Over at the Globalisation Institute, Alex Singleton outlines his vision of an “intellectual revolution in international development“. Naturally, he sees himself at the forefront of this revolution, but what’s it all about? Actually, …

Historically most markets do not function well. This is why the partial development of capitalism is such a revolution. But even in industrial countries getting capital into poorer communities is not effectively handled. Attempting programs from the outside is worthwhile.

Peter Bauer is in a class of his own as an outstanding economist. The orginality, force, and extensive bearing of his writings have been quite astonishing. He is a real pioneer of modern development economics…Many of Bauer’s claims, while resisted at the time, have become a part of the new "establishment" of ideas. Like the old lady who went to see Hamlet and felt it was full of quotation, a young reader of Bauer’s early books may find his arguments rather familiar. This is, to a great extent, evidence of his triumph, though the new enthusiasts for Bauer’s ideas often do not give him enough credit. 

Guess who said that?! 

Owen replies: Amartya Sen? I don’t think that vindicates him.

I’m with Alex Singleton in believing in markets and enterprise.  But I am more modest than Alex about my belief in what we can contribute directly to those

As you know i’m against top down support of bottom up approaches – it’s the geniune enterprises that need to be trumpeted, not the state financed ones. It seems you’re making an assumption that the solution implies aid. That whichever approach is best should be supported from afar. Isn’t it the hope that we dispense with the necessity for aid? Can’t we advocate a solution that doesn’t depend on aid?In other words, the fact that subsidising microfinance creates problems should be an argument against subsidies, rather than microfinance?We shouldn’t be "putting our support" anywhere, or favouring one type of business or another.  An endogenous solution (which is broadly speaking an "enterprise" solution) needs to firstly curb our appetite for thinking we know what’s best.Also, i’ve mentioned this before as well, but

Alex underestimates the extent to which the views he is advocating are already part of mainstream development thinking.

It’s clear who won the intellectual battle of the 60s/70s, and people are now returning to the view that the keyword should be "exchange" and not "exploitation". What frustrates me is the fact that attitudes have shifted (for the better), but those who used to say "aid not trade" are now saying "fairtrade not free trade" without acknowledging those who argued for trade all along.That PT Bauer has been vindicated is a very good thing. That Labour today can only survive by ignoring many of their socialist policies is a good thing. Alex is quite right to trumpet the importance of disclosure. p.s. can you make this text box a little bigger, i’ve no idea what i’ve just written and apologise if that’s evident!!

Owen replies:  Anthony – I don’t know where you got the idea that P. T. Bauer has been vindicated.  Nothing could be further from the truth.  Like you, I would like aid to be unnecessary, and I think it is only a small (and relatively unimportant) part of what rich countries can and should do to promote development.  But Alex is talking about aid and other forms of development assistance – for example, he quotes the example of Technoserve. Unlike Alex, I don’t believe that this is necessarily the best form of aid, even though I agree that the goal is bottom-up growth.