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I would be interested to learn of the training of people like Arthur Lewis, Ragnar Nurkse,
Paul Rosenstein-Rodan, Albert Hirschman, and Raul Prebisch. Who would others nominate as
the most influential development economists of the 1950s and early 1960s?
My own favourite would be Lauchlin Currie who headed up the very first of the World Bank's
comprehensive country study missions, to Colombia in 1949-50. He stayed on in Colombia
after the mission report was completed to advise the Colombian government on its
implementation, eventually becoming a Colombian citizen. Albert Hirschman came down to
Colombia shortly after, also as an adviser to the government for two years, but offering
very different advice from Currie's. (Basically, Hirschman was a protectionist while
Currie focused on openness and a massive urban housing programme. Unlike Hirschman, Currie
wanted to accelerate rural-urban migration and get the birth rate down.)
Despite working in Colombia for over 40 years, Currie never felt that there is an
economics for poor countries and another for rich countries. There is just economics, and
it was the job of a well-trained economist to apply universal principles to a different
set of conditions.
His own training was at the LSE, 1922-25 under Edwin Cannan, whose common sense economics
(particularly in getting behind the money veil) he admired. (Harold Laski was his tutor in
the field of politics.) But he also absorbed Keynes's ideas on the importance of the money
veil, the distinction between private and social accounting, and the related fallacy of
composition (in ridiculing Dalton's capital levy proposal, for example). In 1925 he moved
to Harvard where his chief inspiration was Allyn Young (but he was also one of Frank
Taussig's top students).
Unlike today, Harvard's graduate programme in economics included mandatory classes in
politics, economic history, and a foreign language (German in Currie's case), as well as
statistics (but little maths).
>From Allyn Young, Currie absorbed the profound lessons of "Increasing Returns and
Economic Progress" (Young's seminal presidential address to the British Association,
September 1928). He discussed this with Young on a visit to London in the summer of 1928
while collecting data on British banking for his PhD dissertation which he undertook under
Young's initial guidance. Currie's masterly "Control of the Supply of Money in the United
States" (Harvard 1934) was dedicated to Young's memory.
In 1934, after several years as an unorthodox teacher at Harvard, where he assisted Ralph
Hawtrey, whom he admired, and Joseph Schumpeter, whom he regarded as a reactionary and
even something of a charlatan, he joined Jacob Viner's Freshman Brain Trust at the US
Treasury. (He remained a life-long friend of Viner's.)
>From the Treasury, he moved to the Fed as assistant to the new governor, Marriner Eccles,
and drafted the 1935 Banking Act that greatly increased the powers of the Fed to avert the
calamitous mistakes of 1929-33. Along with his close friend Harry Dexter White, he had
earlier strongly condemned the Fed for its passivity in the face of mass liquidations, and
had also urged fiscal deficits, financed by the Fed, as the best way to revive the economy
in the face of a Hawtreyan "credit deadlock". At the time this was heresy.
His distinguished career as the intellectual leader of the spending wing of the New Deal
culminated in his appointment to the White House in July 1939 as FDR's personal adviser
for economic affairs. He remained in this post until Roosevelt's death in 1945. Among
other duties he was head of the lend-lease programme to China, 1941-43, acting head of the
foreign economic administration, 1943-44, and head of the allied delegation to Bern in
early 1945 to get the Swiss to block Nazi gold accounts and shipments of material to the
Italian front.
That was his background before dedicating his life from 1949 until his death in 1993 to
economic development. In Colombia he fought against the pernicious influence of the
Kemmerer commissions of the 1920s that established central banks in Latin America that
combined central banking with development banking. This perpetuated the confusions of the
real bills doctrine that had so perverted Fed policy in the US. In the Latin American
context, it imparted an inflationary bias to the financing of development projects.
Inflation was disastrous in fixed exchange rate regimes, and hindered the capture of non-
inflationary savings, especially for long-term projects such as urban housing and
infrastructure -- so necessary if the mass of disguisedly unemployed rural labour was to
be reallocated to more worthwhile activities, and the birth rate curbed.
As a top presidential adviser in Colombia for 40 years, Currie had a profound influence on
economic policy, institution-building, and urban planning there (though much less than he
would have liked), and some influence, through his writings, on development theory and
practice more generally. Much of this, however, was against the grain of some fashionable
development economics expounded by those who believe that development economics must be
something different in principle from what would be good theory and practice in the US or
Europe.
The last thing to bear in mind is that our profession used to be development economics.
Certainly, if you look at 1920s economics texts (for example, Ely's best-selling "Outlines
of Economics", 4th ed., 1923, of which Allyn Young was a major co-author), what was it but
development economics, albeit for a maturing United States? And what was Adam Smith's
"Wealth of Nations" if not development economics?
Roger Sandilands
University of Strathclyde
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