The unfolding of neoliberalism in academic economics: a case study of Colombia

Morris A. Copeland's work and career as an institutional economist has been the subject of only one significant paper (Millar 1980) and is not well known today, even among institutionalists. The standard histories of institutional economics have tended to focus on a few leading figures, notably Thorstein Veblen, Wesley C. Mitchell, John R. Commons, and Clarence Ayres, and have largely ignored the many others (some of whom had outstanding careers) associated with the movement. This narrow focus has given a misleading impression both of the institutionalist movement itself and also of the nature of the institutionalist contribution to economics. The examination of Copeland's career, treated as a case study in the history of institutional economics, can help correct this problem. Copeland is a perfect candidate for such a case study due to his central place within the interwar institutionalist movement, his teachers, the contacts he maintained, his work in both academic economics and in public service, and his professional standing within economics more generally.

Macroeconometric models, in many ways the flagships of the economist's profession in the 1960s, came under increasing attack from both theoretical economist and practitioners in the late 1970s. Critics referred to their lack of microeconomic theoretical foundations, ad hoc models of expectations, lack of identification, neglect of dynamics and non-stationarity, and poor forecasting properties. By the start of the 1990s, the status of macroeconometric models had declined markedly, and had fallen completely out of, and with, academic economics. Nevertheless, unlike the dinosaurs to which they often have been likened, macroeconometric models have never completely disappeared from the scene. This book describes how and why the discipline of macroeconometric modelling continues to play a role for economic policymaking by adapting to changing demands, in response, for instance, to new policy regimes like inflation targeting. Model builders have adopted new insights from economic theory and taken advantage of the methodological and conceptual advances within time series econometrics over the last twenty years. The modelling of wages and prices takes a central part in the book as the authors interpret and evaluate the last forty years of international research experience in the light of the Norwegian 'main course' model of inflation in a small open economy. The preferred model is a dynamic model of incomplete competition, which is evaluated against alternatives as diverse as the Phillips curve, Nickell-Layard wage curves, the New Keynesian Phillips curve, and monetary inflation models on data from the Euro area, the UK, and Norway. The wage price core model is built into a small econometric model for Norway to analyse the transmission mechanism and to evaluate monetary policy rules. The final chapter explores the main sources of forecast failure likely to occur in a practical modelling situation, using the large-scale nodel RIMINI and the inflation models of earlier chapters as case studies.

In the early 1960s, the agricultural economist Theodore W. Schultz issued a critical assessment of the prevailing tenets of development economics in Transforming Traditional Agriculture. Aimed at educated bureaucrats rather than academic economists, he proposed no new development theories. Instead, he drew inferences from statistics in case studies to argue that no special economic theory was required in the development space. He packaged these studies as statistical parables to provoke skepticism of development theory among those involved in direct technical assistance in developing countries. Drawing partly on their long experience with US and Soviet agricultural modernization, Schultz and members of his agricultural economics group at the University of Chicago used suggestive empirical evidence to stress the importance of investment in human capital in economic growth. By appealing to government administrators in both the United States and developing countries, Schultz helped shift development policies toward state-supported technical assistance, public education, and market-oriented policies for the agricultural sectors in the global South.

Nothing affects the modern economy (and society) more than decisions made in the market place, especially, but not only, decisions made by consumers. Although it is not startling to suggest that decisions made in production are affected by choices consumers make, consumers have long been viewed, not only by academic economists, as individual, isolated rational actors that make or refrain from purchases purely on the basis of narrow financial considerations. Markets are not and never were morally neutral. Market relations have always had an often taken-for-granted moral underpinning. The moralization of the markets refers to the dissolution and replacement of the conventional moral underpinnings of market conduct, for example, in the music market, financial markets, and corporate governance. It further implies not only the heightened importance of new ethical precepts, but the significant change in the role of moral ideals in market behavior. These profound transformations of economic conduct are accompanied and co-determined by societal conflicts. The moralization of markets represents thus a new stage in the social evolution of markets. The book is divided into four parts, in which the twelve chapters, written by contributors from different social science disciplines, deal with the context of the moralization of the markets; the major social institutions; and present case studies that examine European and American attitudes and behavior towards tobacco and GMO; expansion of the private and ethics in business; and how workers respond to the new corporate norms. This volume will be of interest to sociologists, economists, social scientists, and the general consumer alike.

According to Professor Walter Korpi the Swedish economy would be in better shape if leading politicians had paid less attention to the advice from an influential group of Swedish academic economists allegedly hostile to the welfare state. Their claim that high taxes and extensive social security programmes have strong adverse effects on aggregate economic performance rested on a politically biased reading of comparative international data. In purporting to show that Sweden had fallen behind other comparable countries (the 'sclerosis diagnosis'), they set the stage for cutbacks in the welfare state, and a major tax reform involving substantially lower marginal tax rates.' Apart from creating inequality at a negligible gain in efficiency, the very same reforms may also explain why Sweden ran into a macroeconomic tailspin in the early I 990s. Rather than an instructive case study of the ultimate consequences of a long-term obsession with income equality and social protection, the exceptional economic crisis can be traced to severe macroeconomic policy blunders. The views of Professor Korpi are quite familiar for anyone that has followed the Swedish debate over the last decade. Supporters of the welfare state applaud Professor Korpi for revealing the ideological bias underlying the evidence presented in support of the sclerosis diagnosis. Some Swedish economists rather thank of him as a modern day Don Quixote, eager to pick a fight with imaginary villains. Being a Swede, and a professor of economics, I can hardly claim the status of an impartial observer. I certainly believe that Harberger triangles convey information, and I am convinced that most of the recently implemented reforms make sense. Nevertheless, I believe that Professor Korpi raises important issues. Many of the accusations made against the welfare state, in Sweden and elsewhere, rest on evidence which does not survive normal academic scrutiny. In their capacity as policy advisors, academic economists far from always live up to the standards of the seminar room. Speculation and sweeping generalisations are poor substitutes for facts and empirical investigations. Like Professor Korpi, I doubt that very important insights on the harmfulness of the welfare state can be gained from comparative aggregate data. Over the period I970-90, Swedish economic growth was below the OECD-average. At the same time the public sector was very large. However,

Reviewed by: Regional Integration and Trade Liberalization in Subsaharan Africa. Volume 3, Regional Case-Studies, and: Regional Integration and Trade Liberalization in Subsaharan Africa. Volume 4, Synthesis and Review James Cobbe Oyejide, Ademola, Ibrahim Elbadawi, and Stephen Yeo, eds. 1999. Regional Integration and Trade Liberalization in Subsaharan Africa. Volume 3, Regional Case-Studies. London: MacMillan; New York: St Martin's. 323 pp. Oyejide, Ademola, Benno Ndulu, and David Greenaway, eds. 1999. Regional Integration and Trade Liberalization in Subsaharan Africa. Volume 4, Synthesis and Review. London: MacMillan; New York: St Martin's. 167 pp. These two volumes are the final ones in a series of four reporting the results of the collaborative project on the topic sponsored by the African Economic Research Consortium (AERC) and other institutions. Earlier volumes reported on conceptual and methodological issues, and country experiences, respectively. These two provide analysis of six regional integration schemes in Africa, and overall summary and discussion, respectively. Both volumes are very valuable, and should serve as very useful references for students and researchers; it is to be hoped that they will find their way into many libraries, although at the official price it is unlikely that many African universities will think them good value for their money. The AERC project brought together a mix of economists from outside the continent who had African experience, and some of the best academic economists at African universities, and gave them the support of meetings and conferences to improve their initial drafts. In general, the outcome, as reflected in these volumes, has been very good, and the published papers here give good and accessible surveys of their subject matter. The only problem is that the time lag between the research project and publication of these volumes has been so long that they are now mostly of historical and academic interest; they are far too dated to be influential for policy. Volume Three, covering regional cases, consists of eight chapters. After an introduction and overview by the editors, there are studies of six [End Page 201] integration schemes: ECOWAS, CEAO, and UEMOA, UDEAC, an overview of Eastern and Southern Africa, SACU, and SADC. The final paper, which is a bit of an orphan, is a theoretical discussion of the economic welfare impact of illegal cross-border trade in the context of liberalization of legal trade and monetary integration. The six regional case studies are, of course, somewhat uneven, as are the schemes examined, but they are in general well written. The greatest criticism of most of them is that they appear to have been drafted quite a long time ago, and not updated since. For example, the piece on ECOWAS, written by a three person team from the Universities of Ghana, Ibadan, and Nigeria, is very well done, but all data stop in 1992 (and are incomplete for that year), and the most recent reference is from 1994 (by one of the authors). In fact, in the whole book there is only one reference dated "1996," (to an AERC mimeo) and a handful dated "1995." The internal evidence strongly suggests the papers were drafted by 1995, and were not substantially altered thereafter. How a four-year lag between writing and publication can be explained by such a well-funded organization as the AERC is somewhat of a mystery. In Volume Four, the lag is made almost explicit by multiple references to the papers in earlier volumes with 1999 dates, but no other references later than 1995! It is somewhat surprising that the introductory chapters in neither volume make reference to this publication delay, nor provide any explanation. In Volume Three, the two most substantial and useful papers in this reviewer's mind are those on UDEAC, by a team from Laval, and on SACU, by Gavin Maasdorp and Ngila Mwase. Both are thorough, cover the extant literature through 1995, and contain solid analysis. The other papers are generally more lightweight, although the piece on smuggling, by Jean-Paul Azam (of Toulouse), is a very nice example of how far one can go on a real-world problem with very straightforward and simple analytic tools, and clear reasoning, which could be very stimulating to students. Volume Four really...

This chapter makes the academic, educational, practical and political case for pluralism in economics. It uses case studies of macroeconomics, the environment and inequality, to demonstrate that academic economics must open up to new ways of thinking.

As is the case with Walton Hamilton, Morris A. Copeland's work and career has been the subject of relatively little discussion and is not well known today, even among institutionalists. As noted in earlier chapters, the standard histories of institutional economics have tended to focus on a few leading figures, notably Thorstein Veblen, Wesley C. Mitchell, and John R. Commons, and have largely ignored the many others (some of whom had outstanding careers) associated with the movement. This narrow focus has given a misleading impression both of the institutionalist movement itself and also of the nature of the institutionalist contribution to economics. Along with the previous chapter on Hamilton, this examination of Copeland's career helps correct this problem. Copeland is a perfect candidate for such a case study owing to his central place within the interwar institutionalist movement, his teachers, the contacts he maintained, his work in both academic economics and in public service, and the professional standing he achieved within economics generally. Copeland's career reveals a great deal about how the ideas of the founding group were carried over into the work of their students. STUDENT CAREER: AMHERST AND CHICAGO Copeland's first contact with economics was as an undergraduate student at Amherst College. As noted in previous chapters, Walton Hamilton was hired to Amherst in 1915 and Walter Stewart in 1916. They created an economics curriculum with a heavy institutionalist orientation (Hamilton 1917).

Inderscience is a global company, a dynamic leading independent journal publisher disseminates the latest research across the broad fields of science, engineering and technology; management, public and business administration; environment, ecological economics and sustainable development; computing, ICT and internet/web services, and related areas.

In thinking about policy, academic economists alternate between theoretical models in which governments can design finely-tuned optimal interventions and practical considerations which usually assume the government to be incompetent and hostage to special interests. I argue in this paper that neither of these caricatures is accurate, and that there is much to be learned by undertaking systematic, analytical studies of state capabilities -- how they are generated and why they differ across countries and issue areas. Case studies of export subsidization in Korea, Brazil, Turkey, India, Kenya, and Bolivia are presented to confront usual presumptions against actual experience. Contrary to conventional wisdom, the successful cases (Korea and Brazil) turn out to be ones in which the government exercised discretion and selectivity, while the most uniform and non-discretionary cases (Kenya and Bolivia) were clear failures. The paradox is explained in terms of state autonomy and policy coherence.

BOOK REVIEWS Brewer S. Stone, editor Bergsten, Cline, and Williamson, Bank Lending to Developing Countries ..... 260 Cavanagh, et al., From Debt to Development .............................. 260 Culbertson, J., International Trade and the Future of the West ............... 238 Daniels, R., Russia: The Roots of Confrontation............................ 246 Emerson, S., The American House of Saud ............................... 248 Gupte, P., Vengeance: India After the Assassination ofIndira Gandhi.......... 257 Guttentag and Herring, The Current CrisL· in International Lending......... 260 Hosking, G., The First Socialist Society................................... 246 Katzenstein, P., Small States in World Markets ............................ 262 Katzenstein, P., Corporatism and Change................................. 262 Lamb, D., The Africans ............................................... 255 Lawrence, R., Can America Compete? ................................... 238 Lessard and Williamson, Financial Intermediation Beyond the Debt CmL· ..... 260 Long, D., The United States and Saudi Arabia............................. 248 Mearsheimer, J., Conventional Deterrence ................................ 251 Moffett, G., The Limits of Victory ....................................... 259 Opello, W., Portugal's Political Development .............................. 243 Penniman and Mujal-León, eds., Spain at the PoIh ....................... 243 Safran, N., Saudi Arabia: The Ceaseless Questfor Security ................... 248 Treverton, G., Making the Alliance Work ................................ 251 Turner, K., Lyndon Johnson's Dual War ................................. 241 Turner, S., Secrecy and Democracy ...................................... 254 Ungar, S., Africa: The People and Politics of an Emerging Continent .......... 255 Von Mellenthin and Stolfi, NATO Under Attack.......................... 251 237 238 SAIS REVIEW Can America Compete? By Robert Z. Lawrence. Washington: The Brookings Institution, 1984. pp. 156. International Trade and the Future of the West. By John Culbertson. Madison, Wis.: 21st Century Press, 1985. pp. 242. Reviewed by Stephen Pilon, SAIS M.A. 1985, a research assistant at the Federal Reserve Board in Washington. In recent months the combination of record trade deficits and a stagnating domestic economy has generated considerable political pressure in support of legislation designed to protect a variety of American industries from foreign competition. Literally hundreds of bills on this subject are now pending before Congress. Even President Reagan, on record as favoring free trade, has been obliged to develop a program designed to placate the large number of constituencies that perceive their interests to be seriously injured by the flood of imports. This tendency toward protectionism is opposed by the vast majority of academic economists. They argue that free trade benefits all nations involved, permitting international specialization of production according to differing relative endowments of natural resources, labor, capital, and knowledge. They see protectionist pressures as originating with politically powerful groups that stand to benefit from special legislation detrimental to the interests of the nation as a whole. Some economists, however, maintain that a country can improve its overall welfare by selectively restricting its international trade. This would be done in the hope of fostering industries that are thought to have particularly salutary effects on future prospects for growth. Such economists see recent U.S. economic performance as a case study in how unfettered free trade can lead to a decline in the vitality of a nation's industrial sector. They hold that protectionist policies, properly formulated and applied, have the potential to slow or reverse the perceived deterioration in American manufacturing, benefitting the entire nation. Robert Z. Lawrence of The Brookings Institution clearly falls into the freetrade camp. In the first section of Can America Compete? he examines the widely held view that the U.S. economy has been deindustrializing under the impact of foreign competition. He denies emphatically that the United States is becoming "a nation of hamburger stands." Conceding that the manufacturing sector's share of total employment declined between 1960 and 1980, he observes that its share of total gnp nonetheless remained almost constant at about 45 percent. This seeming paradox is explained by the more rapid rate of increase in labor productivity in this sector than elsewhere in the economy. Lawrence compares U.S. manufacturing to that of the other major industrialized nations and adduces a variety of measures which indicate that manufacturing in the United States actually fared better than in the major European economies and only marginally worse than in Japan between 1973 and 1980. In fact the United States increased employment in manufacturing over this period faster than any other oecd nation, Japan included. Lawrence then estimates the impact of international trade using an econometric regression and input-output analysis. He concludes that between...

Consumption forms a major part of people’s lives. As such, geographers, historians of technology and sociologists have devoted much attention to trying to figure out what makes consumption meaningful. By contrast, economists have been content to hold onto theories of consumption that depend on a self-interested representative agent making utility maximizing decisions. Pietrykowski develops this alternative account through the recovery of past attempts to forge a different analytical approach to the study of consumption. In particular, theories of consumption espoused by home economists, psychological economists and Regulation school theorists are critically reviewed. These research projects, marginalized by the mainstream, are the precursors of contemporary scholarship in feminist, behavioural and radical political economics. Reclaiming this work greatly enlarges the scope for contemporary research in consumer behavior. Pietrykowski then provides a richly textured set of case studies of green automobility, slow food and alternative/local currency in order to explore the diversity of user cultures and to highlight resistant forms of consumer practice. By carefully interweaving historical and interdisciplinary research Pietrykowski creates a lively and incisive critique of mainstream economics This monograph will be of interest to academic economists, sociologists, historians and graduate students. In addition, the economics of consumption would also be of interest to readers in management, marketing and schools of business administration.

The use of social scientific expertise in forming state policies alters the social structure of scientific fields in a way that has important cognitive consequences. In particular, it leads to a competition between holders of traditional forms of academic recognition, and those who are distinguished by their administrative capacity and links to state personnel. Controversies over the authoritative measurement of the effects of state social policies reflect a social struggle between holders of these two kinds of capital or `credibility.' Based on a case study of evaluation of federal job training programmes in the USA, this paper shows that researchers in academic departments and in non-academic `contract-shops' compete to impose different definitions of research problems and objects of study. These definitions, in turn, favour their interests in accumulating different forms of credibility. Academic economists favour a rationalist approach using formal models, while contract shop researchers promote a case-based empiricism and social experiments.