The New Developmentalism and Conventional Orthodoxy
Bresser-Pereira, Luiz Carlos, Ibero-americana
After the failure of the neo-liberal policies prescribed by rich nations to promote macroeconomic stability and development, Latin America has become home to a clear movement for rejecting "conventional orthodoxy". Does this mean that today more developed countries, with sounder democracies, should return to the national-developmentalism of the 1950s, which was so successful in promoting development, but eventually became distorted and plunged into a crisis? Or might we consider a "new developmentalism"? In this paper, after examining the crisis of the national development strategy that was old developmentalism, I compare the rising new developmentalism with its earlier version, as well as with the set of diagnoses and policies rich nations have prescribed and pushed to developing countries since the neo-liberal ideological wave became prevalent worldwide: conventional orthodoxy. In the first section, I discuss old developmentalism, its initial success and becoming, outdated due to a series of new facts and distortions, and its replacement with conventional orthodoxy since the late 1980s. In the second section I discuss new developmentalism as a "third discourse" lying between the bureaucratic left wing's populism and the neo-liberalism of conventional orthodoxy. In the third section, I discuss the importance of the concept of nation and of the "national development strategy" institution. In the fourth section, I compare new and old developmentalism. In the fifth, I compare it with conventional orthodoxy. In the sixth section, I complete the comparison, presenting two pairs of alternative policy "tripods": the first pair opposing conventional orthodoxy and new developmentalism on economic growth, and the second, opposing the two strategies on macroeconomic policy.
II. THE OLD DEVELOPMENTALISM AND ITS CRISIS
Between the 1930s and the 1970s, Brazil and the remaining Latin American countries grew at an extraordinary pace. They took advantage of the weakening of the center to formulate national development strategies that, in essence, implied protection of the infant national industry and the forced promotion of savings through the State. This strategy was called "developmentalism", or "national-developmentalism". The purpose of such a name was to emphasize that, first, the policy's basic objective was to promote economic development, and, second that in order for this to happen, the nation - that is, businessmen, State bureaucracy, middle classes and workers joined together in international competition - needed to define the means to reach this objective within the framework of the capitalist system, with the State as principal collective action instrument. The notable economists that, then, studied development and made economic policy proposals, the politicians, government officials and businessmen that were most directly involved in this process were called "developmentalists" because they chose development as the ultimate goal for their economic analysis and political action. Latin-American economists who, together with a group of international economists, took part in formulating "development economics" were affiliated with three complementary schools of thought: the classical economics of Smith and Marx, Keynesian macroeconomics, and the Latin-American structuralist theory.1 Developmentalism was not an economic theory, but a national development strategy. It employed economic theories to formulate, for each country in the capitalist periphery, a strategy capable of gradually leading to the development level attained by central countries: market-based theories, for there is no economic theory that does not spring from the markets, but also political economy theories that cast the state and its institutions in a leading role as auxiliary coordinator of the economy. Developmentalism faced opposition from neo-classical economists that practiced "conventional orthodoxy" -that is, the set of diagnoses and economic policies and institutional reforms that rich, or Northern, nations prescribed to developing, or Southern, countries. …