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Leap into Modernity – Political Economy of Growth on the Periphery, 1943–1980

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Adam Leszczyński

This book describes struggles of different countries and their development after World War II. It presents a panorama of different ideologies of accelerated development, which dominated the world just before the war and in the next 40 years. The author explains why in the 1970s global and local elites began to turn away from the state, exchanging statism for the belief in the «invisible hand of the market» as a panacea for underdevelopment. He focuses not only on the genesis of underdevelopment, but also on the causes of popularity of economic planning, and the advent of neoliberalism in the discourse of development economics. This book evaluates the power of state as a vehicle of progress and focuses in detail on the Soviet Union, China, Poland, Ghana, Tanzania, and South Korea.

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Chapter 8

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Chapter 8

Truly important and significant hypotheses will

be found to have “assumptions” that are wildly inaccurate

descriptive representations of reality, and, in general, the

more significant the theory, the more unrealistic the as

sumptions (in this sense).

Milton Friedman, 1953911

“Until 1973 or thereabouts it was easy to be an optimist.”

Economist Robert Solow on the loss of faith in state

intervention in the economy during the 1970s
.

1.Malaise

Elites in peripheral countries believed for a number of reasons that the state could serve as a lever to pull their homelands out of backwardness and allow them to escape their peripheral status. Contributing to this belief was the experience of the Great Depression in the 1930s and the presumed success of planned economies (especially in the USSR), as well as economic theory, which had allotted the state a vital role in stimulating economic growth.

In the 1970s, elites in the poorest countries (now called “developing countries), economists involved in development, and international institutions providing aid to these countries, all quickly began to lose faith in the state and socialism. They now began placing their faith in the market, free trade and the free flow of capital. A number of factors led to this transformation: but its spiritual, intellectual and institutional roots can be traced back, like in the 1930s, to the West. Now, like then, the new ideology for promoting growth in developing countries had been born at the desks of Western intellectuals and in the universities and think-tanks of the world’s core states.

It is impossible to identify the exact date this process began. Its political starting point was the visible failure in the early 1970s of the Keynesian model for growth in the United States and Western Europe. But historian Kamran Dadkhah points to an even earlier date – 15 August 1971 – when U.S. President Richard ←301 | 302→Nixon proclaimed that the fight against rising inflation had become the main goal of economic policy.912 In his announcement, Nixon said:

One of the cruelest legacies of the artificial prosperity produced by war is inflation. Inflation robs every American, every one of you. The 20 million who are retired and living on fixed incomes – they are particularly hard hit. Homemakers find it harder than ever to balance the family budget. […] The time has come for decisive action – action that will break the vicious circle of spiraling prices and costs.913

Nixon imposed a 10 percent duty on imports, announced cuts in public spending and taxes, and suspended the convertibility of the dollar into gold, which he claimed was to protect the U.S. currency against attacks by speculators.

Keynesian economic policies assumed that increasing public spending would stimulate demand and help maintain full employment. The price for stimulating this demand was moderate inflation.914 An inverse relationship was thus believed to exist between the level of unemployment and inflation: a drop in inflation was supposed to lead to a rise in unemployment. In 1970, belief in this correlation began to waver, as unemployment and inflation rose in tandem – from three to six percent. Under the threat of strike, on 1 August 1970, the United Steelworks of America negotiated a three-year contract that included a 30 percent increase in wages. On 2 August, the United Transportation Union ended a long and economically costly strike after winning a wage increase totalling 42 percent over the course of a 42-month collective agreement.915

Nixon’s decision also meant in practice the dismantling of the monetary system established under the Bretton Woods Agreement in 1944, which had linked global currencies through a fixed exchange rate pegged to the dollar. Bretton Woods had ensured Western countries stable exchange rates during more than two decades of postwar economic growth.916 In the early 1970s, the United States began to record a trade deficit for the first time in its twentieth-century history. ←302 | 303→Currency devaluation under the Bretton Woods system was practically impossible. The price of gold rose, causing an outflow of gold (exchangeable for dollars at a fixed rate) from the U.S. The American move eventually led to a system of free-floating exchange rates, set by the market.917

The backdrop to these extraordinary decisions by Nixon was an economic recession in the U.S. (which ended in November 1970.) and upcoming Presidential elections. Economist Milton Friedman, who would soon gain fame as one of the main architects of the move away from Keynesianism in the 1970s, later recalled:

I had a session with Nixon sometime in 1970 … in which he wanted me to urge Arthur [Burns, FED chairman] to increase the money supply more rapidly [laughter] and I said to the President, “Do you really want to do that? The only effect of that will be to leave you with a larger inflation if you do get reelected.” And he said, “Well, we’ll worry about that after we get reelected.” Typical. So there’s no doubt what Nixon’s pleasure was.918

Nixon won the election. On the matter of inflation, however, Friedman had been right.

A prominent economist, Robert Solow, recalled twenty years later that until 1973 “it was easy to be an optimist”. In West Germany and the U.K., the unemployment rate remained at 1–3 percent, while inflation was “tolerable” in the range of 2–3.5 percent annually.919 However, tensions in the U.K.’s economy had been growing since the early 1970s: for example, in 1972 miners won large pay rises from the conservative government, but more than a million people were unemployed. In 1973, the U.K. trade deficit exceeded one billion pounds. Paradoxically, writes historian Kenneth R. Hoover, the Keynesian notion that the government should perform a regulatory role in the economy led the public to blame it for the country’s economic problems, regardless of their actual cause.920

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A surge in oil prices in 1973 set off by political events, in particular, the ArabIsraeli war, was a critical turning point. From that time onward, the West suffered a dramatic – in comparison with previous decades – deceleration in economic growth.921 Productivity in the major economies of the West slowed by half, while the inflation rate increased – exceeding 11 percent in the U.S. and 24 percent in the U.K. in 1974. Western countries would never return to the low unemployment levels of the 1960s.

Robert Solow looked for the genesis of the crisis and of “stagflation” – low growth combined with inflation – in the 1970s, not so much in the “oil shock” as in the policies of successive U.S. administrations during the previous decade. At the beginning of the 1960s, the economists employed in the Kennedy administration estimated that by stimulating demand, the unemployment rate in the U.S. could be reduced to 4 percent – and that any drop below that threshold carried the risk of inflation spiralling out of control.922 “Later research has tended to conclude that 4 per cent was half a percentage point (or maybe a bit more) too low,” wrote Solow. Meanwhile, massive spending on the war in Vietnam helped push the U.S. unemployment rate down to 3.5 percent in 1969. Solow commented:

Instead, the prosecution of the war in Vietnam was allowed to drive the unemployment rate to 3.8 per cent in 1966 and 1967, and then down to 3.5 per cent in 1969. This was not a result of miscalculation or inattention. It was straight politics. The war was becoming unpopular; protests and demonstrations were frequent and visible. Those who favoured the active prosecution of the war feared that a decision to finance the war by taxation would merely emphasize its costs and bring normally conservative elements of the population into opposition. Congress might have substituted cutbacks in Mr Johnson’s domestic programmes. Inflation seemed the preferable alternative.923

In retrospect, Solow placed blame for the troubles of the 1970s on a sudden drop in productivity in Western countries – which had grown at an unprecedented pace for almost three decades after the war.924“It made stagflation harder to deal with. The point I have in mind is easiest to see in connection with the adverse supply shock. One way or another the consequent loss of real income had to be shared out,” wrote Solow.925 Lower growth in productivity growth made macroeconomic ←304 | 305→policy much more difficult to execute, and meant that old solutions would no longer work: keeping inflation in check, for example, would require a much deeper recession, with higher unemployment than in previous downturns. Yet, while a lower rate of growth in productivity was clearly visible looking back 20 years later, Solow wrote in 1992, in the 1970s it had been easier to place blame on misguided macroeconomic policy.

The potential of the State to act as an engine of economic growth seemed to have exhausted itself in the Eastern bloc, as well: in the West it was no secret that economic growth had slowed markedly in the Soviet Union since the mid- 1960s, and that the entire socialist bloc was increasingly lagging behind in terms of technology.

2.The revolution of the neoliberals

Very important changes had been taking place since the late 1960s in economic theory, as well, and this could be seen on several levels. It had evolved both in terms of its methods – moving towards mathematical models – and its object of interest. Alternatives to faith in state intervention, planning and Keynesian “stimuli” had been under development since the 1950s in conservative thinktanks and by a few lonely economists, mainly those associated with the University of Chicago.

At the beginning, they were completely marginalized. As the famous American intellectual and literary critic Lionel Trilling wrote in 1950, “nowadays there are no conservative or reactionary ideas in general circulation.”926

In 1950, Friedrich August von Hayek was given a position as a professor on the Committee on Social Thought at the University of Chicago, where he remained until 1962 (he had been rejected by the Economics Department, and his salary was paid by a private sponsor, the Kansas-based Volker Fund).927 He was the author of a book published in 1944, The Road to Serfdom, a passionate defence of political and economic freedom in its classical liberal sense.928 In the book, Hayek rejected economic planning not only as irrational and inefficient, but also contrary to the principle of human freedom, and leading – step by step – to the political enslavement of the nation’s citizens (although he distinguished between ←305 | 306→“good” from “bad” planning without specifying exactly what this meant). In a highly emotional diatribe against “collectivism”, Hayek wrote:

What is called economic power, while it can be an instrument of coercion, is, in the hands of private individuals, never exclusive or complete control, never power over the whole life of a person. But centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery.929

The book was noticed, but received without enthusiasm.930 It was rejected by several publishers, and no one expected it would become a best seller.931 Keynes read it on the way to the conference in Bretton Woods, where he would act as one of the chief architects of the postwar economic order, and wrote to Hayek that it was a “grand book”: “I morally and philosophically find myself in agreement with virtually the whole of it”. At the same time, he added, some state intervention in economic life was necessary:

You admit here and there that it is a question of knowing where to draw the line. You agree that the line has to be drawn somewhere, and the logical extreme is not possible. But you give us no guidance whatever as to where to draw it.932

Hayek could not be fooled by such complements. Keynes, he said years later, still “believed that he was fundamentally still a classical English liberal and wasn’t quite aware of how far he had moved away from it. His basic ideas were still those of individual freedom. He did not think systematically enough to see the conflicts. He was, in a sense, corrupted by political necessity.”933

Hayek had great success as publicist with an abridged version of his book published in 1947 by the highly popular American magazine Reader’s Digest in an edition of one million copies.934 One of its readers was Anthony Fisher, a young war veteran who, having made a fortune raising chickens after the war, founded ←306 | 307→in 1955 an economic think-tank, the Institute of Economic Affairs.935 Its task was to promote free-market ideas.936 Thanks to such sponsors, in the 1970s, there was already a whole network of similar institutions in the U.S., including the Foundation for Economic Education (involved in reforming the teaching of economics in secondary schools and universities to reflect the values of classical liberalism), the American Enterprise Institute, the Cato Foundation and the Heritage Foundation, which provided economic and social analysis and played an active role in shaping public opinion.937

In 1947, Hayek was one of the main organizers of a conference in the village of Mont Pelerin, not far from the town of Vevey, Switzerland, where 39 intellectuals, mainly economists, but also philosophers and historians (among them were Karl Popper, Ludwig von Mises and Milton Friedman) established an association dedicated to the resurrection of neoliberal economic ideas and reintroducing them into political discourse.938 Four economists participating in the first meeting would late receive the Nobel Prize – Hayek, Milton Friedman, George Stigler and Maurice Allais. The participants prepared an ideological manifesto in which they wrote:

The central values of civilization are in danger. Over large stretches of the earth’s surface the essential conditions of human dignity and freedom have already disappeared. In others they are under constant menace from the development of current tendencies of policy. The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power.939

“The importance of that meeting”, Milton Friedman later recalled, “was that it showed us that we were not alone.”940

Hayek’s ideas – that the market’s spontaneous order was always better than a seemingly rational plan, and that behind the noble ideals of socialism and redistribution in fact lay oppression and misery, which led to his claim of “the ←307 | 308→fundamental immorality of all egalitarianism”941 – continued to circulate on the American right. One passionate reader of his work was Barry Goldwater, the radically conservative candidate for U.S. president in 1964, who lost the election, but whose campaign became the organizational nucleus of the modern American right. In 1974, Hayek received the Nobel Prize in economics. Although he shared it with an economist with leftist views, Gunnar Myrdal, it was a sign of the changing spirit of the times. Also in 1974 Conservative British politician Margaret Thatcher founded in the U.K. the Centre for Policy Studies, a think-tank dedicated to the popularization of extreme neoliberal views.942

Another great figure in the neoliberal, free-market revolution against the state’s involvement in the economy was Milton Friedman, an economist from Chicago (he received the Nobel Prize in 1976.). Friedman was not only the author of a new theory on the causes of inflation – which in his view had always been a political phenomenon induced by an excessive money supply, and thus de facto a product of government – but also an ideologue of neoliberalism: his 1962 book Capitalism and Freedom also drew attention on the marketplace of ideas, although it received a number of critical reviews.943 Over the years, nearly half a million copies were sold. In his Introduction to the 1982 edition, he noted that “the change in the climate of opinion” that had taken place mainly during the 1970s had been “produced by experience, not by theory or philosophy”:

Russia and China, once the great hopes of the intellectual classes, had clearly gone sour. Great Britian, whose Fabian socialism exercised a dominant influence on American intellectuals, was in deep trouble. Closer to home, the intellectuals, always devotees of big government and by wide majorities supporters of the national Democratic party, had been disillusioned by the Vietnam War, particularly the role played by Presidents Kennedy and Johnson. Many of the great reform programs – such guidons of the past as welfare, public housing, support of trade unions, integration of schools, federal aid to education, affirmative action – were turning to ashes. As with the rest of the population, their pocketbooks were being hit with inflation and high taxes. These phenomena, not the persuasiveness of the ideas expressed in books dealing with principles, explain the transition from the overwhelming defeat of Barry Goldwater in 1964 to the overwhelming victory of Ronald Reagan in 1980 – two men with essentially the same program and the same message.944

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In the writings of Hayek and Friedman, moral and political arguments against state intervention in the economy intertwined with economics. Democracy, wrote Friedman, was inseparable from private property and the free market. The decade of crisis in the 1970s provided fertile ground for this message: neoliberalism seemed to offer a real political alternative to current policies, which had evidently exhausted their potential. In Capitalism and Freedom, among those things the government should not be involved in, Friedman enumerated agricultural subsidies, import tariffs and export restrictions, production controls, setting a minimum wage, regulating companies (banks, in particular), subsidised housing, pensions and disability pensions, licenses to conduct economic activity, and consumption during peacetime and running national parks. “This list is far from comprehensive”, he added in conclusion.945 Only the natural order of market forces was compatible with prosperity, democracy and freedom.

In 1950, while working in Paris as a consultant for the American agency responsible for administering the Marshall Plan, Friedman wrote a memorandum in which he recommended abandoning the system of fixed exchange rates established six years earlier at Bretton Woods (devised in part by Keynes, who himself had lost a fortune trading currencies in the 1920s). Friedman wrote that the fear of “speculators” was completely irrational: “People who argue that speculation is generally destabilising seldom realize that this is largely equivalent to saying that speculators lose money, since speculation can be destabilising in general only if speculators sell when currency is low in price and buy when it is high.” As he put it years later, “It just seemed to me sensible that the only way you could make money was by buying low and sellinh high, and not the other way around. And if that’s the case, then people who destabilize the market lose their shirt, and so they aren’t going to be around for long.”946

This argument was presented without any empirical evidence: to Friedman it was obvious that the market, left to its own means, would return to a state of equilibrium, and was an effective economic instrument.

Friedman’s contribution to the neoliberal revolution of the 1970s went far beyond his ideological writings and monetary theory of inflation and market fluctuations (laid out in the 1960s in a monumental work co-written with Anna Schwartz, Monetary History of the United States, 1857–1960).947

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In a lecture delivered at the 80th annual meeting of the American Economic Association on 29 December 1967,948 Friedman questioned the “permanant tradeoff” between inflation and unemployment – an idea that had provided the justification for Keynesian economic ideas. Following the statistical surveys conducted by the New Zealand economist William A. Phillips, the results of which were published in 1958, it had been generally accepted that lower inflation was accompanied by higher unemployment, and this mechanism had come to be considered in both the U.S. and the U.K. as a scientifically established economic constant (represented by the so-called Phillips curve).949 Friedman introduced the concept of a “natural rate of unemployment”, characteristic for a given economy. Those steering economic policy could not know the real natural rate of unemployment, and any attempt to bring the unemployment rate below its natural level stimulated inflationary expectations. (This did not mean that political decisions had no influence on it: e.g., establishing a higher minimum wage raised the natural rate of unemployment because it no longer paid to hire the least productive workers).

Friedman’s message had a very practical political moral. Politicians could control the nominal money supply. Their control over the real economy however was in practice very limited and could easily do more harm than good. Friedman said that monetary authorities could not use their control of the money supply to control “real” phenomena– “the real rate of interest, the rate of unemployment, the level of real national income, the real quantity of money, the rate of growth of real national income, or the rare of growth of the real quantity of money.”950 Economic theory told Friedman the same thing as his moral and political convictions.951

Another economist, Edmund S. Phelps, arrived at very similar conclusions to Friedman’s at about the same time.952 More important than his strictly economic theories – which neither politicians nor the journalists who shaped public opinion necessarily understood – were his political conclusions. These were expressed ←310 | 311→using the same language economists were beginning to use to talk about the economy. In his memoirs, Phelps uses such phrases as “the economy can be blown off the natural path it has been following” or “the natural rate of unemployment.”953

Natural in economics meant what the market determines without state intervention. The latter is thus unnatural. This was the language of a new and promising radical break with the economic orthodoxy of the 1960s.

Unemployment was not caused by a lack of jobs, but was the result of decisions made by individuals; in an article from a collection edited by Phelps, the authors echo his claims, defining the unemployed as individuals “who regard the wage rates at which they could currently be employed as temporarily low, and who therefore choose to wait or search for improved conditions rather than invest in moving or changing their occupation”.954 People were unemployed because they found the working conditions available to them unattractive – unemployment was thus a matter of matching pay expectations to the realities of the labour market. Unemployment therefore did not result from a lack of demand for labour – all the unemployed could find jobs if they agreed to lower earnings.955

Another turning point in the evolution of economics was the theory of rational expectations formulated by Robert Lucas in 1972.956 Not only did he assume that unemployment was the result of a mismatch of expectations between the unemployed and the labour market, he developed this idea into theory in which such mismatches were the result of false expectations: if everyone could correctly predict the future, supply and demand in markets would remain in balance, and a state of full employment would be reached. The cause of fluctuations in employment, according to his model, were the unpredictable policies (especially monetary policies) of the state, because they caused rational market players to make mistakes in their forecasts – thus creating short-term fluctuations in ←311 | 312→production and employment. Lucas’ theory provided a much stronger argument against state intervention in the economy than the writings of Friedman and the monetarists.957 Lucas, a former student of Friedman’s, was aware of this. “For many of us, the shock wave of Friedman’s libertarian-conservative ideas forced a rethinking of our whole social philosophy,” he later recalled: “I tried to hold on to my New Deal politics, and remember voting for Kennedy in 1960 … But however we voted, Friedman’s students came away with the sense that we had acquired a powerful apparatus for thinking about economic and social questions.”958

In the new perspective of the 1970s, inflation acted on the economy like a stimulant whose effect was only temporary. Later, expectations of inflation are incorporated into the calculations of marketplace participants. In practice, Keynesian “stimuli” worked like a drug – increasing doses were need to achieve the desired effect, and its costs, in the form of inflation, rose.

In the late 1960s, the belief grew among a group of economists associated with the University of Chicago that the market was not only an instrument efficient, but a perfect one. Eugene Fama formulated a definition of an efficient market in relation to stock exchanges and equity prices: a “weak” understanding of market efficiencies meant that an investor could not attain a higher rate of profit than the average for the overall market based on an analysis of past trends; “semi-strong” efficiency meant that an investor could not beat the market based on publicly available information; “strong” efficiency meant that the market was so perfect that even investors with access to inside corporate information would not be able to outsmart it. Many economists from Chicago – including Fama – acknowledged this hypothesis, at least in its weakest form.959 The market represented collective, distributed wisdom that reacted instantly and adjusted perfectly to every swing in supply and demand; any state intervention in this mechanism was only a feeble attempt at manipulation, doomed to failure and by necessity harmful.

In 1974, Robert Barro added another argument to the already hefty arsenal available to opponents of state intervention in the economy, formulating a theory called “Ricardian equivalence”.960 The government, it said, could borrow to stimulate the economy, but rational investors knew that at some point it would have to repay this debt, and this repayment would require higher taxes in the future. According to the theory of rational expectations, the owners of capital would then ←312 | 313→invest in government bonds. The level of savings corresponded to the level of public debt. In this way, public spending “crowded out” private investment from the economy, and so the level of demand in the economy remained the same. This meant that government spending could not increase demand. In the case of an open economy open to capital flows from abroad, the mechanism worked similarly: repayment of debt required the sale of public assets to foreign investors, thereby reducing the revenue base of the government in the future and raising the prospect of future tax increases. The government could increase the deficit to stimulate the economy, but this would only be an illusion, and an expensive one at that (“the presence of government transaction costs implies that the net-wealth effect of government bonds would actually be negative,” Barro wrote).961

Economic orthodoxy had changed. In 1978, Robert Lucas and Thomas Sargent were already writing of “the spectacular failure of the Keynsian models”, which was unable, in their opinion, the anticipate the stagflation of the 1970s:

That these predictions were wildly incorrect, and that the doctrine on which they were based is fundamentally flawed, are now simple matters of fact, involving no novelties in economic theory. The task which faces contemporary students of the business cycle is that of sorting through the wreckage, determining which features of that remarkable intellectual event called the Keynesian Revolution can be put to good use, and which others must be discarded.962

3.Disillusionment with the Leviathan

The 1970s also brought increasing use of the market as a model – based on a vision of a society consisting of rational and calculating individuals, concerned primarily with benefitting themselves – rather than social phenomena. A pioneer in this field was Gary Becker (who, like Phelps, and Lucas, received a Nobel Prize in economics).963 Since the 1950s, he had been applying standard economic techniques to problems that were previously on the margins of interest in the discipline. Becker described e.g., the attitude of people towards the education system in the same way that companies invested in machines – education was an “investment ←313 | 314→in human capital”.964 Later he took up issues that had generally tended to interest sociologists – the issues of discrimination, marriage, divorce, and crime.965 In a widely-discussed essay about crime, he suggested that “a useful theory of criminal behavior can dispense with special theories of anomie, psychological inadequacies, or inheritance of special traits and simply extend the economist’s usual analysis of choice.”966 Man was a rational individual calculating profits, risks and loss: crime in Becker’s view was the result of rational – if not necessarily conscious – analysis.

In around 1960, several economists, in particular Mancur Olson, Gordon Tullock and James Buchanan, took up decision-making issues outside of the market – in a wide sphere of social behaviour that included, among others things, politics, including the behaviour of the bureaucracy, elections and lobbying.967 In the 1970s, public choice theory became an integral part of economics and had a huge impact on economic policy, because it often dealt with situations in which the government failed, because politicians and bureaucrats themselves acted primarily as individuals focused on individual economic advantage.968

In terms of peripheral and the poorest countries – known in the 1970s under the current nomenclature as “developing countries” – economic analyses of their mechanisms of power were essentially reports on corruption and increasing social differences between young elites and the rest of society. Government was apparently not a vehicle for growth, but merely a burden – very often, if not always. Since the state was the source of pensions and inefficiencies, it needed to reduce its impact on the economy as much as possible.

Since the early 1970s, the literature on “power to pensions” and corruption was rapidly growing. While in the 1950s, the phenomenon of mismanagement ←314 | 315→was given in practice no place in models of growth, it now assumed a dominant position.

A classic example of such an analysis was a very influential article by Anne O. Krueger of the American Economic Review in June 1974.969 Analysing, among other things, the examples of India and Turkey, Krueger evaluated the negative impact of restrictions on international trade on overall well-being. “The restrictions give rise to rents of a variety of forms, and people often compete for rents,” she wrote. The main source of inefficiency and costs to society for Krueger was the discrepancy between the private and social cost of various activities. The state was responsible for causing this division, e.g., by issuing import licenses from which well-connected business executives profited, while the rest of the population was forced to pay more for goods. Trade restrictions led to corruption, smuggling and the creation of a black market; all of these phenomena were profitable for those who took part in them, but they reduced the overall level of prosperity. Moreover, Krueger argued that the more the state intervened in the economy, the greater opportunity to obtain state benefits – legally and illegally – and the greater the overall losses: e.g., import licenses specifying the exact amount of goods that could be imported are much more costly from a social point of view than high tariffs.

The scepticism about the government’s role in the economy that had a lead role in this new theory and the sense of disappointment caused by the crisis resulted in new policy recommendations for peripheral countries. The turning point was a seminar in Houston, Texas, which took place on 3–5 February 1977. The participants were eminent economists actively involved in development.970 The atmosphere was sombre. There was a widespread feeling of disappointment in the achievements of the past three decades. Albert O. Hirschman enumerated the failures of development policy: growing social inequality, a lack of progress in the fight against poverty, overwhelming incompetence in the UN bodies charged with supporting development.

There are also the terrible facts of mass slaughter, expulsion of ethnic minorities (often entrepreneurial and therefore hated) and political opponents, imprisonment wihtout trial, torture and other violations of basic human rights, and the $370 billion spent on armaments, compared with $17 billion on net concessional transfers (in 1975).971

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The paper also contained a comprehensive list under the telling title “discarded ideas.” The ideas about how to achieve rapid economic development that had dominated in previous decades, Hirschman argued, had arisen in the wake of the perceived success of the Marshall Plan in Western Europe (and the success of planned economies). “The problem of development is, however, fundamentally different from the problem of reconstructing war-damaged advanced economies”, he wrote.972 Among the “discarded ideas” he included prioritizing industrialization and infrastructure, central economic planning, and the notion that the key to economic growth was high savings and investment rates. He noted: “It was found, however, that capital accounted for only a relatively small portion of growth, and that growth was not synonymous with development.”973

Thinking based on “foreign trade pessimism” was unjustified as was the belief that rapid increases in production indicated an increase in prosperity. The elites in developing countries underestimated the negative impact of rapid population growth and environmental devastation, and perceived Western aid from a very narrow perspective – as a source of capital and technology. Meanwhile, they should have been learning from developed countries how to conduct effective educational, monetary, regional, employment and trade policies. Hirschman said:

Policies were dominated by the reaction to colonialism. The governments of many newly independent states wanted to do what the colonial powers had neglected to do. This reinforced the desire for planning, for industrialization and for import substitution. It also fed the desire, after the achievement of political independence, for economic self-sufficiency. Latin American countries, which had been independent for a long time, felt that economic independence, which did not follow from political independence, was elusive.974

Moreover, international institutions such as the World Bank and the UN had overlooked the failures of this former strategy. The emphasis on the development of industrial production was abandoned in favour of an aim that seemed much less ambitious, namely ensuring a minimum level of existence in the poorest countries for millions of starving paupers, who were growing in numbers. Hopes for a “leap into modernity” and the structural modernization of society had turned out to be merely pipe dreams. More and more attention was now being paid to research on corruption and the informal sector.975 The world of the periphery had changed, ←316 | 317→but by no means in the direction suggested by the classical theory of modernization: its societies were not becoming more like those of the developed West in either structural or political terms.

The optimism of the 1960s gave way to pessimism. The Western world was in crisis, and tested and proven prescriptions for economic growth had ceased to provide results. Fears about population pressures, environmental destruction and the depletion of natural resources – which began to be voiced after the oil crisis in 1973 – were grounded in books like The Population Bomb, published by Paul Erlich in 1968, and a report released in 1972 by the Club of Rome that had been prepared by a group of Western intellectuals.976 It contained a description of the results of a computer simulation, which included five “trends of global concern”: “accelerating industrialization, rapid population growth, widespread malnutrition, depletion of nonrenewable resources, and a deteriorating environment.”977 The report foresaw reaching “the limits to growth […] within the next one hundred years” and predicted that the result would be a “sudden and uncontrollable decline in both population and industrial capacity.”978 It was not only the future that filled the authors with fear: some feared industrial civilization was on the brink of collapse as a result of the current global crisis, which they wrote represented a “complex of problems troubling men of all nations: poverty in the midst of plenty; degradation of the environment; loss of faith in institutions; uncontrolled urban spread; insecurity of employment, alienation of youth; rejection of traditional values; and inflation and other monetary and economic disruptions.”979

From this perspective, even the successes of development in recent decades did not seem convincing. The American economist Hollis Chenery wrote in a book published by the World Bank in 1974:

It is now clear that more than a decade of rapid growth in underdeveloped countries has been of little or no benefit to perhaps a third of their population … Paradoxically, while growth policies have succeeded beyond the expectations of the first development decade, the very idea of aggregate growth as a social objective has increasingly been called into question.980

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Although the economic goal of the United Nations’ “decade of development” – annual GDP growth exceeding 5 percent – had been achieved in many developing countries, this was accompanied by a sense of disappointment and the realization that prosperity remained a distant prospect, and that the price for this growth had been rising inequality. In 1971, Mahbub ul Haq, an expert at the World Bank, wrote:

In Pakistan, which increased a healthy growth rate during the 1960s, unemployment increased, real wages in the industrial sector declined by one third, per capita income disparity between East and West Pakistan nearly doubled, and concentratiosn of industrial wealth became an explosive economic and political issue. And in 1968, while the international world was still applauding Pakistan as a model of development, the system exploded – not only for political reasons, but for economic unrest. Brazil has recently achieved a growth rate close to 7 percent, but continuing maldistribution of income continues to threaten the very fabric of its society.981

Similar reflections were the order of the day. Soon, the World Bank felt compelled to declare that it “at no time embraced W. W. Rostow’s stage theory of development and the ‘takeoff into self-sustained growth.’”982 The death of modernization theory was thus officially announced. It joined the repertoire of “discarded ideas.”

The 1970s brought another important experiment in social policy. In September 1973, a military coup in Chile overthrew the democratically elected government of President Salvador Allende and replaced it with a military dictatorship led by a junta headed by Augusto Pinochet.

After the coup, a group of young Chilean economists trained at the University of Chicago, known as the “Chicago boys”, carried out a free-market revolution – necessitated by the inflation and economic chaos into which the country had been plunged toward the end of Allende’s rule.983 In 1955, Theodore W. Schulz, then Chair of Economics at the University of Chicago, travelled to Chile and signed an agreement with the Universidad Católica de Chile in Santiago for a select group of students to do postgraduate study in Chicago. Between 1955 and 1963 some 30 young Chileans took advantage of this opportunity, and were imbued with the ideas of Friedman and Hayek. Another result of this agreement was the creation of the Centro de Investigaciones Económicas, a research institute that regularly hosted visiting professors from Chicago. In the late 1960s, the alumni of both institutions began teaching economics in Chile. In 1968, they founded a private ←318 | 319→think-tank, Centro de Estudios Socio-Económicos, in which, among other things, they wrote a radical neoliberal electoral programme for Jorge Alessandri, the candidate of the Chilean right in the 1970 presidential election.984

The entire project, writes historian Juan Gabriel Valdés, was a carefully planned transfer of new political ideas to a peripheral country.985 Chile was supposed to be, as the project administrators from Chicago wrote in one report, a “laboratory” for creating a process that would make it possible to change the dominant thinking on the economy in the societies of peripheral countries.986 From their perspective, poverty and backwardness in Chile were the result of bad political decisions, as was the inflation that plagued the country. All that was required to deal with them was to unleash the forces of the free market and entrepreneurship.

The new government carried out a radical privatization of businesses previously nationalized by Allende and lowered import tariffs. It also established a fixed exchange rate pegged to the dollar. This shock therapy was meant to set in motion a radical Darwinian cleansing of the economy of inefficient companies. Under no circumstances would the State bail out failing companies. The right to strike was also drastically limited and labour unions dissolved (workers could organize only at the factory level). In addition, private individuals and businesses could borrow as much money as they wanted money from wherever they chose, including from abroad – this was their own business and responsibility. After a deep recession which lasted until 1976, Chile’s economy began to grow rapidly, with the average annual GDP growth rate exceeding 7.2 percent.987 Inflation fell (although it still exceeded 30 percent in 1980), and real wages grew at a rate of 9 percent annually.988

Two apostles of neoliberalism – Hayek and Friedman – supported Pinochet’s reforms, although they distanced themselves from the crimes of his regime, which was extremely repressive.989 The irony of the situation in which neoliberal ←319 | 320→economic principles were put into practice by a dictatorship that had to answer for the deaths of at least several thousand people seemed to long remain unnoticed by them.990 Under the pressure of propaganda about this “economic miracle” it was also easy to overlook the rapidly widening social divisions.991 While in 1969, the top 20 percent of society received 43.2 percent of total earnings, in 1978 this number had reached 58.2 percent.992 Soon the pension system was changed (Chileans were to set aside money individually for retirement in private accounts) and a system of vouchers was introduced for educational services (in place of a system of free public education).993

Friedman met with Pinochet in 1975 to advise him on economic matters. Hayek admired Pinochet’s Chile so much that he decided to hold a meeting of his Mont Pelerin Society in Viña del Mar, the seaside resort where the coup against Allende had been planned.994

In 1978, Friedman wrote a famous letter to the London Times, in which he argued that “I have not been able to find a single person even in much maligned Chile, who did not agree that personal freedom was much greater under Pinocheta than it had been under Allende.”995

Later, Friedman added in a letter to Newsweek that “despite my sharp disagreement with the authoritarian political system in Chile, I do not regard it as an evil for an economist to render technical economic advice to the Chilean government”. He did so, he said “to help end the plague of inflation,” which was just as much an act of humanitarian aid as a doctor helping to fight an epidemic.996

The economic miracle turned out to be short-lived. In 1982, Chile was plunged once again into crisis. The global recession caused the price of the country’s main export commodity – copper – to fall by a third. The resulting foreign trade deficit proved untenable at the peso’s fixed exchange rate (the decision to maintain the ←320 | 321→fixed exchange rate was later seen as a serious mistake and the main cause of the crisis). Households which had taken out huge loans during the consumer boom and were now unable to pay them back. In 1983, GDP fell by 15 percent, industrial production declined by 20 percent, and unemployment reached 30 percent. Private financial institutions suffered losses that on average exceeded capital reserves by two-fold.997 The government was forced to take over so many banks that people began calling the period “the Chicago road to socialism”.998 Friedman wrote then that the regime would be unable to cope with the economy until it also provided its citizens with political freedom.

Yet the negative consequences of the neoliberal reforms long remained in the shadow of the obvious economic successes of the Pinochet government. Perhaps they had to go unnoticed, just as it was easy in the 1930s and 1940s to ignore the high social costs of planned economies, and in the 1960s to rave about the achievements of Mao’s China.

Only incorrigible idealists on the left still believed in the efficacy of a staterun economy. Well-known economist Joan Robinson, whose theoretical writings were considered to be within the Keynesian mainstream, was just ending her fascination with Maoism. She wrote in a book review on the economic successes of communist North Korea: “Obviously, sooner or later the country must be reunited by absorbing the South into socialism.”999

The “climate of opinion” (in the words of Milton Friedman) or “structure of feeling” (in the words of the literary critic Raymond Williams) had changed, and with this change in attitudes, came changes in policy.1000 In 1979, Margaret Thatcher won the elections in the U.K. under the banner of a return to a “true” free-market and reducing the power of the unions. In 1980, conservative neoliberal Ronald Reagan was elected U.S. President. Yet, even earlier, the Carter administration had begun deregulating many sectors of the U.S. economy, and the fight against inflation had become a priority – even at the cost of recession and unemployment.1001 In 1979, the Islamic revolution of Ayatollah Khomeini overthrew the authoritarian and secular government of the Shah in Iran, which ←321 | 322→had long been the model for modernization in the Middle East.1002 In 1979, Senegal was the first country in Africa to receive a bail-out loan from the World Bank and the International Monetary Fund – and under their pressure began a program of structural reforms in the spirit of neoliberalism.1003 Since the late 1970s, Poland had been in continual crisis, deepened further by the Solidarity revolution, which exposed the weaknesses of its socialist-style planned economy and the illusory nature of Gierek’s “economic miracle”.

The 1970s in fact brought a challenge to the entire modernist vision of the world – from architecture to industrial policy. State economic planning had been a product of the same era as the geometrical, rationally planned modern blocks of flats built in “housing factories” that were now becoming a thing of the past. In a famous essay written in 1977, historian and architecture critic Charles Jencks assigns a place and date for this “death of modernism”: “Modern Architecture died in St. Louis, Missouri on July 15, 1972 at 3.32 p.m. (or thereabouts) when the infamous Pruitt-Igoe scheme, or rather several of its slab blocks, were given the final coup de grace by dynamite […] Boom, boom, boom.”1004

The housing estate about which he was writing had been rejected by its residents and become a nest of crime and pathology; devastated and abandoned – it was ultimately blown up.

The idea that you could schedule people’s lives rationally and centrally – including what they would eat, where they would live, what their professional and family life would be like from cradle to grave – proved to be a utopia. The geometrically planned state-run villages in Tanzania were no less a failure than Pruitt-Igoe in St. Louis. But at least they could be dismantled without the use of dynamite.


911 M. Friedman, “The Methodology of Positive Economics”, [in:] Essays in Positive Economics, Chicago 1966, p. 14.

912 K. Dadkhah, Evolution of Macroeconomic Theory and Policy, Berlin–Heidelberg 2009, p. 117 ff.

913 Quoted in Public Papers of the Presidents of the United States, Richard Nixon, 1971, General Services Administration, National Archives and Records Service, Office of the Federal Register, Washington 1972, p. 888.

914 E. K. Hunt, M. Lautzenheiser, History of Economic Thought. A Critical Perspective, Armonk 2011, p. 465.

915 K. Dadkhah, Evolution of Macroeconomic Theory…, op. cit., p. 119.

916 M. D. Bordo, The Bretton Woods International Monetary System: An Historical Overview, NBER Working Paper no. 4033, March 1993, http://www.nber.org/papers/w4033, reprinted in A Retrospective on the Bretton Woods System, eds. M. D. Bordo, B. Eichengreen, Chicago 1993, pp. 3–98; and B. Eichengreen, Global Imbalances and the Lessons of Bretton Woods, NBER Working Paper no. 10497, May 2004.

917 A. Rose, A Stable International Monetary System Emerges: Bretton Woods. NBER Working Paper no. 12711; J. Mills, A Critical History of Economics, Houndmills–New York 2002, p. 31.

918 Interview with Milton Friedman from 2 May 2000, [in:] Inside the Economist’s Mind. Conversations with Eminent Economists, eds. P. A. Samuelson, W. A. Barnett, Malden–Oxford 2007, p. 116.

919 R. Solow, “Did Policy Errors of the 1960s Sow the Seeds of Trouble in the 1970s?”, [in:] The Legacy of the Golden Age. The 1960s and Their Economic Consequences, eds. A. Cairncross, F. Cairncross, London–New York 2003, p. 159.

920 K. R. Hoover, Economics as Ideology. Keynes, Laski, Hayek and the Creation of Contemporary Politics, Lanham–Oxford 2003, p. 200.

921 M. Olson, “The Productivity Slowdown, the Oil Shocks, and the Real Cycle”, Journal of Economic Perspectives, 1988, vol. 2 no. 4.; W. Nordhaus, Retrospective on the 1970s Productivity Slowdown, NBER Working Paper no. 10950, December 2004.

922 R. Solow, “Did Policy Errors…”, op. cit., p. 163.

923 Ibid.

924 Cf. W. Nordhaus, Retrospective on the 1970s…, op. cit.

925 R. Solow, “Did Policy Errors…”, op. cit., p. 170.

926 L. Trilling. The Liberal Imagination. New York 2008 [1950], p. xv.

927 J. Burns, Goddess of the Market. Ayn Rand and the American Right, Oxford–New York 2009, p. 103–104.

928 F. A. von Hayek, The Road to Serfdom. Text and Documents. The Definitive Edition, ed. B. Caldwell, Chicago–London 2007 [1944].

929 Ibid., p. 116.

930 Cf. B. Caldwell, “Introduction”, [in:] F. A. von Hayek, The Road to Serfdom, op. cit., pp. 1–22; M. Lane, “The Genesis and Reception of The Road to Serfdom”, [in:] Hayek: A Collaborative Biography. Part 1 Influences, from Mises to Bartley, ed. R. Leeson, Houndmills–New York 2013. pp. 43–60.

931 K. Phillips-Fein, Invisible Hands. Conservative Movement from the New Deal to Reagan, New York 2009, p. 41.

932 Quoted in F. A. Hayek, The Road to Serfdom…, op. cit., pp. 23–24.

933 Interview with Thomas W. Hazlett from 1977 originally published in The Reason, July 1992, http://reason.com/archives/1992/07/01/the-road-from-serfdom.

934 K. R. Hoover, Economics as Ideology…, op. cit., p. 202.

935 Cf. Think Tanks & Civil Societies. Catalysts for Ideas and Action, eds. J. G. McGann, R. K. Weaver, New Brunswick 2009, p. 112 ff.

936 R. E. Backhouse, The Puzzle of Modern Economics. Science or Ideology?, Cambridge– New York 2010, pp. 140–141.

937 K. R. Hoover, Economics as Ideology…, op. cit., pp. 206–207.

938 G. L. Schneider, The Conservative Century. From Reaction to Revolution, Lanham–New York 2009, p. 42.

939 D. T. Critchlow, The Conservative Ascendancy: How the GOP Right Made Political History, Cambridge, Mass. 2007, p. 16.

940 G. H. Nash, The Conservative Intellectual Movement in America Since 1945, Wilmington 2006, p. 34.

941 F. A. von Hayek, New Studies in Philosophy: Politics, Economics and the History of Ideas, London 1978, p. 157.

942 K. R. Hoover, Economics as Ideology…, op. cit., p. 208.

943 W. Ruger, J. Meadowcroft, Milton Friedman, London 2011, p. 173.

944 M. Friedman, Capitalism and Freedom, Chicago–London 2002, p. xiii.

945 Ibid., pp. 35–36

946 J. Fox, The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street, New York 2009, pp. 92–93.

947 M. Friedman, A. Schwartz, A Monetary History of the United States, 1867–1960, Princeton 1963.

948 M. Friedman, “The Role of Monetary Policy”, The American Economic Review, vol. 58, no. 1, March 1968.

949 A. W. Phillips, “The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957”, Economica, vol. 25, no. 100, November 1958.

950 M. Friedman, “The Role of Monetary Policy…”, op. cit.

951 M. De Vroey, “Getting Rid of Keynes? A Reflection on the Recent History of Macroeconomics”, [in:] Keynes’s General Theory After Seventy Years, eds. R. W. Dimand, R. A. Mundell, A. Vercelli, Houndmills–New York 2010, p. 172.

952 E. S. Phelps, “Money-Wage Dynamics and Labor-Market Equilibrium”, Journal of Political Economy, vol. 76, no. 4, 1968.

953 E. S. Phelps, Recollections of My Past Research in Economics. Speech on the Award of an Honorary Professorship, Beijing Technology and Business University, Beijing, 1 June 2005, http://www.columbia.edu/~esp2/BeijingTechAndBusUniversity2005D4.pdf.

954 Lucas, R. E. and L. A. Rapping, “Real Wages, Unemployment, and Inflation”, [in:] Microeconomic Foundations of Employment and Inflation Theory, eds. E. Phelps, et al., New York 1970, p. 285. Cf. also R. Leeson, The Eclipse of Keynesianism: The Political Economy of the Chicago Counter-Revolution, Houndmills–New York 2000; R. Leeson, “The Political Economy of the Inflation-Unemployment Trade-Off”, History of Political Economy, vol. 29, no. 1, 1997.

955 R. E. Backhouse, The Puzzle of Modern Economics…, op. cit., pp. 130–131.

956 R. E. Lucas, “Expectations and the Neutrality of Money”, Journal of Economic Theory, vol. 4, no. 2, 1972.

957 R. E. Backhouse, The Puzzle of Modern Economics…, op. cit., p. 131.

958 Quoted in J. Fox, The Myth of the Rational Market…, op. cit., p. 94.

959 J. Fox, The Myth of the Rational Market…, op. cit., p. 101.

960 R. Barro, “Are Government Bonds Net Wealth?”, Journal of Political Economy, no. 82, 1974.

961 R. J. Barrow, “Are Government Bonds Net Wealth”, Journal of Political Economy, vol. 82, no. 6, 1974, p. 1097.

962 R. E. Lucas, T. J. Sargent, “After Keynesian Macroeconomics”, [in:] Rational Expectations and Econometric Practice, vol. 2, eds. R. E. Lucas, T. J. Sargent, Minneapolis 1981, p. 295.

963 Becker in 1992, Lucas in 1995, Phelps in 2006.

964 G. S. Becker, “Investment in Human Capital: A Theoretical Analysis”, Journal of Political Economy, vol. 70, no. 5, October 1962; cf. also G. S. Becker, Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Chicago 1983.

965 Cf., e.g. G. S. Becker, The Economics of Discrimination, Chicago 1971; G. S. Becker, The Economic Approach to Human Behavior, Chicago 1976; G. S. Becker, H. G. Lewis, “On the Interaction between the Quantity and Quality of Children”, Journal of Political Economy, vol. 81, no. 2, 1973; G. S. Becker, A Treatise on the Family, Cambridge 1981.

966 G. S. Becker, “Crime and Punishment: An Economic Approach”, [in:] Essays in the Economics of Crime and Punishment, ed. G. S. Becker, Minneapolis 1974, p. 2

967 Cf. Teoria wyboru publicznego. Wstęp do ekonomicznej analizy polityki, ed. J. Wilkin, Warszawa 2005; L. Filipowicz, K. Opawski, “Teoria wyboru publicznego: wybrane koncepcje badawcze”, Ekonomista, no. 3, 1992; Elementy teorii wyboru społecznego, ed. G. Lissowski, Warszawa 2001.

968 Cf. Mancur Olson and Ronald Wintrobe’s analysis of Stalinist dictatorship in Chapter 3.

969 A. O. Krueger, “The Political Economy of the Rent-Seeking Society”, The American Economic Review, vol. 64, no. 3, June 1974.

970 Toward a New Strategy for Development: a Rothko Chapel Colloquium, ed. A. O. Hirschman, Oxford 1979.

971 Ibid., p. 46.

972 Ibid.

973 Ibid.

974 Ibid., p. 47.

975 E. Thornbecke, “The Evolution of the Development Doctrine, 1950–2005”, [in:] Advancing Development. Core Themes in Global Economics, eds. G. Mavrotas, A. Shorrocks, Houndmills–New York 2007, p. 11.

976 P. R. Erlich, Population Bomb, London 1971; D. H. Meadows, et al., The Limits to Growth, Penguin Books, New York 1972.

977 D. H. Meadows, et al., Limits to Growth, op. cit., p. 21.

978 Ibid., p. 23.

979 Ibid., p. 10.

980 Quoted in R. E. Wood, From Marshall Plan to Debt Crisis. Foreign Aid and Development Choices in the World Economy, Berkeley–Los Angeles 1986, p. 197.

981 Quoted in Ibid., p. 198.

982 Ibid., op. cit., p. 199.

983 P. E. Sigmund, The Overthrow of Allende and the Politics of Chile, Pittsburgh 1980, p. 283.

984 P. Silva, In the Name of Reason. Technocrats and Politics in Chile, University Park 2008, pp. 148–149.

985 J. G. Valdés, Pinochet’s Economists: The Chicago School of Economics in Chile, Cambridge 1995, pp. 127–128.

986 Ibid., p. 130.

987 Ibid., p. 27.

988 P. Meller, Un Siglo de Economia Política Chilena (1890–1990), Santiago 1998, pp. 196–198.

989 Cf. A. Rouquié, “The Military in Latin American Politics Since 1930”, [in:] Latin America. Politics and Society since 1930, ed. L. Bethell, Cambridge–New York 1998, pp. 170–171.

990 L. H. Oppenheim, Politics in Chile. Democracy, Authoritarianism and the Search for Development, Boulder 1999, p. 141.

991 V. Valdivia Ortiz de Zárate, El Golpe Después Del Golpe: Leigh vs. Pinochet: Chile 1960–1980, Santiago 2003, p. 136.

992 L. H. Oppenheim, Politics in Chile…, op. cit., p. 147.

993 S. Haggard, R. R. Kaufman, Development, Democracy and Welfare States. Latin America, East Asia and Eastern Europe, Princeton–Oxford 2008, p. 108.

994 C. Robin, The Reactionary Mind. Conservatism from Edmund Burke to Sarah Palin, Oxford–New York 2011, p. 74.

995 L. Manzetti, Neoliberalism, Accountability, and Reform Failures in Emerging Markets, University Park 2009, p. 250.

996 M. Friedman, R. D. Friedman, Two Lucky People. Memoirs, Chicago 1998, p. 596.

997 J. G. Valdés, Pinochet’s Economists…, op. cit., p. 29. Cf. also P. O’Brien, J. Roddick, Chile: The Pinochet Decade: The Rise and Fall of the Chicago Boys, New York 1983.

998 D. Yergin, J. Stanislaw, Commanding Heights…, op. cit., p. 240.

999 M. S. Turner, Joan Robinson and the Americans, Armonk 1989, p. 92.

1000 J. Higgins, Raymond Williams: Literature, Marxism and Cultural Materialism, Abingdon–New York 1999, p. 37.

1001 W. C. Biven, Jimmy Carter’s Economy. Policy in the Age of Limits, Chapel Hill–London 2002, p. 237 ff.

1002 Cf. e.g. The Making of Modern Iran. State and Society under Riza Shah, 1921–1941, ed. S. Cronin, London–New York 2003.

1003 N. van de Walle, African Economies and the Politics of Permanent Crisis, 1979–1999, Cambridge–New York 2001, p. 1.

1004 C. Jencks, The Story of Post–Modernism, Chichester 2011, p. 27.