Doctors of Development

The age of chivalry is gone; that of sophisters, economists and calculators has succeeded.

Edmund Burke, 1757

In 1964, no statesman of Burke's stature would be so unchivalrous as to lump economists in such questionable company--or so unwise as to be without an economist at his elbow. In the palaces and Parliaments of a hundred countries, economists are increasingly called upon to build, revive or draw together national economies. Their home is no longer the ivory tower, and their profession is no longer the "gloomy science" but a romantic and rewarding wielding of power. Lively activists, they range the world in pursuit of the universal goal of economic growth.

Worldly, urbane and versatile, the top economists are first-class customers of the international airlines, often jetting across the oceans a dozen times a year. Fluent in several languages, they are self-confident in discussing the great painters, gourmet restaurants and gross national products of many countries. They tramp the African bush and they savor champagne at diplomatic receptions, where they advise chiefs of state to start new plants or shut down old ones, to expand or contract imports, to invite or restrict foreign capital. The Presidents and Ministers are receptive to the advice, partly because many of them have a much finer appreciation of the nuances of economics than political leaders used to have. Several economists have risen to head governments, including West Germany's Ludwig Erhard, Portugal's Antonio Salazar and Bolivia's Victor Paz Estenssoro. Others, such as Britain's Harold Wilson, are hopefully planning their own takeover.

The Planners. Especially in the newly developing nations that favor highly planned economies, the economists greatly influence the income that the ordinary man earns, the products he can buy, the jobs he can hold. Economists were the first to devise the plans for the Common Market in Europe and the Aswan Dam in Egypt. When Kuwait's government was pondering what to do with its sudden oil riches, it summoned Fakhri Shebab, an Iraq-born Oxford don; he conceived an $860 million regional-development fund that has extended loans to five Arab nations. Nicholas Kaldor, a Hungarian-born Briton, has drawn up budgets and tax programs for India and Ghana.

Jamaica's W. Arthur Lewis, a Princeton professor, has answered calls from countries in Asia, Africa and the West Indies that are trapped between rising expectations and falling commodity prices. No development specialist has been more active than Jan Tinbergen, an obscure Dutchman ("I never gave an interview in my life," said he last week, in his first interview). From his Netherlands Economic Institute in Rotterdam, Tinbergen dispatches experts to 50 countries, where they preach the doctrines of economic planning. Recently he set up branches of his institute in Bangkok and Cairo.

The importance of economic advisers has also grown with the proliferation of common markets, payments unions, development banks and monetary funds--most of which the economists devised, either wholly or in part. Yale's Belgium-born Robert Triffin was the architect of the European Payments Union that abolished strict currency controls; now he is pushing the controversial "Triffin Plan" that would link nations through a world central bank and a single world currency. France's Robert Marjolin, first vice president of the Common Market, is also pressing for the "Marjolin Plan" that would unite nearly all the Six's fiscal and monetary policies in a super federal-reserve system. Argentina's Raul Prebisch, who initiated and negotiated the Latin American Free Trade Association, was also the prime mover of the recent U.N. Conference on Trade and Development, is favored to become head of the ambitious global trade organization that grew out of that meeting. True, neither LAFTA nor the U.N. conference has accomplished much, but they are first steps toward greater world trade.

Communists & Capitalists. Even the Communists are grudgingly coming around to recognizing the professional economists for the first time. The most influential one by far is Poland's Oskar Lange, who lived in the U.S. during the 1930s and 1940s, took U.S. citizenship but renounced it after the war, and is now a deputy chairman of the Polish Council of State. In a mildly heretical mood, Lange declared last month: "Marxist political economics originated as a criticism of capitalism. It was not concerned with details of running an economy." While many of the Western economists call for increased planning, Lange's idea of vitalizing a Communist economy is to eliminate much central planning and introduce a full-scale market economy dominated by the profit motive. Lange's writings have seeded increasingly vocal bodies of so-called "revisionist economists" in Czechoslovakia, Hungary and Bulgaria. Pilot schemes for decentralized planning and a form of the profit motive are being tried in East Germany, and even in Russia, where Economist Yevgeni Liberman has incorporated many of Lange's market ideas in his own proposals for decentralization.

Some of the world's most influential thinkers and doers are U.S.-based. But because the big and free U.S. economy has little want or need for central-development plans, these economists usually exercise their greatest influence in foreign countries. M.I.T.'s highly regarded Paul Rosenstein-Rodan helped draw up the industry-priming development scheme for southern Italy (main feature: tax breaks for new industries), and is a regular consultant to the Alliance for Progress. Students around the world learn the fundamentals of economics from Paul Samuelson, another M.I.T. professor, whose textbook, Economics, is a standard in at least ten languages. The chief U.S. representative to the Alianza, Walt W. Rostow, is better known abroad for his Stages of Economic Growth, a do-it-yourself guide to economic development that is gospel for many leaders of underdeveloped lands. These newly arrived politicians are also avid readers of Harvard's John Kenneth Galbraith, whose criticism of high consumer spending and low public spending in The Affluent Society provided many of them with an apologia for their planning programs.

Prescriptions & Persuasion. The economists speak with authority in Europe, where even nonsocialist governments believe in more planning than the U.S. does. France is in the midst of its fourth postwar economic plan. Though President de Gaulle has little taste for economics, he has given Pierre Masse, the commissioner of Le Plan, free rein to develop the planning machinery, which holds out rewards of tax credits and easy loans for companies that produce what the government suggests. Not long ago, the Common Market paid Masse the compliment of setting up a similar body to plan for the Six. An expert in the complex field of the mathematics of economics, Masse has sharpened his colleagues' ability to predict the consequences of some policies and to propose counteractions by changing interest rates and money supplies.

In Italy, Economist Guido Carli, governor of the central bank, has prescribed strong medicine for the country's debilitating inflation. With the patchwork government of Premier Aldo Moro too weak to take effective action, Carli on his own tightened credit and restricted borrowing from abroad. A convincing negotiator, he was called upon by Moro to persuade socialists and labor leaders to temper their own wage demands and agree to reduced government spending. One result of Carli's influence: Italy's trade balance is improving for the first time in two years.

Pitfalls & Penalties. The economists are far from infallible. It is testimony to their immense power that when they fail, whole nations can stagger. One reason that India's second five-year plan fell short of goals was that Economist Prasanta Chandra Mahalanobis overestimated the number of jobs that his industrialization ideas would create and underestimated the population growth. Sweden's versatile Gunnar Myrdal, best known in the U.S. for his monumental 1944 study of the race problem, An American Dilemma, is still one of the top-rated international economists; while highly regarded abroad, he erred gravely in his native Sweden. Fearing a disastrous, worldwide depression just after the war, Myrdal, then a Cabinet minister, pushed through an odd program that ordered inflationary monetary policies and the continuation of wartime controls. Result: Swedish goods were priced out of world markets, foreign-currency reserves dwindled, the trade deficit soared--and it took years for Sweden to recover. Myrdal went to Geneva for the United Nations, and is now completing a ten-year study of development problems in Southeast Asia.

The penalties can be much worse than tarnished prestige. High on the list of Brazilians who were stripped of their political rights after the government of Joao Goulart tumbled was Celso Furtado, who is now a virtual exile in his own country. Furtado's trouble was not so much that his plan for slowing Brazil's dizzy inflation failed--Goulart never carried it out--but that his prowess as an economic planner gained him notoriety, and the incoming government was suspicious of his left-leaning if non-Communist politics. He takes comfort in the fact that his development program for the threadbare northeast successfully brought 200,000 jobs to the area.

Brazil's new strongman, President Humberto Castello Branco, relies heavily on his own brand of idea men. One of his first acts was to draft Roberto Campos as Minister of Economic Planning and give him extraordinary powers to restore some semblance of balance. Campos scorns the inflation-pumping planners who believe, as he says, that "logic, having been invented by the Greeks in the northern hemisphere, cannot be applied south of the Equator." He has taken steps to cut the budget, hold down wage boosts, restrict loans to businessmen.

Raising Keynes. Despite their overambitious planning schemes, the economists score more often then they stumble. For one thing, they know far more than their predecessors did. Many years ago, John Stuart Mill mastered every important economic tract at the age of 13, and Karl Marx absorbed the important books in only three years of part-time reading at the British Museum. But now the complex literature fills whole libraries. As the arbitrary art of politics has grown to embrace the inexact science of economics, the economists have learned to measure everything countable and discountable.

"Yesterday's economists were often wrong," says Alexander Cairncross, the prime economic adviser to the British government, "but there was seldom enough statistical material to prove them so at once." Statistics that once took months to compile are now served up in days, or sometimes minutes, by computers. Economists still stand in awe of the modern maestro, Britain's late John Maynard Keynes, whose doctrines of central planning and high public spending made him the darling of the New Deal. Some statesmen have declared that the modern world needs a new Keynes. Though no single economist today commands so much power, the fact is that economists collectively have far more influence than Keynes & Co. could ever have dreamed of.

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