Gunnar Myrdal and "Asian Drama" in context

Ravi Kanbur 09 March 2018

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Gunnar Myrdal’s Asian Drama: An Inquiry into the Poverty of Nations was published 50 years ago (Myrdal 1968). The Preface to the book starts with the Latin phrase: “HABENT SUA FATA LIBELLI – books have their own destiny”, and this one is no exception. The book is very much of its time, and framed in terms of the realities of an economically stagnant Asia, which is now glaringly out of date. On the face of it, the book appears to have little to offer the modern development economist. And yet it can be argued that the book, and Myrdal, introduced and emphasised themes which continue to resonate and which we ignore to the impoverishment of development economics and economics generally.

Gunnar Myrdal won the Nobel Prize in economics in 1974.1 But he had had several lifetimes’ worth of achievement before that. He was a brilliant economic theorist in the Swedish tradition,2 turned iconoclast and questioned the methodological basis of economics; a founder of the Stockholm School with insights (published in Swedish) on macroeconomics, which were later to be found in Keynes’s General Theory; one of the intellectual and political founders of the Swedish welfare state; and author of the monumental An America Dilemma: The Negro Problem and Modern Democracy, which played its role in laying the foundations of desegregation in the US (Myrdal 1944). After WWII, he tackled economic and political relations across the Iron Curtain as the head of the United Nations Economic Commission for Europe, and of course he was the author of the three volume Asian Drama in 1968. But Asian Drama was by no means his last act. He lived for two decades after the publication of that magnum opus and, before his health faded in later years, was fully engaged in the debates on development. Indeed, his Nobel Lecture (Myrdal 1975) was devoted almost entirely to that topic.

Myrdal’s magnum opus

Gunnar Myrdal began work on Asian Drama in 1957, more than ten years before its publication. The world view of the time is well captured by something he wrote in 1957:

“…there is a small group of countries which are quite well off and a much larger group of extremely poor countries; that the countries in the former group are on the whole firmly settled in a pattern of continuing economic development, while in the latter group progress is slower, as many countries are in constant danger of not being able to lift themselves out of stagnation or even of losing ground so far as average income levels are concerned; and that, therefore, on the whole, in recent decades the economic inequalities between developed and developing countries have been increasing.”

It is this framing of more than half a century ago which is most at odds with the reality of Asian development in the last quarter century, with the explosive growth of China, India, Vietnam, and a host of other countries. Although Asian Drama was focused primarily on South Asia, in the book China and other Asian countries were often painted with the same brush.3 Along with most others at the time, Myrdal did not foresee that the economies of India and China would come to rival the size of the US economy in little more than half a century.

Relevance to 21st century development discourse        

However, strong traces of Asian Drama, and of the Myrdal before and after Asian Drama, are to be found in in the 21st century development discourse. This is because the issues Myrdal raised, throughout his life but also in Asian Drama, are fundamental ones not only for development but for our discipline of economics and for the broader terrain of political economy. Here are three such themes.

The first of these is the role of values in analysis. Myrdal argued, and on this he never wavered after first staking out his claim in the 1930s, that economics is by necessity value laden.4 He argued that although there had been vigorous debate on this in the nineteenth century, the economics of his time had tried to present itself as value free, in an attempt to achieve a status comparable to that of natural science. But this was manifestly not the case, and could not be the case given the nature of the subject. Rather than pretend otherwise, he proposed, and carried out his own proposal very thoroughly in Asian Drama, that the values should be made explicit. I think this is a major strand of his thinking and we would do well to take it to heart.

The second theme which emerges from a study of Asian Drama in the overall context of Gunnar Myrdal’s life work is that of the necessity of going beyond narrow economic principles to understand society, and even to understand the economy itself. Throughout his work, Myrdal maintained a healthy respect for the core tenets of economics as a discipline – indeed, some of the reviews of Asian Drama noted this well.5 But his main thrust is the need to understand fully the social, cultural and political context when trying to explain economic facts and when developing economic policy prescriptions. This comes through most strongly in his discussions of the roles of the ruling elite, and of the gap between formulation and implementation of policy in what he called the “soft sate.”

But ruling elites, corruption, and soft states bring to the fore what I consider to be the third lasting theme in Asian Drama and in Myrdal’s life work. This is the constant struggle to find the balance between state and market. The struggle was famously characterised by Edmund Burke (1795) as being "… what the state ought to take upon itself to direct by the public wisdom, and what it ought to leave, with as little interference as possible, to individual discretion".

I have argued in Kanbur (2016) that this is in effect the eternal question of political economy. Keynes (1926) alluded to this in his equally famous critique of the laissez-faire doctrine.6 The see-saw between an interventionist stance in the face of manifest market failure and a pull-back upon realisation of state failure, and where the balance is struck, is seen in Gunnar Myrdal’s specific struggles with himself and his cycles of thinking on foreign aid, and on the constant back and forth between wanting planning as a way out of an underdevelopment trap, and planning itself as a trap giving hostages to the elites and to the soft state.

The development vista has changed dramatically over the last half century. But the fundamental tensions, including the three themes discussed here, are still with us. They are to be found in some form in most, if not all, of the ‘big picture’ and ‘grand sweep’ books of the last decade, albeit now with the context of the changes of the last 50 years. Myrdal’s struggles with these tensions are his ultimate legacy to the development discourse of the 21st century.

References

Barber, W J (2008), Gunnar Myrdal, Palgrave Macmillan.

Burke, E (1795), “Thoughts and Details on Scarcity. Originally Presented to The Right Hon. William Pitt, in the Month of November”, published in F Canavan (ed.), Select Works of Edmund Burke, Liberty Fund (1990).

Kanbur, R (2016), “The End of Laissez Faire, The End of History and The Structure of Scientific Revolutions”, Challenge 59(1): 35-46.

Kanbur, R (2017), “Gunnar Myrdal and Asian Drama in Context”, CEPR Discussion Paper No. 12590.

Keynes, J M (1926), “The End of Laissez-Faire”, in The Collected Writings of John Maynard Keynes, Volume IX, Essays in Persuasion, Royal Economic Society, Palgrave MacMillan (1972).

Myrdal, G (1944), An American Dilemma: The Negro Problem and Modern Democracy:  Volumes I and II, Harper and Row

Myrdal, G (1954), The Political Element in the Development of Economic Theory, Harvard University Press.

Myrdal, G (1957), Economic Theory and Underdeveloped Regions, Harper and Row.

Myrdal, G (1968), Asian Drama: An Inquiry into the Poverty of Nations (Volumes, I, II and III), A Twentieth Century Fund Study, Pantheon.

Myrdal, G (1975), “The Equality Issue in World Development”, 1974 Nobel Lecture.

Rosen, G (1968), “Review of ‘Asian Drama’”, American Economic Review 58(5): 1397-1401.

Endnotes

[1] He shared it with Friedrich Hayek "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." Many thought it strangely ironic that the free market icon Hayek should be paired with the champion of social democratic interventionism, Myrdal.

[2] As the story goes, he graduated in but became disenchanted with the law as a discipline. His wife, Alva Myrdal (herself an iconic figure and future winner of the Nobel Peace Prize), purchased for him Gustav Cassel’s Theoretische Sozialokonomie and he immersed himself in economics, reading through all issues of the Swedish economics journal Ekonomisk tidskrift since it started in 1899 (see Barber 2008 and Kanbur 2017).

[3] He refers for example to “poverty-stricken China” (Myrdal 1968: 11) a description which would surely not hold today, after the most spectacular poverty reduction in modern history.

[4] The English version of his book was published as Myrdal (1954).

[5] As Barber (2008: 141) notes, Rosen’s (1968) critique in the American Economic Review also included the interesting observation that “in his stress on the need for a more institutional analysis…he himself uses traditional economic concepts centering about the market and the price system as the basis for his own policy suggestions”.

[6] For a detailed discussion, see Kanbur (2016).

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Topics:  Development Institutions and economics

Tags:  Gunnar Myrdal, Asia, development discourse

T. H. Lee Professor of World Affairs, International Professor of Applied Economics and Management, Professor of Economics at Cornell University and CEPR Research Fellow

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