Fidel objects to my “ideological motives” in criticising Raul Prebisch’s protectionism; and Ana Maria objects to my writing ‘immoral’ in connection to Albert Hirschman’s “principle of the hiding hand" in favour of industrial protectionism. She says such words are inappropriate for a historian of thought.


I actually wrote, “to my mind immoral”. Note that we all have value judgements; the only difference is in whether we make them explicit. I made mine explicit, but I’d like to know on what good grounds – moral or otherwise – an economist can justify the “hiding hand” principle.


Hirschman urges planners to conceal the true risks of their own pet projects that would not otherwise be approved, or to urge private investors (risking their money, not Hirschman’s nor that of the planners he is advising). He then explicitly supports this by invoking Christian morality to support “an economic argument” for a “preference for the repentant sinner over the righteous man who never strays from the path”. Cute, but to my mind dubious economics and, yes, even more dubious morality.



And what about Hirschman’s policy advice based on his "theory of unbalanced growth" (about which M June Flanders has written much): deliberately approve projects for which there is no demand (but lots of nice backward and forward supply-side linkages) so that while those projects go bust the resultant bottlenecks and shortages elsewhere will then induce others to invest profitably there?

Or his complacency over rapid population growth because it too leads to “development-enhancing” bottlenecks?



Or his urging that the development agencies bring caravans full of the “cornucopia of modern civilisation” to the edge of villages so that their tradition-bound inhabitants can be wrenched out of their deplorable lack of rational economic aspirations? But maybe he didn’t explicitly use the word deplorable.

- Roger Sandilands

________________________________
From: Societies for the History of Economics [[log in to unmask]] On Behalf Of Ana Maria Bianchi [[log in to unmask]]
Sent: Saturday, June 08, 2013 12:29 AM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series

Roger Sandilands also employs the word "immoral" to refer to Hirschman's hiding hand principle, which I think he should not do, as historian of thought.

----- FIDEL AROCHE <[log in to unmask]> escreveu:
>

Dear all,
Roger Sandilands disaproves Raul Prebisch's contributions to economics on the grounds that Mr Prebisch was a "protectionist". It's sad to see that ideological motives are used as arguments against a man whose heterodox ideas proved to be so useful, even if so many blame him for phenomena beyond the scope of his work.

> I wonder also what's Mr Sandilands opinion about earlier contributors to development economics who advocate protectionism as well, on different grounds, such as Hamilton and continue to be heared by advocates of third party liberalism (never to be practised at home), such as the USA.

>
Regards
Fidel Aroche


2013/6/6 Roger Sandilands <[log in to unmask]<mailto:[log in to unmask]>>

I have to say that I am very lukewarm toward Oscar Ugarteche's suggestion of Raul Prebisch - and the main reason he gives (his influential support to ECLA for the kind of import substituting industrialisation protectionism that theAsian NIEs early rejected in favour of more outward-oriented policies that propelled them to much more rapid growth than in Latin America).

Likewise, one of my last choices would be Albert Hirschman (another protectionist and type of "structuralist" whose work in Colombia in the early 1950s was rightly opposed by the more thoughtful economists there, and whose ideas on backward and forward linkages, to be promoted through the (to my mind immoral) "principle of the hiding hand" -- the duping of investors into putting their money {not Hirschman's} into projects whose benefiits are deliberately exaggerated and whose true costs are concealed by civil servants).

Nevertheless, I respect Michele Alacevich's canvassing of Hirschman's name. His recent book, The Political Economy of the World Bank: The Early Years (Stanford UP, 2009) contains a very full description of Hirschman's bitter conflicts with Lauchlin Currie in Colombia, though perhaps with not enough insight into the relative depths of their economic visions, perseverance, and actual achievements.