Joe Stiglitz and David Hulme on ‘What have we learned from 10 years of war on poverty?’

September 8, 2010

     By Duncan Green     

I’m spending a couple of days at a big development conference in Manchester. It’s called ‘Ten years of war against poverty – what have WAP_LOGO1-small-yellowwe learned?’ and it’s heaving – there are about 500 people here. It’s hosted by the Chronic Poverty Research Centre, and is both a review of 10 years’ work, and a moment of transition as its research funding from DFID comes to an end and it morphs into what conference host David Hulme calls a ‘modest network’. It’s one of those mega academic gabfests – the conference programme alone is 27 pages long – alternating intense and pointy-headed panels with set-piece plenaries. Alas so far, there is almost no time for networking (one of the biggest reasons for being here) – the final session tonight begins at 8pm. But never fear, the generation of paper is phenomenal – they accepted 150 proposals for papers, out of 500. Wonder how much of them will get read?

Manchester University’s star turn is Joe Stiglitz, who does a stint here every summer, and he kicked off with a 50 minute tour d’horizon on what we’ve learned from the last quarter century. It was all pretty familiar from his work on the Sarkozy Commission and UN panel on the financial crisis. His two ‘big lessons’ from last 25 years were: Growth is necessary but not sufficient (trickle down doesn’t work; inequality also matters); Policies matter (both negatively, eg financial liberalization, and positively). Um, OK…….

stiglitz2Old models focussed on the wrong things and made wrong assumptions, eg self correcting, efficient markets; price stability was portrayd as necessary and almost sufficient for growth. What was missing?

1. Learning: including local and traditional knowledge. Whereas the old view was that development required closing the gap in capital, the new view is that we need to close the gap in knowledge (invest in technology, education, entrepreneurship). That means reforming intellectual property rules and pursuing what he termed infant economy policies (broader than just industrial policy)

2. A balanced role between markets and state (governance and improving state performance). The state needs to go beyond just setting the rules of the game, playing a restraining role (eg financial sector regulation), or market enhancing measures (eg credit for small firms and competition policy). Stiglitz argues instead for an East Asian-style developmental state, with a catalytic and constructive role.

3. Social Capital
We know it’s important, but we don’t really know how to build it, (although we know that badly managed globalization and urbanization can undermine it)

4. Sustainability

He offered a few magic bullets: cash transfers, microcredit, improved cooking stoves, oral rehydration therapy and social forestry, but I have to say, even allowing for the time limits on what he could cover, I found the session pretty disappointing. Right at the end of his talk he recognized that the ‘right’ policies are not enough; that we have to think about how the political power of large banks and governments that block sensible reforms. ‘Interests, politics are crucial but ideas matter too’ he said. A slip of the tongue perhaps, but surely what we need are ideas about politics and change – ideas are not the exclusive terrain of economics! I would have preferred a presentation that explored the last two bullets, and took all the usual condemnation of the Washington Consensus etc for granted.

He was followed by David Hulme, who was more interesting, if more pessimistic. His message was that reforms to global governance Hulme report cardhave been stalling since mid-decade. He has a good line in wonky sound bites – the MDGs are ‘human development meets results-based management’. And a nice ‘report card’ on the last 10 years – click on the table.

Two weeks out from the big UN MDG summit, David thinks their dominance over the last decade has focussed the development debate on planning, financing and managing global poverty reduction, to the neglect of changing social attitudes, norms and values and a ‘vast accountability gap’, whereby governments can break their promises without paying any price (David compared Berlusconi to Mugabe in this respect….).

David reckons the task now is to work out how to diffuse international norms about our ‘moral obligation to help distant strangers’, putting it on a par with the abolition of slavery or women’s suffrage, or the anti-apartheid struggle. The MDGs are too complex and technocratic – David wants to replace them with something like ‘Stop children dying now’ rather than creating a ‘central plan for poverty reduction’.

But as a member of the audience pointed out, three quarters of the world’s poor actually live in middle income countries where the problem is to a large extent one of power and injustice. This is not a unipolar struggle, but a complex and above all, national one that requires active citizens, effective states and the redistribution of power and opportunity within developing countries. The aid industry can only be a bit player in that drama.

Right time to dive into the next workshop. Links to other conference bloggers here.

September 8, 2010
Duncan Green