Libertarian / Austrian Insights Joseph Schumpeter Entrepreneur  Progress Creative Destruction Renews Enterprise Economy Antidote to Marx Karl Polyani Market Imposed by State Substitute for Marx

Market Skeptics Karl Polanyi Gunnar Myrdal Raul Prebisch – Hans Singer W. Arthur Lewis Michael Kalecki – Nicholas Kaldor

Karl Polanyi The Great Transformation Market Economy is Historically Rare Laissez Faire is Unnatural Enforced by Strong, Oppressive State Resistance to Market is Natural Reaction to Liberalism … Welfare State Social Protection vs “Self – Regulating” Market

Karl Polanyi The Great Transformation Pre – industrial society Reciprocity: produce & share according to social role Redistribution via public consumption Market economy Behavior “guided” – directed, dictated – by prices Resistance emerges naturally, quickly

Reclaiming Humanity: The Social Theory of Karl Polanyi by Hlseyin Vzel Dissertation examines Karl Polanyi's social theory, which underlies his critique of the market economy. The market system, which is organized on the basis of three fictitious commodities, namely labor, land, and money, generates a dehumanization process … The result is the disintegration of society. It is natural for human beings to protect the social fabric against the market. Ph. D. dissertation, The University of Utah, August 1997

Gunnar Myrdal, Monetary Equilibrium 1933 Chair in Political Economy, University of Stockholm 1934 Elected to Swedish Senate, Social Democratic Party 1938 Carnegie Corp Grant to Study Situation of American Negro 1944 An American Dilemma 1942 Reelected to Swedish Senate: Board, Bank of Sweden/Chair, Post War Planning Commission/1945 – 1947 Minister of Commerce Executive Secretary, UN Economic Commission for Europe 1957 Rich Lands and Poor Twentieth Century Fund An Asian Drama: An Inquiry Into the Poverty of Nations The Challenge of World Poverty: A World Antipoverty Program 1961 Professor of International Economics, University of Stockholm 1974 Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel Married to Alva Myrdal, Swedish Ambassador to India and Nobel Peace Prize Laureate

Gunnar Myrdal Cumulative Causation Thems that gots gits. For unto everyone that hath shall be given, and he shall have in abundance; but from him that hath not shall be taken away even that which he hath.Matthew

Gunnar Myrdal Cumulative Causation Critique of Equilibrium Approach “Harmony of Interests” Laissez – faire Free Trade Increasing Inequality

Gunnar Myrdal Cumulative Causation Critique of Equilibrium Approach The “other things” that are assumed to remain equal – particularly social and political relations – change with economic outcomes. They change in ways that lead to divergence, not equilibrium. Thems that gots gits.

Gunnar Myrdal Cumulative Causation “Spread Effects” Peripheral regions supply the dynamic center “Backwash Effects” Dynamic regions suck the best resources from the backwater Free trade and free migration hurt the periphery

Gunnar Myrdal Cumulative Causation In Rich Lands … Spread Effects > Backwash Effects New Dynamic Centers But in Poor Lands … Backwash Effects > Spread Effects Poor regions of poor lands fall farther and farther behind

Gunnar Myrdal Cumulative Causation Myrdal’s Prescriptions “Rational Generosity” … Foundation for continued progress Welfare State  Greater Regional Equality Prosperity  Democracy  ~ “Oppressor State” Equality Promotes Development “Balanced Growth” Position Harmony through intervention, not laissez faire

Gunnar Myrdal Cumulative Causation Myrdal’s Prescriptions Break out of primary goods trap Prebisch: ISI “Jump Start” Institute Capital Controls LDCs: Bargain as Bloc National Economic Planning The inherent tendency of a social system is dispersion. Only interventions can constrain these tendencies and promote convergence.

W.W. Rostow Stages of Economic Growth Traditional Society Transition: Preconditions to Take Off Emergence of Capitalist Sector Nationalism: Weakening of Regional Elites The Take Off Accumulation  Compound Growth Drive to Maturity Diversification / Import Substitution High Mass Consumption / Welfare State