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interview

Deepak Lal on Development Economics and ‘Lords of Poverty’

2016

Summary

Deepak Lal restates his long-standing claim that there is no separate subject called development economics, only mainstream economics, and laments that young economists are 'reinventing the wheel' by resurrecting discredited theories such as vicious circles of poverty and big pushes. He argues these theories are really instruments for fighting Western ideological battles in the Third World, with Africa the worst affected because, unlike India, China, or Latin America, it lacks a local core of trained economists able to challenge defunct ideas.

He reserves his sharpest criticism for the World Bank, which he says was founded to finance reconstruction and infrastructure but was dismantled under James Wolfensohn in the 1990s in favour of gender and social issues where it has no expertise, leaving it redundant and, by refusing to finance dams and roads, a barrier to development. He praises China's new infrastructure bank for filling that gap and calls the aid establishment 'lords of poverty' who cannot afford to see poverty disappear. He criticises the IMF under Christine Lagarde for a milder version of the same drift, alleges the World Bank fiddled poverty figures to fit preconceived notions, and insists that actual poverty reduction over the past fifty years has been the fastest and largest in history, sustained despite predatory elites and foreign aid.

Key points

  • Lal maintains there is no separate discipline of development economics, only mainstream economics.
  • He accuses younger economists of resurrecting discredited theories like vicious circles of poverty and big pushes.
  • He argues development theories serve to fight Western ideological battles in the Third World.
  • Africa suffers most because it lacks a local core of trained economists to challenge defunct ideas.
  • The World Bank, founded for reconstruction and infrastructure, was dismantled under Wolfensohn in the 1990s.
  • By refusing to finance dams and roads on NGO advice, the Bank became a barrier rather than a help to development.
  • China's new infrastructure bank fills the gap the World Bank vacated.
  • Lal calls the aid establishment 'lords of poverty' with an institutional interest in keeping poverty alive, and says real poverty reduction over fifty years has been the largest in history.

Transcript

Deepak Lal on Development Economics and ‘Lords of Poverty’

Source: https://www.youtube.com/watch?v=keShsYqNXGc Duration: 370.9s

Speaker 1 (00:00): I do not believe there is a separate subject called Development Economics. It’s just straightforward mainstream economics, in your classic income, whatever you like to call it. That’s the only economics and these things try to carve out a separate economics is a mistake. So that’s what the book was about and I think that message has gone through. through but I now see amongst the young they’re going and reinventing the wheel again so the vicious circles of poverty you’ve got big big pushes all the sorts of things you’re completely shredded I mean these are tried it’s not just in theory people tried all this stuff and then

Speaker 2 (00:42): the basis of that so this new book Poverty and Progress has many of these how can I put it going

Speaker 1 (00:48): back to the old and not not accepting that but the difference is that now there are many more people I mean, well, there are two points. One is that many of these theories which we resurrected, this is really a way of fighting ideological battles in the West. That’s always been true. The Third World has been looked upon as a way you fight your ideological battles. You can’t do anything sitting in Washington or London. You can’t change that in the same way you like. You try and fight these battles abroad. Africa has been worst hit by this. And the reason is that now, at least in India, there are some of these absurd things, people will challenge them here. And these are local people who have been trained in there, and that’s where China is, through many, many countries, Latin America. Africa still has not got enough of a core of these people to challenge that. So that’s where the battle is now. So any defunct idea, if you want to resurrect it, go to Africa and try and present what you’ll take out and present it to them and hope that you’ll get away. The other bastion of this happens to remains the World Bank. That was ruined. So the World Bank was set up as a bank for reconstruction and development. So it was mainly on infrastructure.

Speaker 2 (02:04): And there at first rate, you know, divisions which knew how to build roads, dams, all this sort of stuff. That under Wolfenstein in the 1990s was dismantled. The drop starts earlier. tomorrow started his war on poverty if you like to call it that but wolfenstein but they kept the

Speaker 1 (02:23): other things going wolfinson then dismantled all this and they went into all this stuff to you know the world bank is into gender issues uh you name it i mean every social soft social issue of this and they have no expertise so what are they going to say you know as a result they’re completely redundant and that’s that’s how the chinese have done a very good thing and say they know what is it called it’s an infrastructure bank Well, that’s what the World Bank used to do, and there would be a big gap there, where the World Bank listening to all these NGOs refusing to finance dams, who doesn’t believe in having roads because they go through tribal areas, all the usual sort of stuff. So there, instead of helping their world countries, now a great barrier. So I call them lords of poverty. They cannot see poverty disappear because they’d be out of business. Well, the IMF, you see, the IMF was a very sound institution, but under Lagarde and this

Speaker 2 (03:17): latest reincarnation, it now is again taken on all this sort of stuff, but not to the same extent as the bank. I think it’s a much more respected institution than the bank. One of these chaps once told me, he said, what we should do is, we should hand out dolls in Africa, the Congo, he said, hand out dolls. I said, ha, they were killing each other. Who are you going to go, carry bags of gold in your hand? and hand it to… First you’ve got to identify who these poor people are. So you do a survey, you can’t get killed. And in the process, then you take your bags of gold.

Speaker 1 (03:48): Before it reaches anyone, you’ll be killed in the bag. So it’s completely impractical. It’s nothing they can do. Old-fashioned views about development, I think those have gone. And the only people who are holding back on this are, I call it loads of poverty. These are not just the academics who live by grants from these institutions, it’s large institutions like the World Bank, who’s interested in keeping this poverty debt, because the numbers are pluralized. For instance, the World Bank, I can’t remember what the date is, you’ll see it in the book. One of their studies showed that there were X number of people in poverty in a country, in the world, below one billion. In three months, they were previously before saying that the number of poor people was over a billion.

Speaker 2 (04:38): So suddenly, how could suddenly out of the bill three months, the extent of poverty has gone up?

Speaker 1 (04:43): And this all goes back to very flawed studies based on lousy data, as you already described it.

Speaker 2 (04:53): And then, fiddling this, they’re fiddling it to show this preconceived notion that poor poverty has not gone down.

Speaker 1 (05:01): Because if poverty has gone down, what the hell are you paying these people whose salaries to do and all these claims that they’re making? So see, laws of poverty will still have… So that’s still… But the truth is that in fact, the amount, the extent of poverty regress and including things like education, the speed and the extent of this is actually breathtaking. It never happened in the new industry. It’s the largest poverty reduction and improvement in living standards the world has ever seen in the last 50 years. So that’s the reality. And then all these myths, you see. Again, we’ve got lots of people going around creating theories, which I say they are familiar with refurbishing the old discredited stuff, which they’re pushing forward, and then things like this. And of course the other big thing is foreign aid, you see, that’s another thing, but you have to say foreign aid is built. And they live off it.

Speaker 2 (05:53): People who live off it are these predatory elites in the developing countries who steal

Speaker 1 (06:00): the money. And of course these functions and other things who don’t hold on top of it. good

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