Abstract
The UK Development Studies Association bravely took as its theme, for its September 1983 conference, ‘the continuing recession’. Then, and even more than a year later, the organisers may have appeared foolhardy. The main US indicators, especially real GNP, apparently signalled a strong and prolonged recovery. Many world commodity prices — their record lows of mid-1982 the despair of development experts2 — were moving upwards. For a while, even inflation seemed to be recovering; but at the September 1984 Bank-Fund meeting the IMF reported that 1984 was the best year for the world economy since 1976, anticipated 5 per cent real growth in industrial countries’ real GNP, and applauded the apparent containment of inflation, and even (outside Europe) of unemployment.
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Notes
Shortly after the 1973 oil shock, Paul Streeten, with characteristic economy, remarked to me: ‘Economists have high elasticity of expectations, i.e. are hysterical’. His own debunking of the commodity-price bandwagon appears in ‘The Distribution of the Gains from Trade and Technical Progress’, in The Frontiers of Development Studies (London: Macmillan, 1972), especially pp. 459–61 and 466–8.
D. Ricardo, Principles of Economics (ed. D. Winch) (London: Everyman, 1973), Ch. XIX, p. 177. Ricardo stressed that ‘temporary periods of distress should not be confused with secular stagnation’ (Winch, ‘Introduction’, pp. xv–xvi).
T. Balogh, ‘Productivity and Inflation’, Oxford Economic Papers, 1958. For one model with autonomous investment creating a ‘floor’ below which activity cannot fall in the downswing,
See J. Hicks, A Contribution to the Theory of the Trade Cycle (Oxford: Oxford University Press, 1950).
S. Griffith-Jones and M. Lipton, International Lenders of Last Resort: Are Changes Required?, Occasional Papers in International Trade and Finance, Midland Bank International, March 1984.
M. Lipton, ‘World Depression by Third World Default?’, Bulletin of the Institute of Development Studies, Vol. 12, No. 2, April 1981.
D. Ricardo, Letter to Malthus of 6 February 1815, in P. Sraffa, Works of David Ricardo, Vol. VI (Cambridge: Cambridge University Press, 1952), p. 173.
Ricardo, Notes on Malthus, in P. Sraffa (ed.), op. cit., Vol. II, 1951, p. 157.
In terms of gold, ‘increasing labour-cost of producing wage-goods’ leads to a falling rate of profit (Winch, op. cit., p. xiv). Oil is unlike corn in that it is not directly a wage-good. Today, however, oil enters heavily, Leontief-wise, into the production of most wage-goods and services (not least corn). ‘The mixed wage basket is conspicuous in all the illustrative examples of the central distribution chapters’ of Ricardo’s Principles (S. Hollander, The Economics of David Ricardo, London, Heinemann, 1979, p. 257; see also pp. 685–6). It is incorrect to confine Ricardo’s analysis of the rent squeeze to effects on corn prices; Ricardo recognised the existence of other wage-goods.
J. M. Keynes, General Theory of Employment, Interest and Money (London: Macmillan. 1936). pp. 136–7.
D. Ricardo, Essay on Profits, in P. Sraffa (ed.), Works, Vol. IV, 1951, p. 36, my italics. I have put the words in square brackets in place of Ricardo’s ‘diminished’, ‘fall’, ‘increased’ and ‘increased’, respectively.
Ricardo held the ‘sophisticated’ version of Say’s Law, which precludes only a glut that is both long-term and general, as argued by A. Heertje, Economics and Technical Change (London: Weidenfeld & Nicholson, 1977), pp. 20–5, and as proven by the words I italicise from Principles, pp. 192–3: ‘No man produces but to consume or sell … By producing, then, he necessarily becomes either the consumer of his own goods, or the purchaser of the goods of some other person. It is not to be supposed that he should, for any length of time, be ill-informed of the commodities which he can most advantageously produce … and, therefore, it is not probable that he will continually produce a commodity for which there is no demand’.
World Bank, World Development Report 1983, pp. 29, 156–7, 162–3.
Y. Hayami and V. Ruttan, Agricultural Development: an International Perspective (Yale University Press, 1971).
M. Olson, The Rise and Decline of Nations (Yale University Press, 1982).
L. and J.C.F. Stone, An Open Elite? England 1540–1880 (Oxford: Clarendon Press, 1984).
World Bank, Accelerated Development in Sub-Saharan Africa: An Agenda for Action, World Bank, Washington, DC, 1981;
FAO, Monthly Bulletin of Agricultural Economics and Statistics, April 1984.
A. Ellis, Financial Times, 12 September 1983, p. 12.
World Bank, World Development Report 1984, Washington, DC, 1984, p. 31.
M. Lipton, ‘World recession by Third World Default?’, Bulletin of the Institute of Development Studies, Vol. 12, No. 1, April 1981, note 10.
IMF, World Economic Outlook 1982, Washington, DC, 1982, p. 142.
IMF, World Economic Outlook 1983, Washington, DC. 1983, p. 70.
World Bank, World Development Report 1983, Washington, DC, 1983, p. 175; and see note 53.
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© 1986 Sanjaya Lall and Frances Stewart
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Lipton, M. (1986). Recession, Rent and Debt: Quasi-Ricardian and Quasi-Keynesian Components of Non-Recovery. In: Lall, S., Stewart, F. (eds) Theory and Reality in Development. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-18128-5_4
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