. He scorns the planners as blind men drawing and then following maps for terrain that can not be known. Searchers, on the other hand, are where hope lies. Without grand plans, they try; they fail. They try again. They fail better. Eventually they succeed. And eventually one of these successes lights a fuse for larger development, or all of these successes build upon each other until the economy is fully formed.

Easterly’s enemies are those who believe that the economy and economic development path can be planned. Ha-Joon Chang is one, believing that industrial policy is a central component of development success. Yet Easterly is definitely fair in maligning all planners, including those who ‘plan for markets’ by dismantling all vestiges of the pre-existing economy and its controls and letting the market do it’s magic.

This argument is oddly reminiscent of an older intellectual approach in a very different context. Anarchism historically sought to bring down Governments through constant, random, revolutionary acts. At least one, they felt, would eventually prove to be the spark of revolution. This approach contrasted with, for example, revolutionary socialists, for whom planned revolution was required to effect a change in the way the state was structured.

It’s not such a bizarre comparison to make – anarchism ran aground because its approach equated the failure of many planned revolutions to materialize with the bankruptcy of the planning approach, instead believing that random acts have a better chance of success. What this analysis failed to recognize was that these plans depended on the confluence of certain social, economic and political conditions. When they did not obtain, the plans would not come to fruition, or would fail when attempted. What this denotes is not the fundamental uselessness of the plan, but the reality that all plans must depend also on external factors. In other words, the conditions were not right for this plan to succeed; or this plan was not right for these conditions, but it was not the case that planning as an approach was inherently unsuccessful.

Anarchism attempted to remove the tyranny of circumstance. When an opportunity to act arose, it was taken. Very occasionally this led to massive social unrest, but most often it fizzled out because the opportunities were not built upon, precisely because concerted efforts require some level of planning. This is not to deny the importance of the ‘searchers’, those who act upon circumstance and build successes. They are central to success. It is simply to point out that their impact is maximized when set within a structure designed to do so.

In development, success is likely to be contingent on a wide array of conditions: is the government actively malignant, helpful or not such a strong influence one way or another? What are the natural resources available? Are there terms-of-trade trends that will influence macroeconomic conditions? What is the level of development in domestic capitalism? And so on and so on.

That plans often fail isn’t necessarily surprising. We need to consider all of these questions before we decide on either a plan that suits the circumstances or on an approach to change the circumstances till we can apply a reasonable plan. That this is difficult and will often fail should not be taken to mean something that it doesn’t. Trying to build on success as and when it is found is by no means more likely to succeed. In fact, in the knowledge that so much needs to change and so many efforts need to be coordinated, it rather seems that it is a more difficult approach, less likely to succeed; albeit one that is also less likely to fail outright simply because it doesn’t set for itself clear criteria by which it can be judged.

Skepticism of the grand plans is important. We need it to remind us that we must constantly prune our planning instincts and constantly assess conditions and plans that seek to exploit them. Yet planning itself should not rejected – the problems we deal with are too many and too interlinked to address without the coherence it can bring.

14 thoughts on “Development as Anarchism?

  1. bsanchez

    January 24, 2010 at 1:41am

    Ranil,

    I do not find it easy to argue at the conceptual and abstract level in which this post has been written. In any case, the eight paragraphs preceding the statement “yet planning itself should not be rejected” fail to convince me that your conclusion is right. Three years in Malawi also failed to convince me of the importance of planning (as understood in the development community). I guess your experience working within African governments might have given you a different perspective.

    Anyway, you will be pleased to know that the shock-waves from your post have been felt in the Spanish anarcho-capitalist blogosphere I seem to increasingly inhabit: http://amartinoro.wordpress.com/2010/01/24/%C2%BFel-desarrollo-como-una-especie-de-anarquismo/. The author of this blog is encouraging people to respond to your entry with reference to things like methodological individualism … So you might yet get a more enlightened response than mine.

    Regards.

  2. Ranil Dissanayake

    January 24, 2010 at 5:54am

    Ah, I look forward to it! It might help if the respondents know that I’m a huge critic of the methodological individualist approach to economics and in particular it’s deleterious impact on analysis at the social level. http://aidthoughts.org/?p=650

    “Economics has increasingly adopted a theoretical approach called Methological Individualism (MI). MI is an approach that has been tried and discarded in most disciplines, one that builds models on the basis of ‘representative’ individuals and relations. For some reason, however, it has stuck in economics, retained some support in sociology and perhaps in political science. Unlike in sociology and political science, it is now the only acceptable approach for mainstream economics – to the extent that few economics students have even heard the term, for they have never questioned its status as the basis of economics…

    In the period of MI’s dominance, economics has developed its two biggest contemporary flaws: universality and reductionism. They are closely related phenomena. Reductionism is the more direct effect of MI. Through MI, economists seek to model representative relationships; the problem with this is that models quickly become unmanageable when we try and capture the multiple levels on which a relationship works. Individuals react to specific phenomena on an individual level, as part of a group (or several groups) and as subject of a state which has coercive power over them. These reactions may pull in different directions. In some cases, individuals identify with multiple groups that contribute to contradictory responses to a single stimulus.”

    Though they may use a different conception of MI.

  3. Ranil Dissanayake

    January 24, 2010 at 6:04am

    On your other point, though, that the first few paragraphs don’t justify the planning approach. You may be right for this argument. I was more concerned with demonstrating the intellectual basis for rejecting it (the frequency of planning failures.) A clearer justification for planning would probably take in a longer argument looking at:

    1) Basic requirement of coordination of various actors, to reduce duplication of effort and contradictory actions

    2) Need for problem analysis and interventions targeted to respond to such problems

    3) Timing considerations: X may only have an impact after Y is complete.

    4) Ease of measurability, monitoring of progress etc.

    5) Concentration of effort.

    and I’m sure there are plenty more. The alternative approach, whether relying on an invisible guiding hand or on the power of random or rather ad hoc action *can* work. It’s just that there is little reason to believe it will work with any regularity given weaknesses in market structures in much of the developing world on the one hand and the complexity and inter-relation of issues that cannot be surmounted until a certain set of issues are tackled simultaneously.

  4. Jonathan Finegold Catalán

    January 24, 2010 at 11:02pm

    Ranil Dissanayake,

    I think I, more or less, agree with your thesis. Just to avoid confusion, what you are suggesting is as follows: given that successful human action, in the form of entrepreneurship and investment, needs to be planned, the idea of planning should not be altogether rejected. Is this correct? I suspect that this is a response to the anarchist rejection of “central planning”.

    I don’t think that anybody can reject the utility of planning. When an entrepreneur makes an investment, he makes an investment based on a plane which takes into consideration both the costs and the benefits of said action. This is called economic rationalization. An entrepreneur will probably have set up a method by which to achieve his objective (such as, setting up a business). So, “planning” as a way of individual organization is imperative in economic growth.

    However, I don’t think it follows that some central planning is viable. What central planning does is aggregate individual subjective preferences, and so there is bound to be a contradiction between the “central policy” and one of the individuals’ preference. This is why there are always winners and losers when it comes to economic planning led by a State. This is the type of planning which is rejected by anarcho-capitalism.

    Also, just to be fair, this type of central planning is rejected by minarchists, as well. Admittedly, minarchists contradict their libertarian beliefs when they concede that perhaps there are some goods which the free-market cannot provide, which are absolutely necessary to allow a relatively free-market to exist (most of the time, this good is security). Nevertheless, generally speaking the idea of central planning is still rejected.

    By no means does this mean that anarcho-capitalists or minarchists propose some type of psychological change whereas each individual’s action would now be arbitrary. There is a clear distinction between aggregate planning (central planning) and planning by part of an individual.

  5. Angel Martin

    January 24, 2010 at 11:07pm

    Ranil,
    I am the author of that blog.
    I am afraid my friend bsanchez was not too accurate on a couple of things.
    First, I do not feel comfortable with the label “Anarcho-capitalist”. And second, I wasn’t particularly thinking on MI as the basis of a reply to your post. I linked to a book called “Order Without Plan: the reasons for methdological individualism” (in Spanish), but the reason why I linked to it was especially because of Order Without Plan, not because of the latter.

    Also, the conception of MI you describe is not what I have in mind. I am also skeptical on the kind of models you described. I am skeptical on mainstream (neoclassical) economics, and my ideas are much more influenced on Austrian authors such as Hayek or Mises. In this sense, MI would imply that social phenomena must be analyzed beginning with human individual action (because only individuals act), and then studying how these individuals interact with each other, and so on. This is not to deny the social aspect of economics, which is crucial. This is not to deny the social aspects of the human life and behavior.
    I also like to stress the complexity of the social world, the difficulties of social analysis and the need to study it from different perspectives. Also, the relationship between empiricial and theoretical research is quite interesting, but this deserves much more time that I can give it to.

    I am still waiting for some reader of my blog to write a critique, but don’t promise anything. By the way, it was an interesting post.

  6. Ranil Dissanyayake

    January 25, 2010 at 7:46am

    Jonathan, Angel, thanks for the very interesting comments.

    I think where we diverge is at a very basic level of conception of the economy and society. I believe (and it is a value judgment) that society is more than an aggregation of individual preferences, and further, that one should place value on social outcomes above individual outcomes to some extent. In this sense, I believe that some central planning is useful, despite that it would cause winners and losers (incidentally, I also believe that in a world without any central planning at all, there would still winners and losers, since power relations will exist on the individual scale based on allocation of resources in the first instance).

    The value of the anarchist viewpoint for me is that it reminds us of the need for constant vigilance to ensure that pursuit of social goals does not trample all over individual liberty (much in the same way Bakunin believed in anarchism as a counterpoint to the inevitable dictatorship that would arise from leninist revolution). As with most things, a balance needs to be sought. We’d probably disagree on where that balance lies.

    This is all quite apart from the need for basic provision of public goods (which again, I do believe in).

  7. Angel Martin

    January 25, 2010 at 12:21pm

    Regardless value judgments one may have, I think what Jonathan was saying is that central planning has very limited results and that (normally) does not work. Even, central planning may not achieve its proposed goals. There are usually important and hardly seen (especially ex-ante) unintended consequences in central planning (in individual planning as well).

    Besides, there are crucial problems in the way central planning or state solutions are applied and implemented. I mean the problems Public Choice theorists and other authors have pointed out over the years, regarding what incentives politicians and bureaucrats have. And also, the knowledge problem, which was best developed by Friedrich Hayek in The Use of Knowledge in Society and other essays.

    I think these points have to be taken into account regardless what one may think society should be (value judgments).

    PS. I have to admit that I don’t have first-hand experience in development issues, nor have I made any field work. So, here there are big potential gains from (communicative and discussion) trade :)

  8. Ranil Dissanayake

    January 25, 2010 at 3:49pm

    Well, Jonathan does refer directly to the aggregation of individual choices and the winners and losers of state action, so he was referring to values and desirability.

    Still, your points, as you say should be taken into account. They should help us prune our planning instincts.

    Incentives need to be examined; knowledge and the levels of foresight of various actors need to be examined too. In the first case, incentives may or may not align with a greater public good; in the latter economists have been pretty poor so far at actually describing how human beings use information, and their results in this field are far from certain.

    Finally your stylised fact that plans normally don’t work needs backing up with facts. In South East Asia and parts of East Asia, very concrete plans were showed to have their intended effect with enormous developmental gains (South Korea, Taiwan and Japan each planned for their observed results: if they were just lucky, it was *very* good luck).

    I already recognised in the post that in many cases plans don’t work. the question is why do they work in some cases and not in others. Blanket rejection of their value does not bring us any closer to the answer, and is hence an approach I reject.

  9. Jonathan Finegold Catalán

    January 25, 2010 at 4:15pm

    Ranil,

    The existence of a division of labor is a universal truth. The fact that individuals have to interact, barter and cooperate, however, does not make a case for central planning. I think there is a jump, from the concession that individuals have to interact with each other to maximize utility, to the confusion of how society work as an aggregate. In reality, society is just a network of individual human action, and by generalizing human action you cannot promote economic growth.

    I have a piece on the topic coming soon, actually (I am in the process of finishing copyediting it). It deals with utilitarian motives versus utilitarian outcomes, the virtue of selfishness and what drives entrepreneurship. I think you would be interested, and would love to read your feedback. I want to get it published, but it will first be posted on my blog (linked through my name, here).

    On the topic of loss, I don’t think that losing on a deal is possible unless you made a bad investment or you were coerced into accepting a contract. The only way that power factors into coercion is if that being has a monopoly on force.

    But, I hope to clarify my argument in that soon coming piece.

  10. Angel Martin

    January 25, 2010 at 10:34pm

    “Finally your stylised fact that plans normally don’t work needs backing up with facts. In South East Asia and parts of East Asia, very concrete plans were showed to have their intended effect with enormous developmental gains (South Korea, Taiwan and Japan each planned for their observed results: if they were just lucky, it was *very* good luck). ”

    Fair enough. I was being too general by claiming state plans don’t usually work. I would need empirical facts to back up that claim.
    The cases you point out worth detailed examination, which I haven’t done. I know of a paper that discuss this issue from a free-marketeer perspective, but I haven’t read it, so I don’t know if it will be convincing. Here it is the link to the working paper (It was published in a different outlet finally)
    http://www.independent.org/pdf/working_papers/54_state_development.pdf

    “economists have been pretty poor so far at actually describing how human beings use information, and their results in this field are far from certain”

    Have you read Hayek’s essays on this issue? I think other Austrian economists have later followed and developed these hayekian insights on information and knowledge.

    Unfortunately, these days I can’t distract much on discussing and commenting. There are important priorities out there. I hope to have more time soon.

  11. Sam Gardner

    January 29, 2010 at 9:11pm

    What is wrong in development planning is that it tends to become the “holistic” kind.
    While planning to solve a specific issue, even the main problems for a whole sector, somebody in the room will stand up and say: yes, but this can only be solved if we also tackle the major issue of e.g. credit, markets, or even poverty or community empowerment, whatever it is that person is doing today. This means that most planning, instead of focusing to solve the right issue with the best partner, ends up spreading the money over a multibranched plan, and spreading the funding to everybody who claims to be involved.
    A case in point is the cluster approach in humanitarian aid (please do read the Flash Appeal on Haiti). A cluster lead is appointed. Efficiency would mean that the cluster lead gets full responsibility and accountability for the results on its shoulders. This would mean also a mandate to select partners.
    In reality, the main issue in the cluster approach is how to be more inclusive in bringing on board all (yes, all) actors. Meaning of course spreading the money thinly amongst them. The cluster lead forgets about the accountability on his cluster, while pocketing the overhead on the funds.

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