September 19, 2017

Economics outside the human domain

Review of From The Outside Looking In: Experiences in ‘Barefoot Economies’, Manfred A Max-Neef. Foreword by Leopold Kohr. Dag Hammarskjold Foundation, 1982


Manfred Max-Neef is a Chilean economist who was recently awarded the Alternative Nobel Prize. This little book is largely devoted to a description of his work in revitalising the economy—and hence the society—of a small town in Peru, an activity he refers to as “barefoot economics”. In essence, Max-Neef’s strategy involves working within the informal or ‘invisible economy’ whose output does not figure in the gross national product, and which, as a result, is of little interest to either politicians or conventional economists.

Max-Neef realises full well that the problems which face us today are very profound. “I am convinced” he writes, “that the total crisis which threatens us, our world and even our biosphere, does not have its ‘final cause’ (causa finalis) in planning faults, nor in the incompleteness of social, political and economic theories, nor in the limitations of one ideology or another. All of these, although not exempt from responsibility, are only ‘efficient causes’ (causa efficiens) of the situation.

The matter goes much deeper. I believe causa finalis flows from the very essence of our culture or, in other words, from what one might call ‘the original myth’ on which our culture has been built.”

If our culture gives rise to destructive behaviour, it is because it accentuates man’s domination over nature and, unfortunately, this notion underlies conventional economic wisdom.

Economics, like most of those disciplines into which academic knowledge is at present divided, has sought to increase its respectability by aping the methodology of science. In this way it is “mechanistic in the same strong sense in which we generally believe only classical mechanics to be.” “This”, Max-Neef points out,

“is borne out by the works of Jevons (1835-1882) and of Walras (1834-1910)—English and French respectively—who tried to find analogies with classical mechanics. Irving Fisher himself (1867-1947), as all economists know, was involved in an effort worthy of a Swiss Watchmaker, when he completed the construction of a particularly ingenious and intricate device, the purpose of which was to demonstrate the purely mechanical nature of consumer behaviour. The Law of Say (1767-1832), which has had such an important influence on liberal economic thinking (‘production generates its own purchasing power’), is equally mechanistic. The notion of ‘Homo Oeconomicus’ is undeniably so and, finally, Marx’s diagrams of economic reproduction . . . are bound by the same limitation.”

Unfortunately, economists have in recent years become all powerful. As Max-Neef writes;

“Their discipline—despite Lord Keynes’ warning to the effect that the importance of economic problems should not be overestimated with the result that matters of higher and more permanent significance are sacrificed to its supposed necessities—suddenly became the magic science: the one to provide the answers to most of the pressing problems affecting humanity. Its practitioners, newly endowed with this unexpected power to exercise their influence over enterprises, interest groups and governments, swiftly and proudly took for granted their new role as inaccessible and powerful sorcerers. It soon followed that economics, originally the offspring of moral philosophy, lost a good deal of its human dimension, to see it replaced by fancy theories and technical trivialities that are incomprehensible to most and useful to none, except to their authors who sometimes win prizes with them.”

Max-Neef talks of his early years as an economist working for a large institution involved in development.

“After a number of years, the enthusiasm and optimism with which 1 had worked as an economist for several international organisations, gave way to a growing uneasiness. To continue being engaged, whether as a witness or as a direct participant, in efforts to diagnose poverty, to measure it and to devise indicators in order to set up a statistical or conceptual threshold beyond which a percentage may reveal the numerical magnitude of those to be classified as the extremely poor: and then to participate in costly seminars and even costlier conferences in order to communicate the findings, interpret the meaning of the findings (my God!!), criticise the methodologies behind the findings, express our deep concern (often during cocktails) for what the findings show, and, finally, end up with recommendations to the effect that what must urgently be done is to allocate more funds for further research into the subject to be discussed again in other meetings—made me feel at a certain point that I was happily participating in a rather obscene ritual.”

One of the main problems with the international development agencies is that they are not primarily seeking to solve the problems of the people whose welfare they are supposed to assure, but rather to please their political masters from whom their funds are derived. As Max-Neef writes, “The reigning principle is the same as in a shop: the customer is always right. And the customer, remember, is the government.” He goes on to comment:

“. . . to assume goodwill on the part of governments to really improve the lot of the invisible sectors is naive. Most, if not all, have more urgent priorities such as, for instance, building ‘damn big dams’, as someone once put it. The invisible sectors are treated as expendable sectors. It is assumed that they can wait, and must wait. They will get their turn once the country has become economically strong.”

Hence Max-Neef’s decision to leave ‘suede-shoe economics’ (he doesn’t use the term) and become a ‘barefoot economist’.

Indeed, he is convinced that the ‘invisible’ economy must be revitalised in order that it can function as independently as possible of both central government (which is invariably indifferent to its fate) and of the formal economy. As he puts it, “If national systems have learned to circumvent the poor, it is the turn of the poor to learn how to circumvent the national systems.”

Max-Neef’s efforts to revitalise the invisible economy of Tiradentes, a small town in Peru—on a ‘barefoof’ budget—appears to have been largely successful. He does not regard this as surprising. “So much can be achieved when thinking and acting small,” he writes. “After all, smallness is nothing but immensity on the human scale.”

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