Two Views on the Obstacles to Development (Part II: Wordly Philosophy and Twenty-First Century Capitalism)
Author(s)
Kregel, Jan
Abstract
In the 50 years since Bob Heilbroner’s The Worldly Philosophers was first published, the problem of “underdevelopment” has still not been solved. The current approach focuses on the inability to mobilize domestic resources and generate domestic savings, recommending market liberalization, foreign borrowing, and the introduction of developed country institutions in the form of common codes and standards of good practice. The other, rooted in the writings of the worldly philosophers and especially Smith, Schumpeter, and Keynes, emphasizes the importance of technical progress in, and the form of, managerial organization and learning, supported by a framework of state support and direction that provides risk sharing to promote private sector investment in those sectors where productivity growth, and thus increases in real incomes, is highest. The growth of East Asia, the great developmental success of the past half-century, followed the latter model. Replicating that experience, with appropriate adaptation to regional differences, is the central challenge of twenty-first century capitalism.
