Political Economy Approaches to Local Economic Development
As mentioned in the intro to this section, the term "Political Economy" has a variety of shades of meaning and is used different ways in different contexts.
Charles K Webber in his book The Political Economy of Development and Underdevelopment (3rd ed) ( ) makes some interesting observations about what he calls the political economy perspective. He notes that that there are two major schools of thought in western economic thought, the Orthodox (Neo-classical) school and the Political Economy school. Both of these spring from western culture and therefore have the same liniar view of history as a common intellectual substructure. He claims that it is very important to examine the view of history of anyone talking about economic development because this is the key to understanding their perspective.
Webber notes that both schools of thought understand that some sort of forces drive economies through various stages towards some end point. They differ on what the forces are, where the end point is, and how the stages are defined, but they agree on the fundamental liniar view of history.
It is not surprising that this "deterministic" flavor is detected in both schools of thought as the foundations of both lie in the early days of the industrial revolution in and age when many of the "parables" and "models" of the great thinkers of the time had a "mechanistic" flavor to it. It must be remembered, that up until the invention of the water wheel, all progress by man was made by human energy assisted by a tool. Once the water wheel emerged, man was freed to go about his business and let things seemingly run on their own. This notion understandably captured the imaginations of the public and the thinkers who addressed them.
The Political Economy School's main difference in point of view from the Orthodox school is the view of what forces are moving an ecomony through the stages towards some end point. The Orthodox school claims that it is automatic, moved along by an unseen hand, a euphamims for the collective effect of individual greed, which does not need to be controlled or planned, but is self correcting. The Political Economy school is more forthright in claiming that progress in history only comes about through the actions of man, which need to be planned and managed.
Within the Ortahodox school, there are different understandings of the exact stages of history an economy can move through, but this is not a critical point to them. Rostow's five stages are often cited, and are viewed generally as being as good as any. There is an unspoken assumption that everyone wants to be at stage five, which sounds a lot like an idealized version of the current economy of the United States.
Within the Orthodox school there are three sub-streams, differing mainly in the degree the system can be left to develop itself:
- Laissez faire which says that economic development operates on its own, so the best plan is to stay out of things and let the people work things out on their own.
- Substantial Government Planning which says that planning is necessary, but usually it has a distinct flavour of curbing the unfettered greed of the various players on the field.
- Growth with equity which states that redistribution of the benefits to those who don't make out as well in the scramble is in order. These people fall into what Webber sees as seven identifyable sub-catagories of process:
- Employment generation
- Re-directing investment
- Meeting basic needs (a big catagory)
- Human Resource Development
- Agriculture first (the "Food First" school)
- Integrated Rural Development
- New International Economic Order (another big group)
The Political Economy school breaks down into two sub streams. They differ mainly in their view of just who it is that controls the "profits" or "economic surplus" left over at the end of the day. This is critical to them because their view is that whoever controls the economic surplus, by definition determines the sort of development process that will follow. Both schools note that whoever happens to be the contoller of the economic surplus at any given time is not likely to give up that control very willingly. The two schools are:
- The Marxists who say that one should look for controllers of economic surplus internally in an economy rather thank externally in some other country's economy. They are generally attuned to the power dynamics inside a country, organization or system, and have a lot to say on the subject - inter-class struggles and so forth. The "end point" for this group is a communal life of varying descriptions.
- The Dependancy Theorists who say that one should look for controllers of economic surplus externally in some other country's economy. They generally are attuned to the inter-relations between nations, and note that the degree of control of a local economy by outside people (and hence by definition the degree of "dependancy" on outsiders by the local economy) determines the shape of economic development inside a country. The "end point" for this group is a "New International Economic Order" with no external control by other countries of a nation's internal affairs and self-reliant cultural uniqueness.
Webber makes the point that the main point of difference between the two systems is in the area of their view of growth and development. That is, it is in the area of economic development (rather than in some other aspet of the two systems) that the main differences show up.
He goes on to point out that any system has to find some way to account for both the fact that some countries or regions grow and for the fact that some countries don't grow. He notes that the Orthodox schools spend more time and effort being obsessed with the growth question (development) while the Political Economy schools spend more time being obsessed with the non-growth problem (underdevelopment), but that this is just a matter of emphasis.
It is into this set of economic perspectives that my "Tree" model fits, as described elsewhere.
The following links lead to pages which consider Political Economy outlooks on Local Economic Development.
Political Economy Theories of Economic Development
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