From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Sep 02 2006 - 14:31:51 EDT
The second chapter of the latest UNCTAD report
http://www.unctad.org/en/docs/tdr2006ch2_en.pdf makes quite interesting
reading, insofar as it is recognised that there is little evidence for the
efficacy of the marketisation/liberalisation policies known as the
Washington Consensus, in fact it is admitted in many cases these policies
made the situation worse.
Reference is made to the subsequent 2002 "Monterrey Consensus" which argues
for a "sound system of financial intermediation... to foster productive
investments" in which governments in developing countries could take a
leading role, or indeed have to, since a "mature system of financial
intermediation" takes a long time to evolve. This is essentially a plea for
better financial regulation ("governance"), which can only be accomplished
via the state legislature
The double problem is really that (1) it is very difficult to (rapidly)
create market relations where there are no (or few) markets, especially if
mass buying power is lacking, and that (2) where marketisation and
deregulation occurs it does not - bar a few cases - result in significant,
cumulative expansion of productive investment (by "capital accumulation"
UNCTAD means especially the growth of the stock of physical capital). It is
of course not true - as Paul Baran already noted - that capital does not
accumulate in underdeveloped countries, it is just that this capital often
doesn't expand the productive base, but hives off into asset speculation and
other non-productive activity.
This leads to a renewed interest in an "institutional" approach to economic
policy, which focuses on the total institutional framework ("governance
structures") which is necessary for stable markets to form and grow.
A lovely non sequitur from the World Bank is cited:
"Different policies can have the same effect, and the same policies can have
different effects, depending on the context".
Which is really to say that an adequate integral theory of the motion of
capital is lacking, and the abstract theoretical ideology about "the market"
does not solve any problem.
There is no reference in the report to "equilibrium" theories, instead
various "imbalances" are noted. On p. 132 for example, there is a table
citing interest payments by governments as a percentage of expenditure - in
the case of Turkey 2001-2004, that's a whopping 53.5%.
Jurriaan
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