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Economic transition, micro- and small -scale enterprise in Zimbabwe, and the significance of participatory development to institutional economics

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Economic transition, micro- and small -scale enterprise in Zimbabwe, and the significance of participatory development to institutional economics

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Content ECONOMIC TRANSITION, MICRO- AND SMALL-SCALE ENTERPRISE IN ZIMBABWE, AND THE SIGNIGICANCE OF PARTICIPATORY DEVELOPMENT TO INSTITUTIONAL ECONOMICS Copyright 2003 by John Edward Peters A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (POLITICAL ECONOMY AND PUBLIC POLICY) May 2003 John Edward Peters Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UMI Number: 3103958 Copyright 2003 by Peters, John Edward All rights reserved. ® UMI UMI Microform 3103958 Copyright 2003 by ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, Ml 48106-1346 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNIVERSITY OF SOUTHERN CALIFORNIA THE GRADUATE SCHOOL UNIVERSITY PARK LOS ANGELES, CALIFORNIA 90089-1695 This dissertation, written by \XJ\ under the direction o f h i S dissertation committee, and approved by all its members, has been presented to and accepted by the Director o f Graduate and Professional Programs, in partial fulfillment of the requirements fo r the degree of DOCTOR OF PHILOSOPHY Director Date Dissertation Committee Chair Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. DEDICATION For Dad, Grandpa, Phil, and Wes. I miss our talks. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACKNOWLEDGEMENTS I've received so much assistance from so many people during the course of my doctoral study that it is amazing that only my name will appear as the recipient of the Ph.D. I would like to thank several of these people. I am fortunate enough to have undergone doctoral study at two institutions (University of Southern California and University of California at Riverside), with the opportunity at both institutions to work with leading scholars of political economy and development. At USC, I did most of my work with the late John Elliott, who was, by many accounts, the leading historian of economic thought and political economy. As even a rudimentary bibliographic search reveals, John was a prolific writer, publishing important articles, chapters, and books on a variety of topics in the field of political economy. John's prowess as a scholar was matched only by his kindness, and his friendship will be as missed as his lectures and mentoring. I can only hope that my intellectual career will be as exciting and important as was his. At USC I met, was supported by, and also became friends with Farideh Motamedi, the Associate Director of the Doctoral Program in Political Economy and Public Policy. Farideh's assistance, friendship, and hard work for the program are greatly appreciated. As was the case with John Elliott, Farideh's commitment to the development of interdisciplinary doctoral study is as commendable as it is vital to the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. iv future of innovative social analysis and academic scholarship. I thank Farideh for her tireless work for this most important Doctoral program. At USC I was also fortunate enough to meet and work with Laurie Brand, who introduced me to international relations and broadened my perspective of development beyond what is taught in most departments of economics. Laurie welcomed me to the USC community and made me feel at home. Many thanks also go to Robert Dekle, who stepped in as Chair of the dissertation committee following John Elliot’s passing. Finally at USC, I'd also like to thank Dowell Myers, who served as outside committee member for my dissertation. At UC Riverside, where I began my doctoral study, I also received academic and personal support and guidance from several people. I learned much of my political economy from Steve Cullenberg and Howard Sherman. Steve introduced me to methodology and postmodern Marxism while Howard (often over lunches at Chinese restaurants) convinced me of his own radical blend of Marxism and institutionalism - and I'd like to thank them both for not only being professors, but friends. I am forever indebted to Steve for joining my dissertation committee and providing leadership on the committee after John Elliott passed away. Also at Riverside, I was fortunate enough to study under Keith Griffin. Keith is a development economist in the best sense of the term. By simply looking at a data set, Keith is able to tell you more about an economy than a team of economists working with advanced econometrics and fancy models. From UCR I'd also like to Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. V thank Aziz Khan, Victor Lippit, and Bob Pollin (who has since moved on to the University of Massachusetts at Amherst). Much appreciation also goes to Alois Mlambo at the University of Zimbabwe and to Ane Quade at California State University at Sacramento, who are both, for better or worse, responsible for introducing me to heterodox economic analysis. I would also like to thank my colleagues at the School for International Training, the academic institution where I am currently employed. Mary-Lou Forward and Tomson Dube in particular have provided me with encouragement in the writing of the dissertation. I am fortunate to have such supportive colleagues, and to be associated with SIT Study Abroad, a leader in cross-cultural, international education. On a more personal level, my family and friends have also been instrumental in my undertaking and completion of my Ph.D., including my mother, who always takes care of things for me at a moment's notice, my sister and fellow interdisciplinary academic, who consistently challenges me to think about things from a different angle, and my lifelong friends - Matt Garbarini, Chris Hall, and Jim Murry - who always remind me to lead a balanced life, not something that is easy to do for an aspiring academic and activist. My deepest appreciation and love go to my wife and best friend Vanessa, and our baby daughter Jamie. Thanks, Ness, for supporting me in my studies. You and Jamie are my life. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS DEDICATION ................................................................................................... ii ACKNOWLEDGEMENTS............................ iii LIST OF TABLES...........................................................................................................ix LIST OF FIGURES................................................................ x LIST OF PHOTOGRAPHS........................................................................ xi ABSTRACT............................................................................................................. xii CHAPTER 1: PARTICIPATORY DEVELOPMENT AND INSTITUTIONAL ECONOMICS: SHARED METHODOLOGICAL COMMITMENTS AND POTENTIALS FOR COMPLEMENTARITY...................................................................................................1 Positivism, Formalization, and Pattern Modeling in Economics...................................5 Kicking the Dead Horse....................................... 5 Pattern Modeling in Institutional Economics.............................................................9 Participatory Development as a New and Evolving Paradigm....................................13 The New Paradigm.....................................................................................................13 Reversals in Development..........................................................................................16 Local, Diverse, and Provisional................................................................................20 The Value of Indigenous Knowledge Systems ................................. 25 The Role of Interdisciplinarity....................... 36 Focus on Participation .............................................................................. 42 Participatory Development and Institutional Economics: Shared Methodological Commitments and Potentials for Complementarity.............. 53 Shared Methodological Orientations........................................................................ 53 Potentials for Complementarity....................................... 54 Final Thoughts................................................................................................................ 59 Endnotes............... 62 References ....... 67 Interviews ...... 73 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER 2: PRODUCE VENDING IN THE CONTEXT OF ECONOMIC HARDSHIP: ANANALYSIS OF THE FIFTH AVENUE MARKET OF BULAWAYO, ZIMBABWE.................................... 74 Bulawayo’s Fifth Avenue: A Walk Through the M arket............................................ 84 Firm Size And Owner Characteristics.......................................................................... 90 Problems Faced by Vendors.................................... .95 Selling Along Fifth Avenue: An Analysis of Vending as a Livelihood Strategy...... 99 Endnotes.........................................................................................................................115 References................... 117 CHAPTER 3: ECONOMIC TRANSITION AS A CRISIS OF VISION: COMPARING CLASSICAL AND NEOCLASSICAL THEORIES OF GENERAL EQUILIBRIUM.........................................................................................120 Classical and Neoclassical Theories of General Equilibrium....................................124 Efficiency, the Role of Markets, and Equilibrium Conditions..............................126 Classical Theory..................................................................................................126 Neoclassical Theory............................................................................................128 Time, the Nature of Exchange, Institutions, and Power........................................ 132 Classical Theory..................................................................................................132 Neoclassical Theory............................................................................................136 Two Frameworks not on the Same Track.............................................................. 138 Classical vs. Neoclassical Economics - Market Development vs. Shock Theraphy........................................................................................................................138 Neoclassical Shock Therapy vs. Classical Market Development........................ 138 The Russian and Chinese Experiences................................................................... 142 Comparative Performance.................................................................... 142 The Vision of Markets and Market Development, Real Historical Time, Power, and the Importance of Institutions.............................................................. 146 Adam Smith: Precursor of Shock Therapy and Laissez-Faire?.................................152 Rapidity and Spontaneity in the Transition to a Market Economy...................... 152 Free Competition, Monopoly, and the Natural Order........................................... 154 Exceptions to Laissez-Faire and Free Trade.......................................................... 158 Conclusion.....................................................................................................................162 Endnotes................. 166 References....................................................... 170 BIBLIOGRAPHY.............. 176 APPENDICES............................ .191 Appendix 1: Primary and Secondary Surveys.................. 191 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. viii Primary Survey:........................................................................................................ 191 Secondary Survey:.................................................................... 192 Appendix 2: Photographs..............................................................................................194 Photograph 2.1: Fifth Avenue Market.........................................................................194 Photograph 2.2: Women Selling Vegetables, Dry Goods, and Cooking Utensils... 195 Photograph 2.3: Women Selling Vegetables and Crocheting....................................196 Photograph 2.4: Man and Woman Selling Dry Goods...............................................197 Photograph 2.5: Women Selling Vegetables.............................................................. 198 Photograph 2.6: Scania, Hired to Deliver Goods to Stands....................................... 199 Photograph 2.7: Houses, Nkulumane High Density A rea.........................................200 Photograph 2.8: House (Exterior View) and Family, Nkulumane............................ 201 Photograph 2.9: House (Interior View) and Family, Nkulumane............................. 202 Photograph 2.10: Block of Flats, Makokoba High Density Area............................. 203 Photograph 2.11: Inside Stands....................................................................................204 Photograph 2.12: Inside Stands, Close-up.................................................................. 205 Photograph 2.13: “Bit” - Stand with Little Produce.................................................. 206 Photograph 2.14: “Some” - Stand with Medium Amounts of Produce....................207 Photograph 2.15: “Lots” - Well Developed, Well Stocked Stand............................ 208 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF TABLES Table 1.1: Two Paradigms: Things and People....................................................... ....21 Table 1.2: Foresters’ Beliefs and Small Farmers’ Realities in Pakistan ........27 Table 1.3: ORAP Concepts of Development................................................................31 Table 2.1: Age of Businesses................. 91 Table 2.2: Age Distribution of Owners........................................ 92 Table 2.3: Years of Formal Education.......................................................................... 93 Table 3.1: Equilibrium in Classical and Neoclassical Economics............................ 125 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. X LIST OF FIGURES Figure 1.1: Strategies for Crop Breeding, Selection, and Spread............................... 23 Figure 1.2: The Organizational Structure of ORAP.................................................... 35 Figure 1.3: Geographical Transect of a Village in Northern Pakistan........................48 Figure 1.4: Map of Village Territory............................................................................ 49 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF PHOTOGRAPHS Photograph 2.1: Fifth Avenue M arket.........................................................................194 Photograph 2.2: Women Selling Vegetables, Dry Goods, and Cooking Utensils... 195 Photograph 2.3: Women Selling Vegetables and Crocheting.................................... 196 Photograph 2.4: Man and Woman Selling Dry Goods...............................................197 Photograph 2.5: Women Selling Vegetables.............................................................. 198 Photograph 2.6: Scania, Hired to Deliver Goods to Stands....................................... 199 Photograph 2.7: Houses, Nkulumane High Density A rea.........................................200 Photograph 2.8: House (Exterior View) and Family, Nkulumane............................ 201 Photograph 2.9: House (Interior View) and Family, Nkulumane............................. 202 Photograph 2.10: Block of Flats, Makokoba High Density Area............................. 203 Photograph 2.11: Inside Stands.................................................................................... 204 Photograph 2.12: Inside Stands, Close-up.................................................................. 205 Photograph 2.13: “Bit” - Stand with Little Produce..................... 206 Photograph 2.14: “Some” - Stand with Medium Amounts of Produce....................207 Photograph 2.15: “Lots” - Well Developed, Well Stocked Stand............................ 208 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. xii ABSTRACT As Joan Robinson argued more than 25 years ago, economics should be “concerned with actual contemporary problems” and therefore put its “arguments in terms of the structure and behavior of the economy” in which we live. This dissertation, consisting of three essays tied together by the idea that theory and analysis should remain close to the world under investigation, demonstrates that development economics is a people-centered, interdisciplinary endeavor that must indeed focus on analyzing “actually existing economies.” The first essay considers the significance of participatory development to institutional economics. I argue that these approaches share significant methodological ground, and as such, institutional economics may have much to gain by learning more about this innovative approach to development analysis and action. I compare institutional economics and participatory development, and present participatory development as an approach that could be fruitfully utilized by institutional economists. The second essay is a case study of farm produce vending in the Zimbabwean city of Bulawayo, reporting on primary fieldwork undertaken by the author. The analysis investigates the role of vending in household income, the heterogeneity of enterprises and livelihoods, problems faced by the vendors, and policy options. An interdisciplinary, quantitative and qualitative field-based case study approach is taken to investigate farm produce vending in Zimbabwe. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The third essay investigates economic transition as regards the light that can be shed upon it by classical and neoclassical economics. I compare the theories of Smith and Marx with those of Arrow and Debreu, and argue that the problematic economic transition of Russia can be seen in part as a result of a following of neoclassical visions of the economy, while the relatively successful economic transition of China can be seen in part as a result of a following of more classically- inspired views of the economy. Central to classical economics’ superiority to neoclassical theory in this regard is its emphasis on history, institutions, and power, traits that allow classical economists to keep their analyses focused on actually existing economies. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 CHAPTER 1 PARTICIPATORY DEVELOPMENT AND INSTITUTIONAL ECONOMICS: SHARED METHODOLOGICAL COMMITMENTS AND POTENTIALS FOR COMPLEMENTARITY Atkinson and Oleson [1996] convincingly outline key elements of what they consider to be the institutionalist method of social inquiry. Responding to an earlier article by Hans Lind [1993], Atkinson and Oleson argue that institutional economists indeed share a common methodology, one that focuses on the pragmatic analysis of concrete social situations, rather than upon formal modeling. While institutionalism shares several common methodological aspects, perhaps a key one is that analysis should begin with a question and not an axiom. In two other important articles, Wilber and Harrison [1978] and Wilber and Francis [1986] describe a type of social analysis referred to as “pattern modeling,” which is “a systematic form of storytelling” where the researcher engages her or his subject by focusing on the real world study of concrete institutions within a concrete social setting, utilizing whatever methods of analysis seem appropriate to the issue at hand, but concentrating on staying close to the world under investigation [Wilber and Harrison 1978,71]. Wilber and Harrison [1978] argue that much of institutional economics utilizes pattern modeling in analysis, while Wilber and Francis [1986] argue that Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 pattern modeling can be seen as the methodology utilized by development economist Albert Hirschman. An analysis of the institutional economics literature (as in Wilber [1978]) indeed reveals that many of these economists do often eschew formal model building for more qualitative, interdisciplinary, contextual, and eclectic historical and relational analyses. This quality of the institutionalist literature is self-evident in the pages of the Journal o f Economic Issues, the main publishing outlet for institutional economists. However, the same can be argued for much of development economics, as several noted development economists, including two Nobel laureates, W. Arthur Lewis [1954] and Gunnar Myrdal [1968; 1970]), and a healthy handful of others, including Albert Hirschman [1958; 1967], Dudley Seers [1963], E. Wayne Nafziger [1988], and Keith Griffin [1999], are all known for their pragmatic, integrative stance towards the inclusion of social, political, and historical, in addition to economic, perspectives and factors in their analyses of development, and their use of a broad, methodologically-pluralistic political economy framework. Connecting institutionalism with development economics, it is noteworthy, moreover, that several self-identified institutional development economists have made important contributions to the development literature, including Gunnar Myrdal [1974], James Street [1987], and James Dietz [1992]. Philosophically and methodologically allied in some important respects to institutional economics, though largely outside of mainstream development economics and other academic development studies efforts, the last twenty or so Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 3 years have witnessed a revolution in participatory development thinking, that astonishingly has yet to make significant inroads into most economists’ analyses of development. Built on such ideas as the relevance of culture, indigenous knowledge, and participatory research and action, this revolution in development thinking has forever changed the way many development organizations, in particular, non governmental organizations, carry out their development work [Chambers 1997]. What development practitioners on the ground have learned after long last is that “development” is not the intellectual playpen of the formal academic nor the gift of the prestigious aid worker, but rather, that development gains significance once local people are empowered to take charge of their own development and their own analyses, of which local people have been found impressively able to do. In fact, such empowerment of local people has shown all parties concerned that oftentimes the knowledge of local people is far more accurate and useful to development initiatives than that of the so-called development “expert.” This new “participatory” paradigm of development thus places a potentially equal value on the knowledge and analytical capabilities of both external development researchers and local people. What has also been demonstrated within the new paradigm is that development problems do not come in nice disciplinary packages, and that most problems are more critically researched and effectively addressed where an interdisciplinary understanding is explicitly sought [Chambers 1983 and 1997]. As institutional economics operates in an open, methodologically pluralistic manner, it would be useful to consider the significance of recent developments in Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 4 participatory development for institutional economics. What is particularly interesting is the shared methodological ground and potential for collaboration between participatory development on the one hand, and institutional economics or institutional development analysis on the other. Hence, the purpose of this chapter is to review some of the theoretical and methodological currents of what might be called participatory development, and to shed light on how these new developments may be seen as complementary to institutional economics. While comprehensive treatments of how participatory development relates to institutionalism on philosophical and theoretical levels are necessary, and will hopefully one day be taken up in a series of contributions, the somewhat smaller plan for the current chapter focuses more on introducing some of the ideas of participatory development, and to begin the discussion of the significance of its orientation, methods, and approaches for the institutional economist. As a framework of analysis, the chapter argues for granting potentially equal intellectual standing to the knowledges and skills of researchers from different disciplinary backgrounds, and to the knowledges and skills of both development “insiders” and “outsiders.” Methodologically-pluralistic institutional economists, being focused more on the analysis of actual social situations and problems and less on formal axiomatic models, would thus seem to be in a good position to learn from recent thinking in participatory development. The organization of the chapter is as follows. Following this introduction, the chapter is divided into three major sections. First, I discuss aspects of the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 5 methodology of institutional economics that places it very much in an allied and receptive position to learn from, and dialog with, participatory development. In particular, I discuss pattern modeling (as opposed to formal economic modeling) as a key methodology of the institutional economist, largely drawing on the methodological work of Wilber and Harrison [1978] and Wilber and Francis [1986]. Second, I discuss the emergence and explore the significance of participatory development and indigenous knowledge. As one of the methodological values of participatory development is that no one person or discipline has the comer on truth, as part of this section I also explore the potential role of interdisciplinarity in analysis. Third, I bring the argument together by considering participatory development and institutional economics as allied approaches, and I suggest ways in which participatory development can be increasingly utilized and integrated by institutional economists for analysis and action. POSITIVISM, FORMALIZATION, AND PATTERN MODELING IN ECONOMICS Kicking the Dead Horse1 Postpositivism, postmodernism, poststructuralism, and several other trends in social analysis have, in most disciplines, convincingly demonstrated the inadequacies of the positivist vision of science, and has demonstrated that science as “systematic Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 6 investigation” (as it is defined in most languages) involves making value judgments in the analysis of reality and the social construction of the theory through which we see it [McCloskey 1994]. And yet, it can be noted that within the social sciences it is in economics where positivist visions retain a stronghold, at least formally [McCloskey 1994], In particular since the 1940s, most of economics has strived to be positivist and formal; more or less universal, ahistorical laws are provided through logical deduction which are then empirically tested for confirmation or refutation. As Milton Freeman [1953] writes, the goal of economics is to “provide a system of generalizations that can be used to make correct predications about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields” [Friedman 1953, 4]. Regarding empirical analysis, however, one of the key criticisms of positivist economics is that it simply is not an accurate description of how much work is actually done in the discipline. For example, consider if we have a theory that states “if A, then B.”2 It therefore follows that if the economist finds “not B,” then we must also have “not A.” If this were the case, then clear-cut empirical tests could be designed so that false theories could be definitively refuted based on empirical testing. But alas, the history of economics shows that empirical testing does not work this way, as there are always auxiliary hypotheses embedded into the testing, so that it is not the case that “if A, then B,” but rather, “if A l, and A2, and A3 ..., then B.” And thus, where the economist finds “not B,” it does not necessarily mean “not Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 7 A,” as the ceterus are not necessarily paribus. Researchers can then always blame the data or challenge the auxiliary assumptions as for why the theory’s prediction did not pan out.3 More on the theoretical side of economics, criticism has also focused on the overformalization of the discipline. Modem general equilibrium theory, for example, has been criticized for lacking real-world applicability, even from within neoclassical economics. McCloskey [1994], for example, writes that from “everywhere outside of economics except the department of mathematics the proofs of existence of competitive equilibrium will seem strange. The proofs do not claim to show that an actual existing economy is in equilibrium, or that the equilibrium of an existing economy is desirable” [McCloskey 1994, 133]. Instead, the proofs show that “certain equations describing a certain blackboard economy have a solution, but they do not give the actual solution to the blackboard problem, much less to an extant economy” [McCloskey 1994, 133]. Where economics has been most successful, as argued by McCloskey (herself a noted economic historian and econometrician), is where it has strayed the furthest from its official positivist stance, embracing instead the quantitative and qualitative analysis of actual economic situations, within the context of critical theoretical and methodological reflection. And indeed, as argued by McCloskey [1989; 1994], Wilber and Harrison [1978], Wilber and Francis [1987], and Ward [1972], rather than through positivism and formalism for its own sake, this is how much work actually takes place in economics. Wilber and Harrison [1978] argue that rather than Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 the traditional scientific view of theory generation and objective testing, the final outcome “of the use of formal methods in economics is that those methods fail to generate the hoped for results, and the investigators end up engaging in what Ben Ward calls ‘storytelling.’ Instead of explaining something by logically deducing an hypothesis as a specific instance of a more general law and then subjecting it to empirical verification, economists tell a variety of stories” [Wilber and Harrison 1978, 70]. On the question of what to make of this, Ward writes that the main point is not really that this is how economics ought to behave. It is rather that this is how they do in fact behave: that is, roughly speaking, the methodology that we actually use in establishing our professional beliefs. Perhaps the science could be improved if we were more honest about this matter, for practitioners might then feel under less pressure to transform their studies into models of a procedure that has not worked and which really is not even believed. The result of that practice has been to sweep under the table some of the most important and profound issues that economics faces, as well as substantially to distort much potentially useful work [Ward 1972, 190]. By recognizing and making explicit this aspect of much of our work, we may therefore be in a better position to explore and open ourselves to new ways of thinking, knowing, and analyzing. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 9 Pattern Modeling in Institutional Economics In contrast to the official positivist stance of much of economics, pattern modeling as often used by institutional economists makes explicit the constructivist and contextual nature of social analysis. Wilber and Francis [1986, 185-190] discuss four particular qualities of holistic analysis from where pattern modeling is generated: (1) the conception of reality; (2) the structure of explanation; (3) the primacy of subject-matter; and (4) the form of logic. Holism, a term coined by South African scholar Jan Christian Smuts a century ago, denotes theories which not only conceive the whole as greater than the sum of its parts, “but that the parts are so related that their functioning is conditioned by their interrelations” [Gruchy 1947, 4]. “For the holist, then, explanation of reality cannot be had through the application of universal laws .. .Rather, an event is explained by identifying its place in a pattern that characterizes the ongoing process of change in the whole system” [Wilber and Harrison 1978, 73]. The holistic conception of reality argues that social reality “must be studied as a whole human system in its natural setting” [Wilber and Francis 1986, 185], and thus, “the holist standpoint includes the belief that human systems tend to develop a characteristic wholeness or integrity” [Diesing 1971, 137]. An holistic analysis, therefore, defines the concrete system under study, which can vary from intra household dynamics in a particular culture, to a single market, to the social mores of a national society, to issues of international relations, and then proceeds in an Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 10 integrated manner to analyze the concrete relationships and complex determinacy between parts and wholes of that system. Contextuality is therefore a major characteristic of holistic analyses, as “two superficially similar parts of different systems,” for example, local vegetable markets in Zimbabwe and Southern California may behave very differently as the concrete institutions at work may be significantly different. Generally, therefore, the holist “believes that it is inappropriate to take parts of an interdependent system out of context” [Wilber and Francis 1986, 186], The structure of explanation for the holist links together many seemingly independent parts and tries to see their relationships, rather than “deducing an hypothesis from a formal theory [Wilber and Francis 1986, 327]. The holist, moreover, does not “predetermine the appropriate framework in which to explain their subject-matter” [Wilber and Francis 1986, 187], As such, the holist “maintains that we have an explanation for something when we understand its place in the whole, as opposed to the formalist’s approach which maintains that we understand something once we can predict it” [Wilber and Francis 1986, 187]. To use Kaplan’s terminology, the structure of holistic theories is concatenated (linked together) rather than hierarchical, as in formal theories. Holistic theories, in contrast to formal ones, are composed by linking together several relatively independent parts, rather than by logically deducing an explanandum from an explanans. Each segment of a concatenated theory is first developed, interpreted, and tested (contextually) independent of the other segments, then each is systematically linked to the other parts in a pattern... .As such, a concatenated theory with its several independent sections and subsections provides a many Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 1 sided, complex picture of the subject matter [Wilber and Harrison 1978, 81]. The explicit subject matter for the holist is the world under investigation. While this would, in some ultimate sense, also be the case for many non-holistic analyses, where theory plays a proxy role between the researcher and the issue at hand, for the holist the point is to strive to investigate the dynamics of the world rather than the dynamics of an overly abstract, often axiomatic, model. That is, for the holist, “concepts are relatively concrete, particularized and close to the real system being described” [Wilber and Francis 1986, 187]. While the holist may use similar concepts and methods of analysis in different studies, the point is that for the holist, at least in some sense and to some degree, it is the problem that drives the analysis and not the method. Finally, holistic theories are often (though not always) dialectical, a fact that helps analysis to focus on staying close to the world under investigation. “Two concepts are dialectically related when the elaboration of one draws attention to the other as an opposed concept that has been implicitly denied or excluded by the first” [Diesing 1971, 355]. “One begins with some historically or empirically suggested viewpoint and develops it until its shortcomings are clear enough to suggest the outlines of an opposing, formerly excluded viewpoint; then the latter is developed and related back to the first” [Diesing 1971, 218]. In this way, the dialectic “is the logic of the concrete” [Wilber and Harrison 1978, 83]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 12 These four qualities of holism, its particular conception of reality, structure of explanation, focus on “real-world” analysis, and its often dialectical style of investigation, all lead the holist to particular ways of analyzing complex social phenomena, often using a method which could be termed pattern modeling. As a first step, the institutionalist attempts to become a “participant observer” in the subject under study. “As participants, investigators allow the subject matter to impress upon them its norms and to instill within them its categories. Unlike positivists, who impose external formulas upon the subject matter, the participant- observer attempts to remain close to the concrete form of the system” [Wilber and Harrison 1978, 75]. Second, the institutionalist makes explicit “information which, as a participant, the researcher is now able to perceive,” and begins to form tentative interpretations “about parts of the system out of the recurrent themes that become obvious to him or her in the course of the socialization process” [Wilber and Harrison 1978, 75]. Third, these interpretations are evaluated by “consulting a wide variety of data (previous case studies, survey data, personal observations, and so forth). Evidence in support of an hypothesis or interpretation is evaluated by means of contextual validation. This technique is a process of cross-checking different kinds and sources of evidence” [Wilber and Harrison 1978, 76]. Interpretations or hypotheses are continually revised or discarded as necessary, and as such, “as socialization proceeds, the researcher becomes increasingly attuned to accurate perception and interpretation of the recurrent themes and formulation of validated Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 13 hypotheses. The holist uses this experience and the various pieces of evidence to build up a many-sided, complex picture of the subject matter” [Wilber and Harrison 1978, 76], The institutionalist methodology is thus problem-focused, methodologically pluralistic, and both qualitative and quantitative. There is also a propensity toward case studies in institutionalism; case studies of actual, concrete situations, their dynamics, regularities and particularities.4 For the institutionalist, analysis is an ongoing process, as there can be no final set theory or form of analysis applicable to all situations. As such, in the first instance, the role of case study in institutional analysis is to understand the dynamics of the given situation under study. Later, one may find that this particular case provides useful guidance and direction for further case studies and/or the asking of new questions, but the point is that first and foremost, when the institutionalist undertakes analysis of a given situation, the overriding goal is to address that particular situation. PARTICIPATORY DEVELOPMENT AS A NEW AND EVOLVING PARADIGM The New Paradigm Diverse developments both in the field and in academia have pushed forward in the last twenty years an emerging new paradigm of development, one focused less Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 14 on grand theorizing and more on contextuality, less on disciplinary hierarchies and more on interdisciplinary insight and humility, and less on North-South intellectual hierarchies and more on the recognition of the value of diverse knowledge systems, indigenous and foreign [Chambers 1997], Though perhaps not (yet) fully articulated or widely recognized as a new paradigm of development in some comers of formal academia, events both in the field and in academia indicate that development thinking and action is currently undergoing significant change. The failures of first modernization theory and then dependency theory and their variants, coupled with the failures of integrated rural development programs in the 1970s and neoliberal structural adjustment and transition in the 1980s and 1990s, have quickened the development of more practical, participatory approaches to development. As noted by Chambers [1997, 192-197], the emerging new paradigm of development is also related to, and perhaps is part of, significant shifts in thinking in many other parts of the academy. For example, postmodernism (Harvey [1990]; Rosenau [1992]), with its emphasis on multiple realities and the profoundness of the local, facilitates a move away from grand theorizing and toward contextuality. Chaos and complexity theory (Gleick [1988], Waldrop [1994]), which emphasizes sensitivity to initial conditions and non-equilibrium dynamics, highlights the importance of case study and the challenges of sustainability of development initiatives. Business management (Peters [1989]; Senge [1992]), which has increasingly focused on the importance of flexibility, listening to others, and loving change, helps to dismantle the hierarchies among researchers from different Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 15 disciplines and between researchers and their subject. Post-Newtonian social science (Uphoff [1992]), with its criticism of reductionism and mechanistic modeling and its reconstruction of altruism and positive-sums, leads to holistic analysis on the one hand, and promotes cooperation on the other. Finally, new ecological theory (Behnke et al. [1995]; Scoones [1995]), which focuses on adaptability and a non equilibrium environment, pushes researchers away from totalizing theorization to more open and pluralistic forms of social analysis that focus on diversity, change, and contextuality. Perhaps the most complete academic presentation thus far of this new paradigm of development, however, can be found in Robert Chambers’, Whose Reality Counts?: Putting the First Last [1997], which builds upon and demonstrates the further evolution of many of the arguments of Chambers’ seminal 1983 contribution, Rural Development: Putting the Last First. Commenting on the new paradigm, Chambers [1997] writes: In an evolving paradigm of development there is a new high ground, a paradigm of people as people. Local, complex, diverse, dynamic and unpredictable, its conditions are difficult to measure and demand judgment. .. .On the new high ground, decentralization, democracy, diversity, and dynamism combine. Multiple local and individual realities are recognized, accepted, enhanced and celebrated. Truth, trust, and diversity link. Baskets of choice replace packages of practices. Doubt, critical self-awareness and acknowledgment of error are valued [Chambers 1997,188], Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 16 Five particularly noteworthy elements of participatory development, in my view, are: (1) the role of “reversals” in development; (2) the local, diverse, and provisional nature of the new paradigm; (3) recognition of the value of indigenous knowledge systems; (4) the potential role of interdisciplinarity; and (5) the centrality of participation. These elements of the new paradigm are neither exclusive nor exhaustive, but they do point to some of the more central ideas and trends in what has come to be called participatory development by many development workers, facilitators, and activists, as well as by an increasing number of formal academics. As such, each of these proposed central elements of participatory development are discussed below. I will argue in the final section of the chapter that each of these elements of participatory development, as well as the paradigm’s overall methodological orientation, are allied with and have the potential to contribute in important respects to institutional economics. Reversals in Development The central theme of Chambers’ Rural Development: Putting the Last First [1983] is that of “reversals,” why the processes of domination are difficult to slow, halt, or reverse, and why such reversals are key to a more broad-based, participatory development. Chambers [1983, 13-27] articulates six biases that are in need of reversal in development research, theorization, and action: (1) spatial; (2) project; (3) person; (4) dry season; (5) diplomatic; and (6) professional. These biases conspire to Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 17 keep researchers/policymakers and the poor apart, and hinder external understandings of, and appreciation for, local realities as well as analytical capabilities. Each of these biases is discussed below, with extra consideration of professional biases. Specialization, one type of professional bias, will however be discussed in a later section on the potential role of interdisciplinarity. “Spatial” bias refers to the fact that most rural visits by development workers and researchers concentrate near major towns, even if the majority of people do not live there. “Project” bias is “marked by the showpiece: the nicely groomed pet project or model village, specially staffed and supported, with well briefed members who know what to say and which is sited a reasonable but not excessive distance from the urban headquarters” [Chambers 1983, 16], Government officials, development agency workers, and foreign academics are all steered towards these pet projects and away from the poor. “Person” bias refers to those who are often spoken to when gathering information in the field, at times leading to local elite and often male bias. The less active, less present, and less well off are often not reached. For those who live in wet-dry tropical climates, “dry season” bias can be especially damaging. The wet season in the tropics, just before the harvest, usually sees the most severe malnutrition, high infant mortality, indebtedness, hunger, death, and the most intense of back-breaking work. However, the wet season also sees the fewest number of development researchers, officials, and policymakers. “Diplomatic” biases, politeness and timidity can also play a significant role. As poverty is often Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 18 something which is hidden or underplayed, it can be difficult for the outsider to penetrate the politeness barrier to see the severest of poverty of an area. Finally, and perhaps a particularly pressing issue here, is “professional” bias. The word “professional” itself denotes a hierarchical structure between those who are professional and those who are not. The culture of the professional, or the culture of the “upper,” conspires to keep real communication between uppers and the “lowers” at a minimum. Even under some of the best scenarios, uppers travel or return to the locales of the lowers to research the realities of the lowers with a professional culture that often does not adequately allow for interaction between these two groups. Professionals are by conventional definition those who work their way up the social hierarchy through migrating to the center, attaining high academic and professional credentials, and publishing in journals that are only read by fellow professionals. As one moves up the professional hierarchy, males, the urban, the well-off, and mature adults are increasingly found while females, the rural, the poor, and the young are increasingly not to be found; many poorer groups are weeded out along the way of the professional hierarchy. Those who do not follow the upward path of the professional thus cannot by conventional definition be real professionals. Consider language as an example of a cultural mechanism through which dominance is generated. Academics often use esoteric words when more common ones will convey the same message. Many economists write out line after line of mathematical axiom when it is often the case that the same thing could be said just as easily in words, at times the only difference being that if expressed in words, more Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 19 people would understand what is being said. Some postmodernists do with verbal language what economists do with mathematics, at times writing in such an impenetrable manner that many throw up their arms and decide that the whole postmodern project is not worthwhile. Even where the academic upper literally speaks the same language as the lower (often as a result of being of the same ethnic background), and academic jargon gives way to more common language in fieldwork, once the academic upper leaves the research site to write up the results of the analysis, the upper again resorts back to esoteric academic language, ensuring that the lower about whom the research was conducted will not be able to access the results of the research. Thus the research still “belongs” to the upper and not to the lower; the research remains one of the upper administering his or her realities upon the lower. It is the view of what constitutes “proper” theory and analysis that forms one of the most damaging elements of professional bias, however. A proper theoretical structure is most often considered one that is informed by respected individuals, historical and contemporary, from the upper. One travels to the locales of less- developed areas to administer and assess the theories of Marx and Foucault; studies which engage poorer groups on an equal, non-hierarchical footing by facilitating and asking people to express and theorize upon the nature and complexity of their own realities are rare in many parts of the academy.5 Licenses to construct proper social theory are thus given out on a basis which is quite hierarchical (upper vs. lower), and thoroughly undemocratic. A key reversal in this regard, however, as will be Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 20 discussed in an upcoming section, are participatory development methodologies that have been developed specifically to encourage local groups to theorize and analyze their own realities, with perhaps external researchers and development workers, where needed, playing more of a facilitation than a teaching role. Local, Diverse, and Provisional A second thrust of participatory approaches to development is that they recognize the diversity of experience in development, both time and place, the importance of local-level analyses, often initiated by local groups themselves, but in any event aware of the importance of contextuality and the inherently provisional nature of theorization and analysis. Chambers [1995] recognizes this shift in development thinking over the past couple of decades, away from top-down development paradigms and toward provisional, bottom-up, problem-solving methodologies as a shift from “things” to “people,” where top-down “becomes more bottom-up. The uniform becomes diverse, the simple complex, the static dynamic, and the controllable uncontrollable” [Chambers 1995, 33]. The focus is upon process rather than blueprint, noting the inherently provisional nature of social theorization and analysis. Table 1.1 summarizes this shift in development thinking. Sometimes referred to as “putting people first,” this paradigm of development is about process and participation, where people can come together, often on a local basis, to theorize and discuss their own development problems from their own points Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 21 of view, and where development interventions and initiatives can be tailored to match continually evolving local contextual variables and circumstances. The role of the external researcher, in such a context, therefore becomes more one of partner, rather than bearer of true knowledge or benefactor. Table 1.1: Two Paradigms; Things and People Point of Departure Things People Mode Blueprint Process Keyword Planning Participation Goals Preset, closed Evolving, open Decision-Making Centralized Decentralized Analytical assumptions Reductionist Systems, Holistic Methods, Rules Standardized, Diverse, Universal Local Clients seen as Beneficiaries Actors, Partners Outputs Uniform, Diverse, Infrastructure Capabilities Planning and Action Top-down Bottom-up Source: Adapted from Chambers [1995, 32]. The Green Revolution provides an example of where the “top-down,” “blueprint” approach to development leaves much to be desired, and where development initiatives may be much more successful where local diversity and contextuality is recognized. Chambers [1997, 67-70] argues that uniform, top-down, “Model T” forms of technology transfer to less-developed countries have a good chance of success in certain situations. Three situations where this can be the case Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 22 are: where a technology can easily be made effective in a range of environments (two Indian examples include the use of chalkboards in schools, and the India Mark 2 water handpump); where environmental conditions are relatively predictable and regulated (e.g., the elimination of smallpox); and where the receiving environment is standardized and controlled (this applies to some fertilized, irrigated land in the Green Revolution). The difficulty, however, exists where environments differ from those under which the technology was developed; where environments are less controllable, less predictable, more complex, and more heterogeneous. In this case, the nomothetic Model-T will most often break down. While the Green Revolution was successful in some respects, what “scientists were slow to realize was that in the Green Revolution, it was as though the research station itself was transferred” through large-scale irrigation, fertilizers, pesticides, etc. [Chambers 1997, 70]. However, where farmers are resource poor and rain fed, where their environments are neither controllable nor predictable, and where their realities are complex and heterogeneous, we cannot expect the Model T to work. And in fact, it has failed in many such situations, often wasting precious resources [Chambers 1997, 70]. What is needed instead of the Model T is a model where former “uppers” and “lowers,” or professional development researchers and local people, can work and research side by side. Figure 1.1 compares the “green revolution” to the “complex, diverse, and risk prone” approaches to crop breeding, selection, and spread. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 23 Figure 1.1: Strategies for Crop Breeding, Selection, and Spread CDR Industrial and green revolution Type o f agriculture Farmers with scientists Scientist Analysis and criteria Screenin' Screening j Selection Genotype Com m ittee M ultilocation trials Results uom m ittee Reject C M ultiply ■ l u i m m n u u . Basket Package Diverse Complex Risk-prone Uniform, Simple Controlled Environment G chosen to fit E Strategy E made to fit G M enu k la carte Fixed, table d ’hote Toyota (Choice o f any colours) M odel - T (Any colour as long as black) Industrial Parallel Source: Adapted from Chambers [1997, 69]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 24 The Model T, on the left, starts with scientists’ analyses and criteria. The scientist guesses what types of seeds are likely to be successful based on their perceptions of farmers’ realities. Committee screening narrows down the selection to a few choices, after which a small number of local farmers are given a choice of a few varieties to be tested in multilocation trials. When the committee of scientists finds what it sees as positive results in trials - never mind that such trials are often heavily subsidized with external inputs) - it proceeds to produce a fixed package that local people can choose to adopt or reject. Reject is often the ultimate choice. In Rwanda, for example, farmers engaged in multilocation trials were only offered two to five varieties, from an original research base of two-hundred. Ten years after the packages were delivered, only ten percent of farmers were still planting the beans delivered by the Model T [Chambers 1997, 68] 6 The vision of local farmers’ realities is of a uniform, simple, and controllable environment. After the package is delivered, the expectation is that the environment can be controlled to adapt to the genotype. What is instead needed in many cases is for scientists and farmers to work together, side-by-side in the research and development process, each learning from the other. This is represented on the right-hand side of Figure 1.1. Working together, the scientists and farmers screen lightly and come up with a basket of possibilities from which the local farmer can choose, according to their needs and desires. In this way, it is possible to account, on a “permanently provisional” basis, for diversity and complexity, adapting the genotype to the environment, which is Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 25 often highly unpredictable, uncontrollable, and heterogeneous, rather than the other way around [Chambers 1997, 197]. Readers may recognize the right-hand side of Figure 1.1 as the “farmer first” approach to agricultural development [Chambers 1993]. The Value of Indigenous Knowledge Systems A third element of participatory development is the explicit recognition of the legitimacy of indigenous knowledge systems. Development theory as well as other types of social analysis have traditionally been considered the purview of the external scientist. Researchers and policymakers travel to the societies about which they will be writing and/or offering policy prescriptions (though sometimes do so from the comfort of their desk chair in Washington or elsewhere), and execute the research on the poor, rather than with them. The job of the external “expert” is to identify and propose solutions to development problems, utilizing and putting into practice the extensive knowledge gained by the external researcher through several years of formal study in their particular field. The precise insight of participatory development, however, is that the received hierarchy of knowledge between elite researchers and donor agencies and local people is not justified, and in fact, has led to hundreds of billions of dollars being spent on top-down, non-context specific projects and programs that have increased the debts of the poor significantly but have contributed little to the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 26 livelihoods of many people in most regions of the world.7 One difficulty in working within the received hierarchy between elite researchers and local people is that external researchers can often be blinded by their professionalism and not feel the need to consistently consult with local people regarding local realities and preferences. For example, a problem-ridden national forestry project in Pakistan was unsuccessful in part due to policies being designed upon professional forester’s beliefs of local small farmer realities, rather than upon small farmers’ perceptions of their own realities. In an excellent study conducted over nearly four years, Dove [1992] investigated and compared the differences between foresters’ beliefs about farming with the realities of the small farmer. Table 1.2 clearly demonstrates the divergence between forester’s beliefs about small farmers’ realities and small farmers’ actual perceived realities. Foresters believed that only large farmers would be willing to plant new trees, that farmers who were willing to plant would only plant exotics, that the best time for planting would be monsoon season, and that more fuelwood would not reduce the prevalence of dung-burning. On each of these issues, the professional foresters turned out to be wrong. A second difficulty and weakness in working within the received hierarchy between elite researchers and local people is that it has been shown, time and time again in the field, that local people’s knowledge is just as if not more useful in development efforts than that of external experts. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 27 Table 1.2: Foresters’ Beliefs and Small Farmers’ Realities in Pakistan Issues Foresters’ Beliefs Small Farmers’ Realities Farmers who would Only large farmers Large farmers and small farmers that already have trees on their land and want more Small farmers were Opposed to planting trees Not opposed to planting trees, as per above Farmers’ preferences Only large blocks of market-oriented exotics Small plantings of multi-purpose native trees Best time for planting Monsoon When labor is available Farmers’ fuel use More fuelwood would not reduce dung-burning Source: Adapted from Dove [1992, 48]. More fuelwood reduce dung-buming Variously referred to as rural people’s knowledge, local people’s knowledge, people’s science, village science, and indigenous technical knowledge, researchers have increasingly discovered that local knowledge often provides significant insight into local development issues and problems, at times providing superior data to that of external “expert” research. Indigenous knowledge is often particularly developed Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 28 in the fields of agriculture, animal husbandry, botany, climate, craft skills, clinical psychology, ecology, ethology, linguistics, medicine, and zoology [Chambers 1983, 85]. For example, in farming, the mixed cropping preferred by many African peoples was at one time severely criticized by “Northern” Ph.D.’s as inefficient and backward. Agricultural extension researchers and staff instead advocated pure stands, with plantings in precise geometrical formation. From the point of view of the researchers, the mixed and staggered plantings of African farmers appeared irrational and inefficient. But yet, it turned out that the external experts had much to learn from the local African farmer; staggering and mixing crops reduces risk from weeds and bugs; one crop can often provide shelter, pest protection, or even fertilize another; returns can be higher per unit of land; and labor time can be spread out under mixed cropping [Chambers 1983, 86-87; Belshaw and Hall 1972, Norman 1974; Belshaw 1979]. Another example of local people’s knowledge includes an extensive knowledge of the environment, for instance of hundreds or thousands of types of animals and plants, the quantity and quality of rainfall, and of soil types and fertilities. In addition to these and many other examples of impressive scientific and social knowledge found to be available from local peoples, there have also been Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 29 efforts to articulate more complete “indigenous theories of development.” Examples include the rise in the Middle East of a distinctively Islamic model of development based on the ethical principles of the Quran, the development in India of an alternative economics grounded in Gandhian philosophy, the appearance in countries such as Burma and Sri Lanka of a Buddhist economics stressing cooperation and self-sufficiency, the formulation in Africa of rural development strategies based on the traditional egalitarian values of African communalistic societies, and the creation in Nicaragua of a Sandinista model of popular development that rejects the ready-made frameworks of the West and the East in favour of a more flexible alternative more appropriate to Latin American particularities [Brohman 1995b, 130-131], Let us consider one such example of an attempt by local people to build on indigenous knowledge in the articulation of development theory, analysis, and action - the case of the Organisation of Rural Associations for Progress, or ORAP, in Zimbabwe.8 ORAP was formed in 1981 with its registration as a non-governmental organization in Zimbabwe, a country which achieved independence from Britain in 1980. Currently, ORAP has approximately one and a half a million members, concentrated in the Matabeleland and Midlands Provinces of Zimbabwe, and is one of the largest indigenous NGOs in the world. The participatory nature of ORAP, writes Sithembiso Nyoni [1987], one of the movement’s founders, must be seen in the context of the colonial situation in Zimbabwe. “To gain independence, Zimbabweans had to be clear as to their goals, organized and ready to fight. .. .Real changes began to take place when the young Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 30 people and the rural population began to participate in the struggle, in the true sense of the word” [Nyoni 1987, 52], Thousands of youths left their education and went to train as freedom fighters, while village committees worked with rural people to build momentum and gamer grassroots support for liberation. This broad-based participation in the liberation struggle thus impacted the way some groups hoped to promote development following independence. Development for us became the liberation of a people: a straggle which brings social, political and economic changes. Development became a process which involves the poor in the thinking, deliberating, and strategizing for change. Thus, some of us felt compelled to support this philosophy beyond the straggle for independence; to assist the rural population to continue to fight for participation in the development of our country in terms of a clear understanding of our situation; to create strong village organizations, unity of purpose and relevant courses of action to solve our problems and meet our basic needs... .The few educated elites have failed to bring about these changes alone. It has become clear to us, therefore, that they are not the nations. The poor in our countries are the nation because they are the majority, and the power to bring about permanent social change and development in Zimbabwe and other straggling countries is to be found in their hearts [Nyoni 1987, 52]. Indeed, for Nyoni, half a century of “national and international development efforts have passed without any fundamental changes in the lives of the poor,” and as such, “something must be very wrong” with many of our development efforts [Nyoni 1987, 52]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Building on the idea that in Zimbabwe “rural people are underdeveloped because they have been dispossessed of their traditional knowledge and way of life,” central to ORAP’s mission are seven guiding principles informed from indigenous understandings of development [Chavunduka et al. 1985, 2]. Table 1.3: ORAP Concepts of Development Ndebele Concept English Translation Zenzele Help yourself, do it yourself Zihluze Examine yourself Ziqoqe Mobilize yourself Zimisele Commit yourself Ziqhatshe Be self-employed Zimele Be self-reliant and independent Ziqhenye Be proud of yourself and your achievements Qogelela Collective savings, little by little, for resource mobilization Source: Dube, Interview [9/10/01]. Together with the concept of amalima, which means “meeting together for working and helping ourselves” [Chavunduka et al. 1985, 3], these pillars of ORAP Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 32 “recognize development as a process. Starting with Zihluze (self-examination) and Ziqoqe (mobilizing yourself), communities begin to empower themselves for progress [i.e., Zenzele, or help yourself]. The end point is seen to be Zimele (self- reliance), and Ziqhatshe (self-employment), when cycles of dependency and marginalization have been broken” [Sweeney 2001, 2], In this context, “traditional development activities, such as technical assistance or drought relief are seen as supplementary to the goal of self-reliance” [Sweeney 2001, 2], ORAP thus “recognizes that although rural people may be poor they still have dignity and ability and hence should be given the chance to run their own affairs and organization.. . . In this way, people are able to revive respect for themselves, their organization and the nation at large” [Ndiweni 1993, 77]. Very interesting is the Ndebele translation (a language spoken by most ORAP members) of “development” into English: “taking control over that with which you need to work” [Dube, Interview 9/10/01]. ORAP members in villages across Western Zimbabwe have defined development in a variety of ways, including material, but development is also often defined by ORAP members in terms of self- reliance, cultural dignity, and cooperation. Development is coming out from a lower standard of living to a better standard of living .. .[A] better standard of living implies many things; such as . . .going forward by doing, participating. Development means changing you from the old life to a new, better life. To understand yourself and others. Not changing as such, but improving our old life, our implements, our Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 33 food. To know our rights and encouraging one another to go back to using the best of our old methods that we were leaving aside. People must also change. If there is no change in people, there is no development. We must learn to work together... .Development is harmony and feeling for one another, sharing our problems. Developed people do not discriminate: they mix with and feed strangers. They share knowledge with others [quoted in Chavunduka et al. 1985, 1 and 20]. Also significant are the names that ORAP members have given their groups, such as Dingimpilo (search for life), Siwasivuka (we fall and stand up), Siyaphambili (we go forward), Siyazenzela (we are doing it ourselves), Khulum’ Usenza (discuss while working, i.e., talk and action must go together), and Vusanani (support each other to get up) [Dube, Interview 9/10/01]. ORAP’s programs are very diverse, with the explicit goal of designing development initiatives relevant to particular villages and regions. However, some examples of ORAP efforts would include basic skills (i.e., literacy) and development education; income generating projects, including market gardening, tailoring, carpentry, brick-making, and fishing; food security projects such as horticulture, cattle breeding, dairy, water, and food processing and storage; infrastructural development, including securing safe drinking water, sanitation, health, nursery, and family planning facilities; and professional training and employment creation in fields such as carpentry, well and grainmill maintenance, food services, handicrafts, bookkeeping, management, and marketing; and the development of community centers [Ndiweni 1993, 79], Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 34 Structurally, what ORAP has attempted to articulate in place of uncritically accepting received development paradigms, is a structure which seeks to put local people at the center of development, in some sense reversing the “top-down” nature of many development efforts. The organizational structure of ORAP is seen in Figure 1.2 The NGO thus operates with a vision of Family Units at the top, with the Advisory Board on the bottom. Hence, Family Units, generally the smallest unit of the organization, are thus placed at the center of development analysis and action. At this level, five to ten families come together to discuss their problems on a local level. Among many other problems, for example, some Family Unit discussions have argued for the importance of building a clean homestead and having sanitary cooking and storage facilities. Representatives from Family Units then come together to form a Group. Groups and/or Production Units work together to try to understand and compare local problems in a wider context, often discussing issues presented within Family Unit discussions. Development efforts at this level may include small-scale water projects, road building and maintenance, and village-level agricultural processing. Representatives from several Groups then discuss problems at the Umbrella level which in particular helps to facilitate communication and the sharing of ideas between Family Units belonging to different Groups or Production Units. Group and Production Unit projects are also presented at this level, and Group Representatives at the Umbrella level advise which projects are in need of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 35 further revision and which may benefit and be ready to receive funding and/or equipment from donors. Figure 1.2: The Organizational Structure of ORAP Production Units Production Units Umbrella Umbrella Umbrella Group Family Units Group Group Family Units Group Group Group Family Units Family Units Family Units Family Units Advisory Association Association Source: Adapted from Nyoni [1987, 54]. Associations are then formed to advise and articulate district development strategies that seem to be percolating within Umbrellas, Groups, and Family Units. Finally, the Advisory Board, consisting of members from all of these levels, meet every six weeks at the ORAP offices in Bulawayo, Zimbabwe to make Organization- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 36 level policy and to “create a platform from which rural people share their experiences and assist each other in solving problems” [Nyoni 1987, 54], Power within ORAP, of course, is not simply a matter of local people articulating all development efforts and all projects all of the time, as of course power is diffused within the organization. Moreover, as with all development efforts individual personalities and local constraints may come into play in some situations that may compromise particular efforts of grassroots participation. However, what is clear and interesting about ORAP is the extent to which it represents a direct attempt to build upon indigenous understandings of development, and to facilitate a “reversal” of top-down dominance and power of the type discussed by Chambers. The Role of Interdisciplinarity It has often been said that while the world has problems, universities have departments [Brewer 1999, 328]. And thus, various calls have been made, including from within participatory development, for multidisciplinary or interdisciplinary approaches to social analysis. Related to Chambers’ aforementioned notion of “professional” bias, the potential role of interdisciplinarity is a fourth value of participatory development. Some discussion of terminology is important. ‘‘ Multidisciplinary’’ research, usually conducted in teams, examines complex social phenomena from many different angles, but the underlying theories, methods, and epistemologies from Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 37 respective disciplines remain largely intact, while more “interdisciplinary” research attempts to create new concepts, methodologies, and to ask new questions.9 Hansson [1999] provides an interesting perspective on multidisciplinary versus interdisciplinary by considering the short-run and long-run advantages and disadvantages of each. The advantage of “cooperation,” one level of interdisciplinarity more concerned with using existing concepts and methods (in a multidisciplinary manner), is that it is more readily produced by research teams, and thus, more quickly able to address social problems. The advantage of “cross fertilization,” another level of interdisciplinarity, and one that is more concerned with the development of new, integrated concepts and methods, is that it is more apt to produce knowledge heretofore significantly underinvestigated and to ask new questions in novel ways. In any event, however, it can be noted that many of our key discoveries and analyses come from scholars guilty of various types of disciplinary “boundary crossing,” and as such, the promotion of further multidisciplinary and interdisciplinary work may prove useful [Dogan 1996 and 1997].1 0 Quoting Julie Thompson Klein, Allen and Kitch [1998] argue that “interdisciplinarity aligns knowledge and action by recognizing that ‘real’ problems do not come packaged in ‘discipline shaped blocks’; endogenous academic interdisciplinarity is thus a response to exogenous social interdisciplinarity” [Allen and Kitch 1998, 81]. Moreover, calls for interdisciplinarity are not unique to development analysis. For example, three such calls for interdisciplinary research, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 38 from environmental studies, women’s studies, and development studies, are as follows. Much high-quality science illuminates environmental problems, but it is often poorly organized and incomplete. It often does not have an interdisciplinary integration and synthesis that permit problems to be seen in a larger context, especially in an ecologically sensitive and sensible one. It is often not geared to the scale needed to shed light on environmental problems of long-term importance to human well-being. In short, much essential knowledge is not capable of guiding the development of policy, heightening public awareness, or even informing and enlightening political debate [Brewer 1995, 4]. From the early 1970s, scholarly work exploring women’s diverse situations and experiences has consistently confronted the limits of prevailing disciplinary criteria. Questions posed by feminist analysis have not been fully answered by any single discipline. Themes and problems have not neatly conformed to disciplinary parameters. Pervasive problems for feminist theory have demanded innovative interrogation. Because disciplines have traditionally demarcated distinct scholarly parameters, many issues critical to feminist scholars fall to the margins or borderlands of any given discipline’s preoccupation [Allen and Kitch 1998, 277]. The multifaceted and dynamic nature of development processes makes it necessary to take an interdisciplinary approach to the study of development, one that includes sociocultural, political, and environmental factors as well as those economic... .In order to be able to understand, explain and act effectively, development theorists and practitioners need to adopt more open, pluralistic perspectives and incorporate recent conceptual and methodological advances in a variety of disciplines, as well as indigenous insights into development from a range of sources within the South itself [Brohman 1995a, 297 and 303]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 39 Thus, a diverse group of researchers in different fields, including development, seem to be calling for interdisciplinarity, but what are its potential benefits? Locker [1994] suggests that interdisciplinary concepts and methods can illuminate and extend one’s work, contextualize and connect findings with larger conversations, facilitate triangulation, and enable researchers to reframe data and theories, so that problems can be seen in new ways, and new and different questions can be asked [Locker 1994, 141-146]. As such, by encouraging researchers to look at things in new ways with new and different theories, concepts, and methods, interdisciplinary research has the capacity to explore “gaps” of knowledge between disciplines and to bring these heretofore underexamined phenomena to the light, and indeed to analyze these phenomena in different ways. An example of such a “knowledge gap” from development studies would be useful [Chambers 1983, 182; also see Wade and Chambers 1980, and Bottrall 1981], Irrigation and canal management is an issue variously addressed by the disciplines of engineering, agronomy, and sociology. Civil engineers focus on the design and construction of irrigation systems, with little or no attention to the distribution of water or the post-construction operation of canals. Agricultural engineers and agronomists focus their attention on the level of farmers’ fields, below canal outlets. Sociologists also focus their studies below the canal outlets, addressing issues at the community level. As such, there is no discipline or field that places primary emphasis on the management of the canal or the distribution of water within the system. Therefore, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 40 farmers “privileged to be at the headreaches receive abundant water while those deprived at the tail receive little or none, and receive it unreliably and late. The opportunities for improved equity and productivity are immense,” but are not realized, due in no small part to the “common chasm” between the work of disciplinary engineers, agronomists, and sociologists [Chambers 1983, 182]. More productive than this arrangement, it would seem, would be to allow for and explicitly encourage cross-fertilization and interdisciplinary checking and rechecking of research results and development plans, to search for gaps, synergies, common ground, and new theoretical, methodological, and organizational concepts. This and other examples (Borooah et al. [1994] in development studies, Allen and Kitch [1998] in women’s studies, and Clark [1999] in environmental studies) of the potentials of interdisciplinary work notwithstanding, there are, however, obstacles to effective interdisciplinary research which should be kept in mind, and need to be challenged if interdisciplinarity is to play a more fruitful role in development analysis. In particular, in addition to a number of practical problems,1 1 just as there are often difficulties in getting academic and other professionals to accept the legitimacy of indigenous knowledge systems, there are also difficulties in doing multidisciplinary or interdisciplinary work in the disciplinary world of academia. In particular, as noted in most publications discussing interdisciplinarity, it is not clear where interdisciplinary work stands in the disciplinary world of academia. There is “an establishment attitude in universities of remaining true to one’s Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 41 discipline. To engage in interdisciplinary research as a non-tenured faculty member is a risk to one’s career” and as such, the pressures to conform and solve the standard puzzles as presented by the discipline can be considerable [Bruhn 2000, 60; also see Metzgar and Zare 1999, Kent 1994, and Watt 1991]. “Interdisciplinary research is risky; traditional research is safe. It is easier to explain failure to one’s peers when you did research in an accepted way” [Bruhn 2000, 63; also see Sternberg and Lubart 1995]. Within development analysis, the perception is much the same, as for the most part, “interdisciplinary approaches to development have yet to attain intellectual respectability; development theorists commonly contend that interdisciplinarity tends to lead away from more important ‘scientific’ and ‘rigorous’ 19 research within disciplinary specialisations” [Brohman 1995a, 303], As noted, however, despite the political and practical difficulties, it is recognized in participatory development that many important social problems do not yield to disciplinary prescription. For academia more generally, where the discomfort of the traditional disciplinary boundaries is increasingly felt, perhaps it is only a matter of time before significant academic restructuring occurs, though this remains an open question [Wallerstein 1995]. However, this may indeed be a case where much of the formal academy will need to “catch up” with what is already happening on the ground in many of today’s pressing fields of social inquiry and action, including development. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 42 Focus on Participation The fifth value of participatory development to be discussed is, of course, its focus on participation. In fact, one way of thinking about the previously discussed elements is that they all demonstrate the need for and potentials of, greater and more open participation. “Reversals” of power and privilege help to expose the domination and ethnocentrism of much of development research and policy, and help to promote better understandings of local realities and facilitate local participation in analysis. Similarly, the contextual nature of participatory development, expressed through the investigation of diversity, local realities, and continuous change, also demands an emphasis on local investigation and participation. Furthermore, recognition of the value of indigenous knowledge systems also demonstrates the potentials of local capabilities and participation in analysis and action. Finally, recognition of the value of interdisciplinary analysis can be seen as an expression of the need for greater cooperation, synergism, and democratic participation of the academic disciplines. “Participation” in development has different meanings, but perhaps all are guided by the principle that analysis and action may be more successful and sustainable where institutions are structured to encourage voices to be heard and policies and actions to be reflective, as feasible, of democratic participation and processes. Clearly, some development economists have already noted the importance of participation in development. Griffin [1999], for example, notes the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 43 central importance of local participatory structures to what he calls the “redistributive” development strategy, used in part in Taiwan and South Korea’s development efforts. More generally, however, “participatory development” can be seen as a commitment to local knowledge, problem identification and action, as well as a recognition and celebration of local diversity, context, and culture. Within development practice, particularly within NGOs and various types of people’s associations, but also within an increasing number of multilateral aid efforts, an emphasis on participation is quickly becoming the norm.1 3 However, some parts of academia (and certainly economists) have yet to fully embrace and utilize many of the research methodologies of participatory development. As one of the purposes of this chapter is to highlight some of the methods of participatory research and action currently being utilized in the field, the following paragraphs introduce some of these methods. Two methodologies of research and action which can be seen in the participatory tradition are what have been come to be known as “rapid rural appraisal,” or RRA, and “participatory rural appraisal,” or PRA.1 4 RRA and PRA share much in common, but also have some important differences. On the whole, RRA is more extractive or elicitive, with the key resource being local people’s knowledge, while PRA is more about empowering or sharing, with the key focus being local people’s analytical capabilities. The methods of analysis and action are not at odds with each other; both are appropriate at various times and places. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 44 RRA emerged as a field research methodology in the late 1970s and early 1980s among several types of development workers, policymakers, and academic researchers, largely in response to the increasingly evident biases of much of rural development research as described above. While an oft-quoted basic principle of RRA research is simply to “use your best judgment at all times,” some additional values and qualities would include a reversal of learning and substantial use of indigenous knowledge, learning rapidly and progressively, with an uncommitted, flexible use of tools and methods, optimizing tradeoffs in research, between accuracy, relevance, and timeliness, seeking diversity and learning from exceptions, and triangulation of methods of research and analysis [Chambers 1994, 1254; Grandstaff et al. 1987, 10-14], Sharing influences and involving many of the same practitioners as RRA, PRA emerged in the 1980s and 1990s as an attempt to “hand over the stick” in analysis to local communities. In PRA, research becomes more facilitative and less extractive. “They” do the diagramming, “they” do the asking and interviews, “they” do the village walks, etc., and “we” act more as partners (or “reflectors” in the Freireian sense), than as leaders or data collectors. Some of the more popular uses of RRA and/or PRA in development have been on soil and water conservation (Kenya, India, South Africa, Vietnam); urban violence (Jamaica); gender issues (the Gambia, Morocco); aquaculture (India, the Philippines); rural development forestry (India, Nepal, Tanzania, Uganda, Zimbabwe); participatory monitoring and evaluation (Kenya, India, Nepal, Bangladesh); community level planning (West Africa, Sri Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 45 Lanka, Tanzania, Uganda, Vietnam, Zimbabwe, the United States); agricultural research priorities (Botswana, Malawi, Zambia); crop-specific programs (Nigeria, Indonesia, Pakistan); irrigation (India, Sri Lanka); health mapping (Bangladesh, India, Tanzania); water and sanitation planning and action (India, Kenya); poverty programs and assessments (Bangladesh, India, Pakistan, Sri Lanka, Ghana, the United States); livelihood analysis (India); park and forest management (India, Pakistan, United Kingdom); impact of structural adjustment policies (Zimbabwe, Zambia); and land tenure (Tanzania, Honduras, Panama, Guinea). On one level, the development of RRA and PRA was quickened by problems with more standard data gathering techniques, including questionnaires and the secondary analysis of survey data. While not questioning the importance of surveys in many contexts, it was increasingly recognized by researchers that in some cases large-scale and “one-off’ surveys can be costly in terms of time and resources when compared to their net benefit, as the data returned are often inaccurate, and thus the findings from the research are often misleading, or at a minimum, incomplete (several such examples can be found in Chambers [1983, 55-57]).1 5 Complementary methods of data collection were needed, for purposes of cross-checking survey findings, as well as for providing vital contextual knowledge of a given situation that is generally not possible where research methods are not more deeply qualitative. Influenced by disciplines and fields such as anthropology, farming systems research, agro-ecosystem analysis, and participatory action-reflection research, in the analysis of development, RRA and PRA use more familiar research methods such as Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 46 interviewing (semi-structured, group, individual, life history, etc.), direct and participant observation, and secondary data review (statistical, case studies, maps, etc.), in addition to perhaps less familiar methods to some, including (but not limited to) transects, mappings, diagramming, and raking. It is worthwhile to consider some of these perhaps less familiar research methods in more detail. What should be clear from an overview of these research methods, however, including the more traditional methods of semi-structured interviewing, and direct and participant observation, as well as the more participatory methods of transect, mapping, and seasonal diagramming (to name a few methods currently used in the field), is that researchers using such methods are required, metaphorically, and sometimes literally, to “get their hands dirty” in local-level field research and contexts. Where local realities are valued, the researcher is thus required to face and try to make sense out of many more types of data than the researcher who is content to download a data set of annual data from the latest CD-Rom and then run some regressions. A geographical transect involves a systematic “walk” through the area to be studied, often a village or neighborhood, with key informants or local experts. The purpose of such a transect is to gain a better understanding of local conditions, resources, and potentials. The exact path to be followed need not be a straight line; a general pattern to be walked and discussed can be mapped out with local residents beforehand, if desired. The team of transect walkers might also discuss beforehand aspects of the terrain to be noted and tasks assigned, such as researching prevalent Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 47 crops, soil types, livestock, land use and tenure, etc., in addition to problems and opportunities in particular areas. Following the walk, and from their fieldnotes, participants can create a diagram (or series of diagrams) which can then be discussed and debated in community meetings. Key factors to success of a transect walk include the need to not rush or lecture, and to be inquisitive and to show your interest. Local development analyses, plans, and initiatives can then start to be formulated using the geographical transect as one piece of concrete local data and analysis. Figure 1.3 offers an example of a geographical transect from a village in Northern Pakistan.1 6 Participatory mapping is another common PRA method. Communities, groups, and researchers can facilitate the drawing of many types of useful maps of local conditions, resources, problems, and potentials, for example, social maps of local livelihoods and natural resource maps of land and soil types and watersheds. Participants are encouraged to work together and draw one or a succession of maps (using whatever materials are appropriate, including pen and paper, chalk and chalkboard, stones and the ground, etc.), which helps to facilitate discussion, cross checking, and debate of local realities, problems, and potentials. As with the case with data and analysis emanating from transects, participatory mappings can often better capture local contextual data that more traditional research methods, such as the one-off formal survey, may misinterpret or just miss entirely. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 48 Figure 1.3: Geographical Transect of a Village in Northern Pakistan I TERRACE £ S O IL LOAM a I b T io t a VE Ly” LOAMb S 'WftW.VS'W PROPORTION OF GRAVEL INCREASES WITH DEPTH STONEV LARGE B O lil DERS CRO PS: WHEAT - MAIZE, MASH WHEAT - FALLOW VEGETABLES, POTATOES B U SH E S T R E E S RECENT TERRACE I S E M I- I DEVELOPED SANDY RECENT TERRACE * PO PLA R I THORNY | BU SH ES UN-DEVELOPED STONEY SAND SCATTERED T R E E S | FLOODING I LIV ESTO CK : RUNIMANTS FREE GRAZING IN WINTER FREE GRAZING I 9 1 s mL GRAZING PROBLEMS: POD BORER IN MASH WATER FLOODING WATER SHORTAGES POOR S O IL SER IO U S | WATER 0 SHORTAGES § POOR S O IL O PP O R T U N IT IE S : P E S T CONTROL EXTEND CANALS IR R IG A T IO N AND WATER CONTROL IMPROVING GRAZING I ~T fi MORE ( EXTENDED CANALS . TREES r IR R IG A T IO N ALFA ALFA Source: Adapted from Mascarenhas [1994, 12] Figure 1.4 offers an example of a natural resource map drawn by villagers in Ndam Mor Fademba, Senegal. There are several types of diagramming used in participatory research and action. Participatory Venn diagramming, for example, can be useful in encouraging people to explain how they see power relations and decision making both locally and with organizations such as the state or donor agencies. Alternatively, a conflict Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 49 matrix can be constructed, listing disputants horizontally and conflicts vertically, with discussion comparing the severity of, and articulating conflicts over, for example, trees, land, water, and animals, between disputants such as fellow villagers, neighboring communities, strangers, and the state [Freudenberger 1994, 46-49]. Figure 1.4: Map of Village Territory D ISPU TED A FF E LEYE NDAMI SA N O SSI -TER RITOR Y w s t u r e DAROU S E Y E NDAMI G O UR EYE NDAMI BALIA ' FALLOW ■SHARED "WITH NDAMI M O R FADEMBA CATTLE P A S SA G E T O W A TERING HOLE NDAMI PEU L |'.F I E L D FIELDS y 'F A L L O W C BELO N GIN G TO V . NDAM NDIOUM P NDAMI S E Y E NDAMI BOUSRA L an d allo ca te d to long term (> 5 y rs) fallow by re sid e n ts of NM F NDAMI NDIOUM P FALLOW •PA STU R E V illage within th e territorial lim its | | Village o u tsid e th e territory FALLOW C O N TIN U ES NDIOURKI (TH IES REG ION ) L and cultivated (or in sh o rt te rm fallow) by re sid e n ts of N dom M or F a d e m b a NDIENGDIAW Source: Adapted from Freudenberger [1994, 29] Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 50 Another type of diagramming is the seasonal diagram, which tries to articulate seasonal changes (however defined) in local realities, livelihood strategies, problems, and potentials. It is not difficult to see how analysis of (often annual) regional or national aggregates and averages can at times misunderstand the complexity and diversity of development problems and realities as they are faced in different periods of time, and in turn, how such a lack of critical understanding of problems as they are faced in real historical time can lead to difficulties in appropriate policy formulation. In this sense, seasonality diagramming is an aid for the formulation of policy and plans of action that are cognizant of the time dynamics of realities in the communities and societies investigated. The first step is to try to understand how the community’s year works, do they primarily separate the year into months, seasons or kartics, etc., and which one or more of these do they want to use for their diagram. Next, participants can be asked to suggest and discuss important aspects of their livelihoods, which may include issues such as income, expenditure, employment, and rainfall. Participants then show the importance or prevalence of each during the year by using stones or seeds on the ground, pen and paper, chalk and chalkboard, or whatever other materials may be appropriate. The group then discusses the diagram, makes changes and debates the relative importance of each item to be discussed. Problems and policies can then be discussed in a group setting, and notes can be taken which can Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 51 be later used in order to write analyses of problems and statements regarding policy formation. Figure 1.5 offers a seasonal diagram, produced by Basapura villagers in India. Figure 1.5: Seasonal Diagram bv Basapura Villagers. India CREDIT INCOM E EXPENDITURE EM PLOYM ENT (WOMEN) EM PLOYM ENT (GENERAL) RAINFALL MONTHS — j------------T • M l • •• 1 : | i ! I * i t ||«*«|»»** • • M AR | APR M AY - I ______ ' • • • • • • • * «••• • • JUN E JULY I ----— + j « • • • J ! » i M l | {••• • • ' • • I <m m ! IM M I I • • • # , AUG ••••{*♦• | — 1 • • • • «#» ' * • • f »« ** 1 » I I * I SEPT I OCT PARTICIPANTS: 1. NAGALINGAIAH B.D.O. 2. HANUMANTHARAJU B.D.O. 3. CHANDRASHEKAR B.D.O. 4. VIJAYKUMAR 5. KARUMBAIAH 6. SHELEIKERI 7. M.K. ALI 8. RAMEGOWDA 9. JANIARDHAN Source: Adapted from Mascarenhas [1994, 15]. 10. CHALUVACHARI 11. NINGACHARI Finally, wealth ranking is a most useful type of participatory analysis that seeks to articulate differences in local standards of living, however defined. A Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 52 technique called card ranking places the names of families in a village (or other locality) on cards, and participants, often in a private setting, are asked to sort through and rank families into different piles, so that each pile represents families with approximately equal wealth. Prior to doing the actual ranking, discussion focuses on how wealth is locally defined; discussion of how local reality perceive wealth and poverty is just as important as the actual ranking exercise. Once the ranking is completed, discussion can move on to issues of differential access to resources, and those regarded by the community as the poorest can then be specifically targeted to encourage their participation in analysis. Some general comments on the above methods can be offered. It is clear that both RRA and PRA are highly eclectic and inclusive of different types of evidence. For someone engaged in participatory methods of research and action, the idea that statistics and photographs can carry potentially equal value as evidence is not a controversial one. In fact, for RRA and PRA a study is generally considered more “rigorous” where several types of evidence are appropriately utilized. Moreover, RRA and PRA methods can, and usually do, generate both “quantitative” and “qualitative” data (and again, this is to be encouraged). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 53 PARTICIPATORY DEVELOPMENT AND INSTITUTIONAL ECONOMICS: SHARED METHODOLOGICAL COMMITMENTS AND POTENTIALS FOR COMPLEMENTARITY Shared Methodological Orientations Carefully nuanced and qualified, Beed and Beed [1996] discuss a dichotomy between naturalist and non-naturalist approaches in contemporary economics. Naturalist approaches to economics may variously stress formalism, empiricism, rationalism, objectivity, modernism, and reductionism, while non-naturalistic approaches may variously stress social constructivism, holism, postmodernism, and the role of interpretation and “storytelling” in analysis. In much of naturalistic economics, “relations between economic variables are acultural, ahistorical, and aspatial,” which is to say that they are “context universal,” while in much of non- naturalistic economics, in contrast, “relations between human behavioral, including economic, variables are culturally, historically, and spatially contingent,” which is to say that they are “context specific” [Beed and Beed 1996, 1087]. The theoretical aim in much of naturalistic economics is thus “quantitative explanation and prediction,” while non-naturalistic economists focus more on “qualitative understanding, intelligibility, and explanation” [Beed and Beed 1996, 1087], Philosophically, naturalistic economics assumes a fact/value distinction, while non-naturalistic economists more often acknowledge that all theories and facts Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 54 are value-laden, and that only through exposing one’s values can a theory’s significance be contextualized [Beed and Beed 1996,1087, also see Myrdal [1978]. Beed and Beed then identify neoclassical economists, and a minority of Marxists and Post Keynesians as more naturalistic, while institutionalists, most Marxists and Post Keynesians, most economic methodologists, and most economic historians and geographers as examples of more non-naturalistic economic analysts [Beed and Beed 1996,1087]. It is my argument that participatory development, in its epistemological and methodological formulation, falls into this more non-naturalistic category of social analysis, and as such, shares some common ground with institutionalism and thus is in a position to potentially contribute to institutionalist analysis. Potentials for Complementarity It would be useful to look, first, at participatory development through the lens of Wilber and Harrison’s [1978] four qualities of holistic institutionalist pattern modeling, and second, to consider my proposed five qualities of participatory development from an institutionalist standpoint. Such a discussion reveals that there is indeed much shared methodological commitment and thrust between participatory development and institutional economics. Following such a discussion, the chapter concludes by offering some thoughts on a possible road ahead. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 55 As previously noted, the holistic institutionalist conception of reality argues that social reality “must be studied as a whole human system in its natural setting” [Wilber and Francis 1986, 185], and thus, “the holist standpoint includes the belief that human systems tend to develop a characteristic wholeness or integrity” [Diesing 1971,137]. The structure of social explanation for the holistic institutionalist, moreover, seeks to link together many seemingly independent parts to try to see their relationships, rather than “deducing an hypothesis from a formal theory [Wilber and Francis 1986, 327], and therefore, holists do not “predetermine the appropriate framework in which to explain their subject-matter” [Wilber and Francis 1986, 187]. These qualities of institutionalism correspond well to the conception of reality and structure of explanation utilized in participatory development. For example, participatory development criticizes a method widely used in development practice called logical framework analysis. Logical framework analysis forces planning teams to identify a single core problem supposedly “behind” all or most other pertinent problems faced by the community, and then policy is formulated around addressing that single core problem. Participatory development, however, argues that there may be many problems, that they cannot be reduced to one, and that the community may be better served where analysis attempts to articulate interconnections rather than identify the supposed root cause of all social problems. In this way, problems can be seen in a relational context, and policy can be formulated with explicit attention to possible interactions of variables as policy proceeds. Likewise, the institutionalist’s method of pattern modeling as an evolving Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 56 view of the issue at hand is similar to the process that emerges over the course of a PRA exercise, where local realities are continually looked at from different angles and with different evidence, until an overall picture of the community starts to emerge, and continues to change and evolve, throughout the analysis. It is the primacy of subject matter where participatory development shines brightest through the prisim of the holistic institutionalist, however. For the holistic institutionalist, “concepts are relatively concrete, particularized and close to the real system being described” [Wilber and Francis 1986, 187].1 7 As such, the institutionalist often becomes a participant observer in the subject matter or case under study. This value of institutionalism goes a long way in explaining the institutionalist propensity toward case studies of concrete situations. Participatory development, emerging in part from grassroots development movements and criticism of more standard academic techniques as well as from criticism of the nomothetic and neoclassical policy prescriptions offered by institutions such as the World Bank and International Monetary Fund, is committed to the explicit analysis of social realities as found in actual social settings. This places the institutionalist in a far more sympathetic position to participatory development research, with its emphasis on local and concrete analysis rather than abstract theorizing. Finally, the oftentimes dialectical nature of the holistic institutionalist also finds expression in participatory development. “Two concepts are dialectically related when the elaboration of one draws attention to the other as an opposed concept that has been implicitly denied or excluded by the first” [Diesing 1971, 355], Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 57 In this way, the dialectic “is the logic of the concrete” [Wilber and Harrison 1978, 83], As previously noted, one of the reasons for the emergence of participatory development was the growing recognition that the more standard methods of development research and action were biased in several ways against, for example, the poor, the rural, and females. Participatory methods, by encouraging the expression of diversity, multiple and complex causation, and alternative explanations, is therefore dialectic in that the views and realities of previously excluded factors, explanations, individuals, and groups, are explicitly sought for analysis and in creating and re-creating the vision of society, how it works, and what its problems are. Let us now shift focus to considering my proposed five qualities of participatory development from an institutionalist standpoint. First, participatory development’s emphasis on local and diverse realities and upon provisional theorizing and analysis corresponds to the overall methodological thrust of institutionalism. Not only does the provisional theorizing of participatory development correspond with institutionalism’s aforementioned contextual structure of explanation, but it is also allied with institutionalist pattern modeling, as both are attempts to understand the workings of a particular situation, with analysis continuing over time and the “model” representing an holistic, evolving understanding of the workings of some particular concrete situation. The multi- and/or interdisciplinary understanding sought by participatory development can also be found in institutionalism. Most institutionalists endeavor to Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 58 be knowledgeable in history, politics, and other fields in addition to being familiar with what is more commonly taught in graduate departments of economics (the mainstream criticism of institutionalist analysis as “interesting, but not economics,” is well known). Beyond a shared broad view of their subject matter and disciplinary orientation, participatory development and institutionalism are both methodologically pluralistic, with the exact method and form of analysis in some sense determined by the problem at hand, rather than on an a priori basis. Participatory development’s emphasis on reversals aimed to empower the previously oppressed corresponds well with institutionalism’s tendency to champion the underdogs of society. Dugger’s [1998] insightful and inspirational presidential address to the Association for Evolutionary Economics on the issue of inequality leaves little doubt as to the institutionalist’s strong opposition to various social structures of oppression. More generally, it is noteworthy that both institutional economics as an approach to economics and participatory development as an approach to development are characterized as approaches critical of “mainstream” approaches to their disciplines and/or subjects, and that the practitioners of both also seem to see themselves as championing the causes of groups whose realities are often left out of more mainstream approaches and theorizing. Participatory development’s recognition of the legitimacy of indigenous knowledge systems corresponds with the institutionalist method of analyzing societies as cultural systems of social provisioning through time. The institutionalist often starts her or his analysis on the cultural level, trying to understand how existing Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 59 social and cultural institutions work. Not emphasizing behavior as necessarily either “rational” or “irrational,” but rather more often as an expression of cultural norms which will differ in both time and place, the institutionalist is therefore in a better position to more often see local cultural norms of behavior as contextual and purposeful. Finally, participatory development’s focus on participation also makes sense from an institutionalist standpoint, which investigates the workings and structure of social institutions with an eye toward understanding how such institutions may be re structured over time to allow for broader and deeper democratic participation in economic, political, and social life. Both participatory development and institutional economics are thus both activist, as they are most often intended not only to describe the world in relatively concrete terms, but also to be directly useful and applicable to policy discussion. As will be noted below, this similarity between participatory development and institutional economics may be key, in that several of the methods and values of participatory development may be directly applicable and offer guidance to institutionalist analysis. FINAL THOUGHTS The purpose of this chapter has been to outline some of the basic elements of participatory development in order to explore its compatibility with the values and methodological thrust of institutional economics. Hopefully, much common Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 60 methodological ground has been highlighted, including but not limited to the fact that both institutional economics and participatory development are quantitative and qualitative, pragmatically eclectic in their choice of research method, and sensitive to issues of contextuality and specificity. Additionally, both claim to be oriented toward real-world and policy analysis. And significantly, both value and seek to facilitate wider and deeper democratic processes in social, political, and economic systems. So, where might one go from here? On one level, it may prove useful for institutionalists to look into the literature and “on the ground” activity of participatory development. While many institutionalists may already be familiar with the participatory development literature and its current importance particularly in the world of grassroots development, more work needs to be done exploring in greater detail some of the potential complementarities between institutional 1 O economics and participatory development suggested in this chapter. It can be noted that perhaps the best starting point for a reading on participatory development is the “Participation Page” of the Institute of Development Studies at the University of Sussex (http://www.ids.ac.uk/ids/particip/home). Beyond this and the suggested reference to Chambers [1997], the reader is also referred to Scoones et al. [1996] as one of the best examples of how participatory methodologies can be turned into solid, insightful, social analysis. On a more hands-on level, and owing to the aforementioned compatible methodological ground between institutional economics and participatory Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 61 development, it can be noted that institutionalists may readily benefit from learning more about, and more often employing in their own analyses, a greater number of participatory methods of analysis and action, in particular those considered to be RRA and PRA methods. Given the eclectic, pluralistic methodological world of the institutional economist, it may prove useful for institutionalists to more often utilize and include primary quantitative and qualitative evidence and analysis from methodologies such as interviewing, direct and participant observation, transect, mapping, diagramming, and ranking. These methods, of course, could be used in addition to other methods commonly used by institutional economists, including historical analysis of quantitative and qualitative secondary data (hence further triangulating the study). Participatory development and participatory methodologies are not for everyone, and they are not a necessary condition for useful and insightful social analysis. Clearly, moreover, there are different shades of participation within research and action that will be relevant in different contexts. However, it can be said that in many cases and in many different contexts, participatory methods can and often have proven to be both useful and insightful. Participatory methods help to keep analysis grounded, practical, relevant to policy issues, and supportive of local ownership and participation in problem identification and action. As such, the institutional economist may benefit by looking deeper into these recent developments in development theory and analysis. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 62 ENDNOTES 1. The use of the idiom “kicking the dead horse” in this context comes from McCloskey [1994]. 2. Readers may recognize this as the “Duhem-Quine” thesis. 3. In an insightful and witty article entitled “Voodoo Economics,” McCloskey [1991] argues that if economists could indeed predict the future, they would all be rich. “From the British economist John Maynard Keynes (who lost money regularly before breakfast, but had King’s College backing him up), to the American economist Irving Fisher (who reduced Yale’s endowment to half of Harvard’s by touting stocks in 1928), down to the last scheme of some economist to make money from mathematical models of gold speculation, economists have not earned the confidence of bankers. .. ,[A]n economist is an expert who can tell you tomorrow why the thing he predicted yesterday didn’t happen today; the most hope I can have in a forecast is to be intelligently wrong or fortunately right... .Grown-up economics is not voodoo but poetry. Or, to take other models of maturity, it is history, not myth; politics, not invective; philosophy, not dogma. An illuminating economics - which is to say, much of the rich conversation since Adam Smith - is historical and philosophical, a critical theory, a virtual psychoanalysis of the economy” [McCloskey 1991, 295, 298]. 4. Readers are referred to any recent issue of the Journal o f Economic Issues for readily available examples of concrete case studies. 5. I do not believe, of course, that attempts to analyze local realities through postmodern, Marxian, etc. frameworks are ill-advised. In fact, it may be useful to note that I find both postmodernism and Marxism to be interesting and useful literatures and frameworks of analysis. The point, rather, is one of balance and of recognition of the legitimacy of studies that differ from more accepted (current) forms of academic practice. 6. Another example of a top-down, “Model-T” failure in development is the animal-drawn wheeled toolcarrier, which had been rejected by African and Asian farmers from as early as the 1960s, but which nevertheless had over US $40 million spent on its development through to the late 1980s. Highly Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 63 recommended in this regard is Starkey’s [1988] study, Animal-Drawn Wheeled Toolcarriers: Perfected yet Rejected. I. The potential literature to cite here is overwhelming. A good start, however, would be with Susan George’s [1990] A Fate Worse Than Debt. 8. I should acknowledge my bias. I am an Academic Director of and lecturer within a joint School for International Training - ORAP Zenzele College educational program in Grassroots Development and NGO Management (http://www.zenzelecollege.co.zw and http://www.sit.edu). I do not intend here to fully evaluate my perceptions of ORAP’s experience in development. Like most development organizations, ORAP has experienced successes as well as difficulties. My intention, rather, is to highlight elements of the participatory and progressive structure of the organization. 9. For some scholars, this is a key criticism of much “interdisciplinary” work. For example, Allen and Kitch [1998] survey recent issues of five ‘‘ interdisciplinary’’ women’s studies journals, including Feminist Studies, Frontiers, NWSA Journal, Signs, and Women’s Studies Quarterly, and found most articles therein to be disciplinary-focused. Though clearly of very high quality, the articles examined by Allen and Kitch were largely disciplinary contributions around a particular theme, rather than attempts to integrate disciplines “to create a new epistemology; to rebuild the prevailing structure of knowledge,” or “to create new organizing concepts, methodologies, or skills” [Allen and Kitch 1998, 276]. 10. Dogan [1996 and 1997], however, prefers the term “hybrid” social science to “interdisciplinary” social science. II. For example, as noted by Locker [1994], interdisciplinary research can require more time and effort than traditional disciplinary research. Working in teams with specialists from other disciplines can require extensive conversation in translating disciplinary jargon and negotiating, where possible, different paradigmatic and/or epistemological values and approaches. And this will not always be possible, especially where researchers hold irreconcilable values in their preferred form of social analysis [Bowles, et al. 1999]. Furthermore, it is also possible to make more mistakes when importing a method from another discipline, in particular when not specifically working as part of a research team. While both ethnographic and statistical data have something useful to offer social Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 64 analysis, it may be the case that the economist simply does not have the skills to employ the former or the social anthropologist the latter. Locker [1994] also notes the difficulties in receiving adequate training in other disciplines’ methods and concepts post-Ph.D., in particular where disciplinary structures often do not reward further training in another discipline’s methods. Finally, there is also question as to where the interdisciplinary scholar will publish his or her work [Joumet 1993]. 12. Even within my limited experience in development analysis, I have experienced the “academic sneer” of fellow graduate students and professors both from various disciplines and from various quantitative/qualitative orientations, questioning the value of research differing from the background, research, and teaching emphases of these colleagues. After two interdisciplinary graduate degrees from two different schools, and graduate-level coursework at three schools, including in economics, political science, international relations, international affairs, geography, education, and English, I can honestly say that my experience thus far has generally corroborated the argument that interdisciplinary work is at times undervalued, if not dismissed outright, in some parts of academia. Another obstacle and challenge to effective multidisciplinary and interdisciplinary work, moreover, is that where it is attempted in teams, it may only “integrate” perspectives by juxtaposition. In particular, hierarchies of disciplinary knowledge can make it very difficult for researchers from different disciplines to come together on equal ground in the design and execution of a research project [Simon and Goode 1989; also see Smeltzer 1994]. 13. This is certainly not to say that all development efforts claiming to be “participatory” are desirable, in particular if some development organizations and individuals use the term merely to attract donor funds. As noted, however, an increasing number of multilateral aid efforts increasingly claim to be operating from within various participatory frameworks. The World Bank’s experience with participation is especially interesting, in particular as participatory development rose in large part as a reaction to the failures of Bank-sponsored integrated rural development projects in the 1970s and neoliberal structural adjustment since the 1980s. Long [2001] offers an insightful and very detailed history of the Bank’s experience with participation, specifically looking at the evolution of participation policy at the bank over an eleven year period from its beginnings in 1987. Long documents the push from NGOs “to persuade and assist a major international donor agency to incorporate a significant change in its practice of development” [Long 2001, 19]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 65 14.1 cannot do justice here to the history and current evolution of these methodologies. A wealth of information on participatory development can be found at the (University of Sussex) Institute of Development Studies’ Participation page, at http://www.ids. ac .uk/ids/particip/home. A further note should be made, moreover, that the use of these methods in development work by no means indicates that a development effort is “participatory.” Critiquing top- down development in participatory clothing, Helmore and Singh [2001] writes that oftentimes first “the project is designed, and then the people are consulted and expected to participate” [10]. 15. It can be noted, however, that the type of research I am describing and to some extent criticizing at least involves the researcher actually entering the field, collecting data, and analyzing it. The economist performing econometrics on secondary data is yet further removed by at least one additional major step. On the issue of “survey slavery” (from where many statistics come from, of course), one has difficulty not quoting Chambers [1983, 53-54]. “A report is required. It has to be written late, by dispirited and exhausted researchers who have already begun new tasks. Their families do not thank them for their absences, late nights, and short tempers. They stare at print-outs and tables. Under pressure for ‘findings’, they take figures as facts. They have neither time nor inclination to reflect that these are aggregates of what has emerged from fallible programming of fallible punching of fallible coding of responses which are what investigators wrote down as their interpretation of their instructions as to how they were to write down what they believed respondents said to them, which was only what respondents were prepared to say to them in reply to the investigators’ rendering of their understanding of a question and the respondent’s understanding of the way they asked it; always assuming an interview took place at all and that the answers were not more congenially compiled under a tree or in a teashop or bar, without the tiresome complication of a respondent. The distortions are legion.” 16. Another useful type of transect is an historical transect, which aims to investigate changes over time and to understand trends in cropping patterns, erosion, population, yields, etc. The method of facilitating an historical transect exercise in a community is similar to that of a geographical transect: find local people willing and in key positions to offer insight into the subjects under study, work with them, ask questions, and facilitate. For an historical transect, older people in a community are often key participants. 17. Though I seem to have misplaced my notes from the 1999 Association for Evolutionary Economics summer school program, one distinct memory I have Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 66 from that experience is with talking with institutionalist Glen Atkinson from the University of Nevada at Reno about a study that he was involved with on the economics of mining. Specifically, I remember him beginning by saying “well, we wanted to do a study on mining, so we went down to talk to some miners .. 18. It is also important to look at how participatory development can learn from institutional economics. This will have to be taken up in a later project, however, as for now, space constraints prohibit such a discussion. Another issue that will need to be addressed elsewhere is how one’s picture of the similarities between institutionalism and participatory development is to a degree biased by one’s view of institutionalism. Wisman and Rozansky [1991] discuss a division between institutionalists who are “theory agnostics,” who view institutionalism primarily as a method of analysis (with possible suggestions as to what should be analyzed), and “theory seekers,” who see a need for institutionalism to find more transhistorical and transcultural laws. 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Further reproduction prohibited without permission. 73 Wallerstein, Immanuel. “What are we bounding, and Whom, When we Bound Social Research.” Social Research. Vol. 62 No. 4 [Winter 1995], 839-856. Ward, Benjamin. What’ s Wrong with Economics?. New York: Basic Books, 1972. Watt, R. “The Blocks in Interdisciplinary Research.” New Scientist. Vol. 130 No. 1763 [1991], 8. Wilber, Charles and Steve Francis. “The Methodological Basis of Hirschman’s Development Economics: Pattern Model vs General Laws.” World Development. Vol. 14 No. 2 [1986], 181-194. Wilber, Charles and Robert Harrison. “The Methodological Basis of Institutional Economics: Pattern Model, Storytelling, and Holism.” Journal o f Economic Issues. Vol. XII No. 1 [March 1978], 61-89. Wisman, Jon. “The Methodology of W. Arthur Lewis’s Development Economics: Economics as Pedagogy.” World Development. Vol. 14 No. 2 [1986], 165-180. Zerubavel, Eviatar. “The Rigid, the Fuzzy, and the Flexible: Notes on the Mental Sculpting of Academic Identity.” Social Research. Vol. 62 No. 4 [Winter 1995], 1093-1106. INTERVIEWS Interview with Tomson Dube, Academic Director of ORAP Zenzele College. 9/10/01. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER 2 PRODUCE VENDING IN THE CONTEXT OF ECONOMIC HARDSHIP: ANANALYSIS OF THE FIFTH AVENUE MARKET OF BULAWAYO, ZIMBABWE Recent work on the micro- and small-scale enterprise (MSE) sector in Zimbabwe, Southern Africa, and elsewhere demonstrates that this “sector” is quite a diverse or heterogeneous one indeed [Mhone 1996]. Ranging from activities such as vegetable vending to shoe repair to knitting to carpentry to mining, MSEs have often taken up the challenge of providing employment where the formal sector cannot. A 1993 nationwide survey revealed that the MSE sector in Zimbabwe employed over a million and a half people, where 29 percent of the working age population were engaged in MSE activities at that time [Daniels 1994, ix]. One of the key findings that emerges from an analysis of the available aggregate data on MSEs in Zimbabwe is that generally more profitable MSEs (e.g., garment vending, brick making, construction, and welding) tend to emerge in greater numbers during years of relatively high economic growth, while generally less profitable MSEs (e.g., wood carving, beer brewing, farm produce vending, crocheting, and art production) tend to emerge in greater numbers in years of relatively poor economic growth [Daniels 1994, D-19], Given Zimbabwe’s dismal economic performance over the past few years, with soaring formal unemployment and inflation, falling real incomes and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 75 increased levels of poverty, one may thus reasonably expect the number of MSEs from lower profitability sectors to have increased substantially [Shinder 1998].1 This underscores the potential value of studies focusing on these types of economic activities. And indeed, as noted by Mhone [1996], most of the papers published on MSEs in Zimbabwe are desk studies, and as such, little detailed knowledge exists on how these markets actually operate, the notable and often-quoted exception being Brand’s excellent [1982] study (and it is revealing that a twenty-year-old publication is regularly cited as one of the few empirical analyses on the topic). Thus, as perhaps the leading social scientist working on issues of the “informal sector” in Zimbabwe, Mhone has called upon the academic community to engage in case studies of diverse informal sector activities and markets in the country. The current chapter is intended to contribute in this regard. The chapter offers a case study of farm produce vending in the downtown business district of the Zimbabwean city of Bulawayo, and of the “Fifth Avenue” market in particular. The overriding purpose of the case study is to try to build up an understanding of the life, challenges, and potentials of farm produce vendors in one particular market in Zimbabwe, to try to understand how this market works, and to provide an empirical analyses of such a market, which can then be used by way of comparison to other markets as additional studies are produced. Ethnographic methodology informs the study; the study can be considered to be an example of economics in an anthropological mode. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 76 Produce vending was chosen as a case study for several reasons, all linked to the idea that the number of people engaged in the activity has most likely increased substantially in recent (and difficult) economic times. First, previous surveys have found that produce vending is indeed a relatively lower profitability MSE activity, being in the lowest profitability quintile of all MSEs [Daniels 1994, D-5]. Second, the barriers and costs to entry into produce vending are relatively low; the average cost of entry is one of the lowest of all MSE activities, estimated to be 49 Zimbabwe dollars in 1993 [Daniels 1994, D-5]. Third, it is quite difficult to walk the streets of Bulawayo without realizing the importance of produce vending to many people’s livelihoods in the city. This chapter, reporting on fieldwork undertaken October-November 2000, attempts to analyze produce vending at the Fifth Avenue market as an employment and livelihood strategy in the context of the period’s characterization as one of particularly difficult economic times. The study attempts to shed light on the details of produce vending as an economic and household livelihood strategy, to analyze the population engaged in the activity, to research the problems faced by vendors, and to explore policy implications and options. Specifically, the study attempts to document produce vending as a livelihood strategy in one particular market in Bulawayo, in order to help in the building of a more comprehensive understanding of the MSE sector in Zimbabwe, as well as to investigate local policy options. The organization of the chapter is as follows. Following this general introduction, I review the concept of the “informal sector” in the literature to discuss Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 77 how it has been conceptualized in the literature, and to shed light on how the term may be applicable to the current study. Third, I discuss the methodology of the case study. Fourth, I “take a walk” through the Fifth Avenue market by giving background information on the market and by offering some of the general findings of the fieldwork. Fifth, I analyze firm size, labor force characteristics, and the competitive strategies used by the farm produce vendors. Sixth, I consider some of the specific problems faced by the vendors. Seventh, I make a preliminary analysis of farm produce vending as a livelihood strategy within the Fifth Avenue market, and consider the role of vendor income in total household income. I then conclude by highlighting some of the major findings of the study, discussing some of the emerging policy implications, and by making suggestions for further research. Policy implications that are drawn from the analysis focus on practical, local-level recommendations rather than upon current Zimbabwean macroeconomic policy, which is perhaps more appropriately addressed elsewhere. Survey instruments are reproduced in Appendix 1, and Appendix 2 offers a sample of photographs taken (with permission) during the fieldwork. THE INFORMAL SECTOR: A REVIEW Defining the “informal sector” is not an unambiguous task, and considerable criticism and debate surrounds the topic. While in this study I primarily utilize the term “MSE” to refer to the micro-level economic activity of farm produce vending, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 78 readers may link the business investigated in this study to the informal sector, and as such, an overview of the concept may prove useful. The outcome of the discussion on the informal sector is my view that the concept can be successfully utilized in particular cases where the author makes clear exactly what is being investigated, and as long as too much is not expected from the concept. The term “informal sector” came into popular use with the 1972 International Labor Organization’s Employment Mission to Kenya and the publication of the ILO’s Employment, Incomes, and Equality: A Strategy fo r Increasing Productive Employment in Kenya. Following its mission to Kenya, the ILO argued that informal sector activity is characterized by: ease of entry, reliance on indigenous resources, family ownership and labor, small-scale operation, labor-intensive technology, skills acquired outside of formal schooling, and unregulated, competitive markets [Lubell 1991,17], One way of thinking about the informal sector, as noted by Kabra [1995, 197- 198], is within the dual sector approach pioneered by Lewis [1954]. Such a conceptualization, which informed significantly the ILO’s initial investigations of the informal sector, portrays the sector as essentially emerging from the failure of the modernized economy to absorb surplus labor. Later criticisms of the initial ILO investigations, however, focused less on the alleged source of the informal sector than they did on the ILO’s description of the informal sector and its workings. Specifically, it became clear that the informal sector can be quite slippery as a Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 79 concept, with noted development economist Hans Singer concluding that while he does not quite know what the informal sector is, he knows it when he sees it. For example, it is not clear if characterizations of the informal sector are to be taken as “criteria” for informal sector status. If so, would sewing clothes on an imported machine be considered an informal sector activity (as the ILO notes the use of “indigenous resources” as a quality of the informal sector)? What if the person involved worked illegally, without an established place of business, but on the other hand, had a wage employee who was not a relative, and learned to sew in public school? Perhaps due in large part to such definitional ambiguity, many other variations and extensions on the ILO definition have been offered, including those of Sethuraman [1981,15-18], Aryee [1981, 6], Ashe [1981, 11-12], and Matsebula [1988,137; 1996, 12-13]. At times, the list of informal sector characteristics or criteria can become incredibly long. Matsebula [1996], for example, offers some seventeen possible characteristics of an informal sector enterprise, expanding the ILO definition to cover issues such as flexibility in hours of operation, rudimentary bookkeeping, non-enumeration in official records, low usage of formal credit, and several others. It is interesting that many of the aforementioned empirical studies on the informal sector, in addition to those offered by Ndoro [1996], Ngwira [1996], and Banda and Nyirongo [1996], structure their studies as introduction, review of the informal sector concept, including significant discussion of the concept’s ■ 2 weaknesses, and then analysis of the case at hand. Whether the definitional Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 80 ambiguity of the informal sector is a problem for social analysis, however, depends on how one uses the term and in what context. Clearly, no strict definition of the informal sector is sustainable across all analyses, meaning that the definitional quality of the concept remains somewhat fuzzy [Abedian and DeSmidt 1990; Sethuraman 1981; Peattie, 1988]. The excellent study by Kabra [1995] provides some guidance here. Kabra reviews the most commonly proposed characteristics of the informal sector, and demonstrates that none of them are able to hold up in all contexts. However, as Kabra argues, it is possible and useful to use the term IS [informal sector] not as a locus of all the empirically observed features in terms of the scale of production, skills, interface with government and organised formal markets, location, nature of technology and product mix, etc. Rather, it is an umbrella or portmanteau term . . .for varieties of elemental organisational institutional arrangement, other than the well defined, chiseled and the most powerful organisational forms typical of the mode of production obtaining in the countries of the Third World [214], Thus, the informal sector concept may be useful as long we do not expect the wrong things from it. Clearly, a theoretical schema that forever lumps together the vast qualitative differences of such diverse activities would not be desirable for all purposes of analysis. As such, the informal sector concept remains an umbrella term that denotes research into a broad field, only gaining concrete meaning once investigated in a specific context where the purpose and frame of analysis are made Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 81 clear. As such, allow me clearly note the definition of the formal/informal sectors as the terms are utilized in this study. In this study, formal sector work denotes work where the primary method of remuneration for the majority of those engaged in the activity in the particular industry is through wages. Conversely, where the informal sector concept is used in this study, it denotes work where the primary method of remuneration for the majority of those engaged in the activity in the particular industry is not through wages. METHODOLOGY OF THE STUDY In the course of research, rather than taking a random sample of vendors in which to interview, I decided instead for the primary survey to try to talk to the people at each individual stand at the market. This was done for two major reasons. First and foremost, as I hope this research to be just the beginning of my relationship with this community, it made good sense for me try to get to know as many people as possible, and not to create any possible jealously in who I choose to initially interview. And second, I wanted to talk to as many people as possible so that I would then have a wide selection of participants to return to for more detailed and follow-up interviews. For the secondary survey, due largely to time constraints, I attempted to talk with the owner(s) of every second stand, and where an individual was not available for whatever reason, I simply moved on to the next available stand and continued in counting for every other bay. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 82 As can be seen from Appendix 1, the surveys would fall somewhere between a semi-structured and structured interview schedule. While there were definite categories of information about which I wanted to gather information, I also wanted to be open to the rich data offered by more informal conversation. I thus tried to conduct the interviews in as relaxed an atmosphere as possible, and made the time to visit the research site several times just to walk around and talk informally with sellers and buyers. The interviews were usually conducted in a combination of English and Ndebele, the latter for which I used an interpreter.4 Prior to the interview, I explained that I was a researcher from the United States, and that I intended to keep all of their information confidential. I removed my field notebook from my pocket only once I had permission to conduct the interview. For both the primary and secondary surveys, each respondent was given five Zimbabwean dollars (the approximate price of two bananas at the time of fieldwork) at the conclusion of the interview, to defray the cost of the 15 or so minutes it took to discuss and answer my questions. Where people were missing from their stands, I asked the surrounding vendors about their location and if possible, I returned to try to interview the owner(s). Where people indicated that they were too busy to answer my questions and could I come back later, I had to guess (together with my interpreter) if the person sincerely wanted me to come back, or was trying to find a polite way of letting me know that they did not wish to be interviewed. For the primary survey, I Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 83 interviewed 139 owners, and for the secondary survey, I interviewed 110 owners. The overall response rate was 84.6 percent. Methodological values necessarily permeate social analysis, and it is incumbent upon the critical social scientist to explore his or her subjectivity and position within a research project. With regards to this study, I needed to think about how personal characteristics influenced the collection and analysis of data. I am young, male, white, and foreign. The latter two of these characteristics are particularly noteworthy as my whiteness and foreigner status in Zimbabwe can easily bring with them expectations of economic or other assistance. Though I clearly explained otherwise, there is the possibility that some interviewees assumed that I was a donor, or at least had connections with donors who were in an position to help them. This also raises the question of the ethics of collecting data and taking it away from the community for my own purposes of analysis. I negotiated these issues through a combination of (1) being honest about who I was and the purposes of my field study; (2) offering nominal remuneration in exchange for data; and (3) thinking about ways to remain engaged with this community following the fieldwork. I also attempted to conduct the research in a relaxed manner, and tried as best as I could to “be unimportant.” For example, on some days during the research I would not collect any “formal” data at all, instead opting to socialize and interact with both vendors and customers. I also did my best to “be unimportant” by always Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 84 arriving and leaving on foot, and by dressing in the casual style of other young males at the market. My background influenced not only the types of data I collected, but also the methods of analysis utilized. I primarily consider myself to be a development economist, within an eclectic and interdisciplinary political economy tradition. At the same time, I also have a background and interest in participatory research. As such, I wanted to investigate categories typically analyzed by radical political economists, including class, gender, differentiation, and structure, as well as to try to appreciate how participants in this market see and categorize their own realities and problems. The resulting style of analysis is informed by both the political economy and participatory traditions, and is an example of what I believe could be a fruitful field of inquiry and action in future years; namely, the use of qualitative, anthropological, and participatory methods in the analysis of political economy topics. BULAWAYO’S FIFTH AVENUE: A WALK THROUGH THE MARKET Bulawayo’s Fifth Avenue market runs East-West along Fifth Avenue, bordered by Jason Moyo Street to the West and Robert Mugabe Way to the East. The market is clustered into six groupings of business locations or stands: three groupings of stands between Jason Moyo and Fife Avenue, two groupings between Fife Avenue and George Silundika Street, and one grouping between George Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 85 Silundika and Robert Mugabe Avenue. Stands are two to three square meters, and are currently rented from the Bulawayo City Council for 88 Zimbabwean dollars (hereafter dollars) a month. The stands are undeveloped; individual vendors are left to build their own shelters, most often of which take the form of metal posts with a dark plastic tarp connected over the top (see Photos 2.1-2.5, Appendix 2). In an effort to “clean up” the city, the Fifth Avenue market was “created” in 1996, by passing a city ordinance prohibiting the sale of goods on street comers, and the subsequent “formalization” of the activity by the demarcation of stands to be rented by individual business people. Many of the vendors interviewed indicated that the ordinance has hurt their businesses, in particular as regards their pricing power. While before the ordinance vendors could seek out specialized locations and cater to certain groups of people in the city, the forcing of so many vendors into the Fifth Avenue market has led to fierce competition and hence less pricing power. The ordinance has been enforced to various degrees at various times; in the current era, law enforcement, at least in Bulawayo’s downtown business district, is relatively strict against the sale of farm produce outside of Council market areas (though it does take place). There is very little motor vehicle traffic along Fifth Avenue, as the vendors’ spaces leave little room for cars; the market is thus a walking one. With the exception of the large vegetable wholesalers who occupy most of the buildings along Fifth Avenue, there are only a few other shops or businesses along Fifth Avenue besides the vendors. A wide-variety of fruits, vegetables, grains, seeds, and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 86 traditional foods such as amacimbi (mopani worms) and uxakuuxaku (African chewing gum) can be found in the market. Some of the other items sold include packaging materials, cleaning agents, brooms, and used hardware. With very few exceptions, if a fruit or vegetable is grown and widely eaten in the region, it can be found at the Fifth Avenue market. Most vendors sell directly to the public, while others specialize in wholesaling to other vendors. Supplies are obtained from the large wholesalers, vendor wholesalers, and peri-urban and rural areas, either through the vendor traveling to the rural area to purchase the goods, or from people who come to the urban areas for purposes of selling to urban vendors, with vendors often hiring “scania” pushers to deliver their goods to their stands (Photo 2.6, Appendix 2). The most popular fruits and vegetables for sale include tomatoes, onions, potatoes, oranges, and bananas, while others also specialize in a wide-variety of nuts, seeds, and grains. Some businesses sell a variety of products while others more often sell a much smaller range of fruits, vegetables, or grains, oftentimes only offering one good. Most businesses are open Monday-Saturday, selling from about 6:00 am to about 6:00 pm, though some people start selling as early as 5:00 am and sell as late as 7:30 pm. On particularly slow days some owners may stop selling much earlier in the day. Indeed, upon spending any time in the market, one realizes that business appears very good on some days and very poor on others. Interviews revealed, however, that daily fluctuations are not the only or even primary concern that sellers Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 87 have with business fluctuations. In fact, vendors experience at least three types of business fluctuations - daily, weekly, and monthly. In interviews, a general pattern emerged for each time frame, though disagreement did exist, in particular over the details. First, business fluctuates daily. The days most often cited as good for business are Friday and Saturday, with those working on Sundays also generally considering it to be a good day. The worst day of business, and on this there is little disagreement, is Wednesday. Thoughts regarding Monday, Tuesday, and Thursday are mixed, while what is generally agreed upon is that they are not as good as Friday and Saturday, but not as bad as Wednesday. Second, business fluctuates weekly. Specifically, the last one or two weeks of each month are considered good for sales, while the early weeks of each month are considered very poor. And third, business fluctuates monthly. For the most part, November and December are considered the best months and January and February the worst. Regarding the latter, vendors often jokingly refer to “January disease,” when business is at its worst and sales plummet considerably. “I just come here in bad months because I have nowhere else to go,” explained one woman. The general monthly pattern is therefore slow business in January and February (when school fees must be paid), perhaps picking up a bit in April (a holiday period), then down again June-October (the payment of school fees again, and also the season to purchase maize seeds) with good sales again in November-December (a holiday period). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 88 Competition along Fifth Avenue is stiff, and vendors compete and market their goods on a variety of fronts, including quality (“When a customer comes and finds no rotten things, they’ll come back”), customer service (“I give my customers a good smile and welcome them to my stand”), specialized products and quantities, and retail and input prices. Both casual investigation and the more systematic price data collected during the research show a surprisingly consistent (though certainly not perfect) level of prices charged for goods - something particularly notable given the rapidity and instability of inflation in the country at present. Further investigation on pricing strategies revealed, in the first instance, a mark-up over costs pricing approach; without fail, when asked how prices are determined, vendors indicated that first they determine how much was paid for the goods per unit, and then they “guess” how much profit can be received on top of that. And in determining how much profit one can receive above costs, most (though not all) vendors indicated that prior to pricing, they discuss with their surrounding vendors to determine the appropriate price. This is not to say that price negotiation does not take place in the market. Most vendors noted that they will decrease the price of their goods, in particular late in the day, if items are starting to rot, or if a seller specifically needs money that day - “If I don’t get enough money to go back home, I can try to make things cheap. I can then get transport, but I won’t get any profit,” remarked one woman. What seems to vary much more widely, in fact, than the “price” of goods per se, is quality. For example, at the beginning of the research, five tomatoes generally sold for 20 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 89 dollars. But if one searched high and low, it was possible to find for 20 dollars anything from five big and juicy tomatoes to five mediocre ones. Thus, this uniformity of prices in the market “hides” where a large percentage of the competition and search for and realization of profit along Fifth Avenue takes place - quality, quantity, and input prices. Regarding input prices, sellers have the option to buy from the large wholesalers, from smaller market wholesalers (vendors in the market who sell in larger quantities primarily to other vendors for resale), from peri-urban or rural farmers or sellers, or to grow the items themselves. In interviews many vendors indicated input price and quantity vary to a great extent, thus vendors often noted that a significant amount of time goes into the sourcing of high quality goods at a competitive price. Also interesting, though less common (with the exception of the market wholesalers, whose activities are quite common), is the phenomenon of retail vendors purchasing from one another and then selling for a higher price (perhaps through a stand in a better location), or even buying bunches of goods, for example ten bunches of spinach, repackaging them as eleven, and then trying to sell each bunch for the same price. In addition to the search for quality product at good input prices, however, most vendors indicated that a substantial or in some cases even a majority of sales come down to one’s ability to cultivate repeat customers. Early in the fieldwork I was amazed at the large number of people in the market, in such close proximity, selling the same goods. As such, in interviews I asked people how they enticed customers to come to their stand specifically, and very often the answer was “repeat Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 90 customers.” “I’ve got regular customers who say ‘hey, there’s my shop where I buy’, then they come, and that’s when I sell,” explained one 23-year-old woman, while a 39-year-old man noted that “some people, if you are not here, they won’t even buy.” One of the general pictures of selling gained during the fieldwork, therefore, was thus one where individual vendors enjoy little real pricing power in an economic sense, but where general discussion and agreement over price often takes place, and repeat business is vital and emphasis and competition is significant with regards to quality, customer service, and sourcing of product. FIRM SIZE AND OWNER CHARACTERISTICS Single proprietorships and two-person enterprises dominate produce vending at the Fifth Avenue market. While many businesses employ part-time, usually family, labor on an infrequent basis, the survey found 55.8 percent of firms and 39.2 percent of firms to be owned and operated primarily by one or two people, respectively. Just over three-quarters of the businesses in the survey (75.9 percent) were exclusively female-owned, usually as a single proprietorship, but also significantly as partnerships between sisters, cousins, or mothers and daughters. Only 6.0 percent of firms are exclusively male-owned, while 18.0 percent of businesses are operated jointly by males and females. Of the firms operated by both males and females, 60.9 percent are represented by partnerships between husbands and wives. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 91 Enterprises tend to be very young at the Fifth Avenue market - 33.6 percent of people interviewed indicated that they started selling within the past five years, and 62.2 percent within the past ten years. Only 26.0 percent of people interviewed indicated that they had been selling for 15 or more years. Table 2.1 offers more detailed statistics. Table 2.1: Age of Businesses Number Percentage of Total Last five years 40 33.6 Last five to ten years 34 28.6 Within last ten years 74 62.2 Last ten to fifteen years 14 11.8 Last fifteen to twenty years 15 12.6 Older than twenty years 16 13.4 Older than ten years 45 37.8 The age distribution of owners interviewed ranged widely, from a 17-year- old woman selling groundnuts to a 72-year-old great-grandmother selling green vegetables. The average age of a vendor is 36 years (standard deviation 11.7), with 10.7 years in the business (standard deviation 8.9). Table 2.2 gives an age distribution of owners or co-owners for all firms, those firms started since 1990, and those started since 1995. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 92 Table 2.2: Age Distribution of Owners Owner Aee All Firms New Firms, 1990-Present New Firms, 1995 20 and Below 11.1 13.3 20.9 21-25 10.5 11.4 11.9 26-30 13.0 17.1 14.9 31-35 11.7 15.2 9.0 36-40 19.1 16.2 11.9 41-45 11.7 11.4 13.4 46-50 9.3 4.8 7.5 51-55 9.3 7.6 7.5 Above 55 4.3 2.9 3.0 Considering all firms, each 5-year segment of those in the survey represent approximately 10 percent of businesses, with the exception of ages 36 to 40, who own or co-own nearly 20 percent of all firms. Roughly the same pattern can be observed when looking at businesses that have emerged since 1990, while as can be expected, firms that have emerged since 1995 have a higher distribution of younger owners. Vendors who started their businesses in the first decade of Zimbabwean independence (1980-1989) were on average 28.6 years, while those who started 1990-2000 were on average 30.4 years of age (standard deviations being 7.4 and 10.0, respectively). Formal education among the vendors ranged from none to 11 years,5 with an average of 7.1 years. Table 2.3 summarizes the level of education of vendors of various ages. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 93 Table 2.3: Years of Formal Education 20 and Below 20-29 30-39 40-49 50 and Above Mean 9.9 8.9 7.6 5.5 4.2 Median 11 9 8 6 4.5 Younger vendors thus tend to be more highly educated, with sellers 20 and below having almost twice the formal education as those aged 40 to 49. This is to be expected, given the general expansion of formal education in Zimbabwe following independence. Over three-quarters (78.9 percent) of business owners live in one of the “high-density” or former township areas of Bulawayo, the most common being Lobengula, Makokoba, Magwegwe, Pumula, Mzilikazi, Mpopoma, Njube, and Nkulumane (Photos 2.7-2.10, Appendix 2). Some 13.3 percent live in “medium-” or “low-density” areas (or former mixed race and white areas), oftentimes living in a property’s “servant’s quarters,” or renting all or part of a room in a house. Just over seven percent live in peri-urban or rural areas. Commutes from home to the Fifth Avenue market for most people range from ten minutes to upwards of an hour. Vendor households can be as small as one person renting a room and vending for her or his livelihood, to a large, multi-generational household. The average number of people in the vendor households surveyed was 4.1. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 94 In an effort to gain an understanding of why people enter the business, and utilizing what is called a “free-list analysis” in anthropology (where people are free to express themselves how they wish, and to offer as many or as few responses as they wish), people were asked why they chose to vend rather than doing something else for a living. Note that this is an open-ended question that could be answered in either a “positive” or “negative” light - people could respond positively by listing aspects of the job that they enjoy, or negatively by offering information on difficult circumstances that led them to chose to sell. It is noteworthy that a strong majority of people chose to answer this question “negatively,” indicating that produce vending is generally not an occupation that many aspire to do, but rather is one that is chosen based on lack of other options. Of all responses, the one most often heard (from 44 percent of respondents) is that people chose to vend because of “no jobs” in the formal economy. One 42-year-old woman argued that “to sell here is better than to look for a job, as there are no jobs,” while a 35-year-old mother of three bluntly stated that “if I get a job, I will just leave this.” A significant percentage of people also identified vending simply as their “best option” (13.4 percent) - “When I completed Form 4 [11th grade] I didn’t have anything else to do, so I decided to come and work here with my sister,” noted one 18-year-old woman. Finally, 6.7 percent of respondents referred to either failed or lack of education as the reason for vending instead of doing something else. More on the positive side, people identified the pleasure in working for oneself and not having a “boss” as one of the reasons for vending (noted by 11.5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 95 percent of respondents), and 8.7 percent of respondents referred to vending’s ability to bring in money on a daily basis as a motivation behind choosing to sell. Other less-cited reasons for produce vending include the idea that it is “easy to do” (easy entry) (offered by 2.9 percent of respondents), the fact that you can eat the food if you don’t sell it (1.9 percent), or that the individual learned how to vend with a family member and simply continued in the business (1.9 percent). People were also asked about the spending of money earned from their businesses. The aim in this regard was to investigate the type of spending engaged in by vendors as well as to gain an appreciation for their priorities. The “big three” responses were food, household rent, and various school fees, noted by 60.5 percent, 44.2 percent, and 40.3 of respondents, respectively. Also significant but not in the same class as these spending priorities included putting money into the bank (offered by 14.0 percent of respondents), transport (9.3 percent), clothing (8.5 percent), and sending money to family in rural areas (7.0 percent). PROBLEMS FACED BY VENDORS This is a very, very tough business. I ’ve been doing it all my life. We are in a very tough situation, we have nowhere to hide. You can’t even take to the bank. It’s ju st hand to mouth. - 39-year-old man Vendors face a number of problems, and the challenge to the researcher is to try to understand and analyze these problems, both from the researcher’s and from the vendors’ points of view. As an entry-point to analysis, therefore, a free-list Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 96 analysis was also conducted on the topic of problems faced by the vendors. Specifically, in interviews I asked “what would you say are your biggest problems in selling?” I was careful to explain that by this I meant the biggest problems currently facing their businesses, rather than the problems vendors faced as individuals. The most common problem, noted by 42.5 percent of all people interviewed, was “no customers.” “We spend the whole day sitting and no customers come,” complained a 56-year-old woman. Many vendors noted in discussion that customers are increasingly scarce both because there are simply many more people selling farm produce than was the case several years ago, and also because customers are increasingly constrained in their purchases by their declining incomes. The second most common problem, noted by 29.9 percent of respondents, was lack of capital to buy the goods to sell. “When things cost too much, I can’t buy to sell,” argued a 40 year-old-man. Indeed, most produce retailers at the Fifth Avenue market do not have access to formal credit as such, relying instead on savings and informal credit networks and savings clubs. A majority of the vendors surveyed - 56.5 percent - are members of savings clubs. Although each savings club operates differently, the basic idea is that a group of vendors put together a specified amount of money every day or every few days or weekly, and then members will take turns receiving the sum. For example, five women may agree to put twenty dollars into savings Monday through Friday, with each of the five members taking turns receiving the sum at the beginning of each week (500 dollars). While of course the same amount of money could be saved on a private basis, many Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 97 vendors noted that belonging to a savings club is an advantage, as it “forces” one to save. Another key problem often cited by the vendors has to do with the “rotting” of products prior to having a chance to sell them (noted by 18.7 percent of respondents). While of course, if left for extended periods most fruits and vegetables will rot on the shelf of any business, in my interviews the argument most often heard was that rotting of vendor goods is hastened significantly by lack of adequate shelter from the sun and rain. And thus if one combines the percentage of responses referring directly to poor shelter and protection from the elements (noted by 7.5 percent of respondents) to that of rotting, it can be argued that 26.1 percent of all respondents noted a problem in some way related to the lack of durable selling bays for people’s businesses. Other problems identified by the vendors include rapidly rising input prices (from 11.2 percent of respondents), an undesirably located stand (8.2 percent), little profit (6.0 percent), space rent (5.2 percent), instability of rural supplies (3.0 percent), and police harassment6 (2.2 percent), while less than two percent of respondents noted problems having to do with business fluctuations, not knowing what prices to charge given the high inflation rate, and the difficulties in accurately calculating one’s profit. A significant problem faced by a sub-set of vendors is a stand in an undesirable location of the market. At the beginning of the research, four of the six groupings of stands at the Fifth Avenue market were arranged as two strips of side- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 98 by side stands, with a walking path between the two strips of stands (Photos 2.11 - 2.12, Appendix 2). Thus, stands in these groupings can be divided into “outside” stands directly viewable by the public, and “inside” stands, only viewable by customers if the particular customer walks the small path between the strips of stands. When asked about their problems, 15.2 percent of “inside” vendors interviewed volunteered the fact that their stands were on the inside as one of their major problems - “Our problem is that we are here in the inside. No one comes in here, how am I supposed to find customers?” complained a 35-year old woman. The 15.2 percent figure can be considered to be an underestimate of the problem as it is perceived by the vendors, moreover, as the most popular answer of “no customers” could of course in many instances in part derive from lack of a desirable selling location - and a higher percentage of inside vendors did note “no customers” as one of their primary complaints (48.5 percent versus 42.5 percent). As one of the more successful outside-stand vendors remarked “These people on the inside, by the end of the day, they will not have sold anything.” And indeed, when casually asked following interviews if being on the inside is a problem, nearly all vendors indicated that they thought they would have more customers if they had been allocated a more accessible stand, an argument supported by visual analysis during the fieldwork. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 99 SELLING ALONG FIFTH AVENUE: AN ANALYSIS OF VENDING AS A LIVELIHOOD STRATEGY From 1969 this is my job. I would like to have a shop. Do you think I want to work this hard until I die? - 48 yr. old man While sentiments such as those above were typical of many heard during the fieldwork, one thing that also became clear in the course of study is that some vendors appear to be doing much better than others - a quick look around the market allows one to see that some vendors have highly developed stands with metal bins for various products and seem to have many customers, while other vendors sell their products from the ground, oftentimes offering one good, and perhaps only having two or three bunches of goods for sale (Photos 2.13-2.15, Appendix 2). Any study of farm produce vending would therefore be incomplete without an analysis of it as a livelihood strategy, including a look at differentiation between vendors. In order to analyze produce vending along Fifth Avenue as a livelihood strategy, I researched three questions. First, what were people doing prior to vending? Second, what is the role of vendor income in total household income? Is income earned from vending at the Fifth Avenue market a primary or complementary form of household income? And third, to what degree does livelihood differentiation exist between the vendors? These questions are addressed in turn in the following sections. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 100 In contrast to a previous question that asked vendors why they chose vending as a profession instead of another alternative, the question currently under consideration asked people about their previous experience, or specifically, “what were you doing immediately before you started vending?” This question was intended to help bring out the dynamics that lead people to vending. The most common answer was that vendors were at home, either in urban or rural areas, and were neither in the job market nor in school immediately prior to beginning vending (noted by 46.8 percent of respondents). One possible explanatory factor in this regard, though perhaps only one of many, is the phenomenon of women entering the vending labor force upon their husbands’ deaths. “I started this business after my husband died - 1 had to look after the children” and similar statements were often heard from women vendors. Of single female vendors 30 and over, 34.6 percent volunteered that they started vending once their husband died. There are factors that could lead this figure to be either an underestimate or an overestimate. It could be an underestimate in that in interviews I did not probe into why women indicated that they were single. Where women said that their husbands died, the information was strictly volunteered. Thus the figure of 34.6 percent could be low. Working in the opposite direction, however, some women may have said that their husbands died to avoid potential ill feelings about having children out of wedlock. Thus, the 34.6 percent figure should be seen as a very rough guide of the magnitude of women entering vending due to death in the family. But especially in a country where at Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 101 least one-fifth of the population is estimated to be HIY positive, possible connections in this regard are, at a minimum, plausible. The second most common activity prior to vending was being a housekeeper or maid, at 16.2 percent. While some of the former housekeepers noted that they started vending when their employers left the country, the majority of former housekeepers said that they started vending as it brings in money on a daily, rather than a monthly, basis, and as it brings in more money (with some saying that it brings in a good deal more while others reported just a little bit more). At the end of 2000 (when the fieldwork was conducted), the minimum monthly wage for full-time (five and one half days a week), non-live-in housekeepers was officially 1188.65 dollars, though many are paid wages well below this minimum required by law. Nine percent were working in (formal sector) industrial jobs prior to vending, while 8.0 percent noted that they were primarily sewing or knitting for a living. Other responses offered were selling clothes, at 3.6 percent, or traveling to Botswana, purchasing consumer goods, bringing them back to Zimbabwe and reselling them, at 2.7 percent. A general picture of respondents, therefore, is that approximately half (46.8 percent) were either at home in rural or urban areas before deciding to come to the city to vend, and 13.5 percent were in school immediately prior to vending, meaning that 39.6 percent reported other specific occupations prior to vending, with the most common working backgrounds being that of a housekeeper, at 16.2 percent, industrial work at 9.0 percent, and sewing or knitting, at 8.1 percent. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Having taken a look at how people come to vending as a livelihood strategy, it would also be useful to examine the role of vendor income in total household income. While a key finding of recent research on livelihoods in many less- developed countries [Chambers 1997] is that oftentimes an individual engages in several types of economic activity in order to secure the livelihood of the individual or household, surprisingly, this does not appear to be the case with the vendors of the Fifth Avenue market - 90.8 percent of people interviewed indicated that at present, vending their goods was personally their sole source of earned income (though some noted that they also sell similar goods from home). Thus, only 9.2 percent of vendors indicated that they personally do something else for money in addition to selling produce - the most common example being sewing or knitting.7 A higher percentage of vendors, however (32.7 percent) do live in households where other sources of income exist. And of the households where others are working to bring money into the household, 42.1 percent of vendors report that their income makes up more than half of total household income, while 33.3 percent report that their income makes up less than half of total household income (with the balance of responses being that their income makes up approximately half of total household income, or that the percentages were unknown). What is interesting, however, is that of vendors who report that their income makes up more than half of household income, only 18.8 percent of such households have someone working in the formal employment sector, while 58.3 percent of vendor households where Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 103 vendor income makes up less than half of total household income have someone working in the formal sector. At the same time, however, what the statistics do reveal is that for many (67.3 percent of households), vendor income is the sole source of earned income for household purposes (some, though not many, people did indicate that they receive monetary gifts from relatives not living in the household, most often from relatives living and working in South Africa). This finding is significant, in that what it means is that vendor income is the sole earned household income source for nearly 70 percent of those working along Fifth Avenue. At least for the vendors working along Fifth Avenue, what it means is that in the current era, produce vending is more often being used as a primary and not a supplementary livelihood strategy and household income source. As noted, observation of the market leads one to see that some vendors seem to be dong relatively well while others seem desperate for a single customer. While some (quantitative) income data were collected during the research, and would be very useful for purposes of analysis, here, I will report on and analyze income data of a more “qualitative” type.8 Specifically, people were asked to rank their current economic status along a three-tiered ranking structure. Following extensive interviews with vendors as to how a three-tiered ranking of livelihoods should look, I decided on the following descriptions. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 104 (a) You are able to purchase food, regularly pay rent, and pay for transportation and school fees with relatively little hassle. You may not be able to buy luxury goods (offer examples), but you may have been able to acquire some durable goods (offer examples), and you can eat meat on a regular basis (three or more times a week). You are most likely able to regularly save a percentage of your income in a bank account. (b) You are generally only able to purchase basic food (com meal and vegetables), though you may eat meat on an infrequent basis. You are able to pay rent, transportation, and school fees, though perhaps just barely, or sometimes late. You cannot generally manage to save much money in a bank or other formal institution. (c) You are frequently unable to purchase enough food for your family (you generally only eat basic food), and you have significant trouble in paying rent, transportation, and school fees. There are regular times when you do not have enough money for rent, transportation and school fees, and thus there are many times when you do not pay them, often paying them late. You are not able to save money in a bank. In interviews we explained each of the three rankings, answered any questions that the respondents may have had, and then asked them to identify which of the three livelihoods seemed closest to their own economic status (though it was understood that most likely none of them would be totally descriptive). Although as a group, the vendors clearly expressed that economic times are increasingly difficult - 85.6 percent indicated that they are worse off than they were a year ago, and 98.7 percent indicated that they are worse off than they were five years ago - the research does reveal that there does exist a degree of livelihood differentiation among Fifth Avenue vendors. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 105 In the research, 6.4 percent of vendors indicated livelihood (a) as most descriptive of their personal situation, while 40.9 percent fell into livelihood (b), and 52.7 percent in livelihood (c). Consistent with the idea that farm produce vending is a lower-profitability MSE activity, one can see that 93.6 percent of sellers identified either (b) or (c) as closest to their own particular situations, while only 6.4 percent identified with livelihood (a) as closest to their current situation. Nevertheless, the research, if in an introductory way, reveals that there does exist some degree of livelihood differentiation among the Fifth Avenue vendors, in particular as seen by the large percentage of vendors who alternatively identified their situations as (b) or (c). It would therefore be useful to consider how various vendor and business characteristics relate to livelihood status. I will consider, in turn, the relationships between livelihoods and three other vendor characteristics - demographic, business, and household. There were no major differences in ages of owners between the three livelihoods (31.5, 38.3, and 36.2 years, respectively), nor of years of education (8.8, 7.8, and 7.8 years, respectively). Regarding gender, however, significant differences did exist, with a bias of male ownership toward better livelihoods. For example, of male owners interviewed, 13.3 percent identified with livelihood (a), 53.3 percent with (b), and 33.3 percent with (c), as compared to the aggregate figures of 6.4 percent for livelihood (a), 40.9 percent for (b), and 52.7 percent for (c). Alternatively, one can look at the percentage of male ownership or co- ownership of (a) (b) and (c). Specifically, 28.6 percent of vendors identifying Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 106 themselves as livelihood (a) had a male owner, 17.8 percent of vendors identifying with livelihood (b) had a male owner, and 8.6 of sellers identifying with livelihood (c) had a male owner. In other words, businesses with at least one male owner are skewed toward better livelihood status. Moreover, vendors with smaller households seem to be doing better than those with larger ones, as the average size household among livelihood (a) was 3.3, while vendors identifying themselves as livelihoods (b) and (c) had households that tended to be somewhat larger, at 5.3 and 5.5 people, respectively. It is also interesting to consider characteristics of businesses as they relate to livelihood ranking status. For example, revisiting the inside stand/outside stand issue, one can see that vendors with outside stands more often achieve better livelihood status than do those with inside stands. Only 28.6 percent of vendors identifying with livelihood (a) have inside stands, while 34.1 percent identifying with livelihood (b) and 41.3 percent with livelihood (c) do. This provides further evidence that stand location impacts sales. Also interesting is to consider the fact that the amount of goods vendors have for sale varies positively with livelihood ranking. Sellers’ stands were ranked by the amount of goods for sale, and were placed in the following categories - “none,” “bit,” “some,” and “lots” (Photos 2.13 -2.15, Appendix 2). Sellers without goods (none) were often not at their stands and thus were undercounted in the survey, but limiting the analysis to sellers who had some goods - bit, some, or lots - a positive Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 107 relationship between amount of goods for sale and livelihood status can be seen. Excluding sellers specializing in dry goods (whose amounts for sale are more difficult to assess), 57.1 percent of livelihood (a) vendors were classified as having “lots” to sell, 34.6 percent of livelihood (b) vendors had a lot for sale, and only 26.7 of livelihood (c) vendors had a lot of goods for sale. This result most likely speaks to the capital constraint noted by a large percentage of vendors, and more often faced by vendors with relatively lower livelihoods specifically. Finally, the relationship between livelihood status and total household income can be considered. There was no significant differentiation between livelihood status and vendors themselves doing something in addition to vending for money, at 28.8 percent (livelihood a), 31.0 percent (livelihood b), and 27.5 percent (livelihood c). There was a degree of differentiation, however, between vendors who lived in households where other members were engaged in informal activities - 28.6 percent (livelihood a), 19.5 percent (livelihood b), and 21.2 percent (livelihood c). The clearest connection, however, is between livelihood differentiation and the prevalence of household members working in formal sector jobs - at 28.6 percent (livelihood a), 8.9 percent (livelihood b), and 5.2 percent (livelihood c). Thus, better livelihood status is more often associated with more people in the household working, particularly in the formal sector, but having other individuals also working in informal sector activities seems to help one’s livelihood status as well. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 108 CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESEARCH The foregoing case study of the Fifth Avenue market points to a number of themes. These themes shed light on the functioning of this particular market, and in keeping with the purpose of the study, helps to paint an anthropological-economic, or in some ways ethnographic, understanding of this economy and its participants. Following a discussion of these themes or patterns and some of the implications and policy issues and recommendations that can be drawn from them, the chapter concludes by offering suggestions for further research. Competition along the Fifth Avenue market is fierce, and businesses compete on many fronts. Little pricing power exists in the market due to the very large number of individuals selling at this one particular location, though prices are discussed widely among vendors in the context of a mark-up over costs pricing method. An implication of this would be that market participants might be better off if they were allowed to sell their goods more freely and in more parts of the city than at this one particular location. Vendors could find niche markets and areas within the city underserved by vendor activity, and thus in some cases enjoy additional pricing power for their goods. In particular in the current context of difficult economic times in Zimbabwe, policymakers should be doing all they can to improve the livelihoods of vendors, and thus expanding the legal opportunities for vending may have a positive impact both in terms of improving the livelihoods of current Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 109 vendors and in providing possible employment opportunities, or at a minimum, survival strategies, for those increasingly affected by economic crisis in Zimbabwe. Another pattern revealed in the fieldwork is that businesses tend to be owned and primarily operated by one or two people (95 percent), with over three quarters of businesses being exclusively female owned and operated. In the context of deteriorating economic conditions in Zimbabwe and the related influx into relatively easy-entry and traditionally lower-profitability activities (including produce vending), expansion of this sub-sector can be seen as being potentially linked to, and a manifestation of, the feminization of poverty in Zimbabwe. As the incidence of single-mother households continues to increase in the country, support for vending can be seen as providing support for not only women, but for their families, and in particular children. It is significant that when asked why they chose to enter the profession of vending, approximately three-quarters of respondents chose to respond in a negative manner - often citing the fact that there are “no jobs” elsewhere in the economy. The implication is that for many, vending is a survival strategy given few other options, rather than an economic activity sought out for its virtues. Indeed, only a quarter of respondents also offered a positive reason why they chose to vend, with the most common answers being the satisfaction of “being one’s own boss” and vending’s ability to bring in money on a daily basis. With primarily negative responses to this line of investigation, one is pointed to the idea that many vendors Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 110 may wish to leave the activity should other options become economically viable and practically feasible. The fieldwork also revealed some of the key problems faced by vendors, as perceived from the vendors’ points of view. The most common problem noted by vendors was a general lack of customers, which speaks both to the problems of the contemporary Zimbabwean economy as well as to the cut-throat competition that exists in the market. In addition to the lack of customers, nearly a third volunteered and specifically discussed capital constraints, in particular of working capital. As most of these vendors belong to savings clubs and as such have access to informal credit institutions, the implication is that these informal credit institutions do not seem to be fully compensating for the lack of credit available to them. This finding is significant, in particular in that it has been argued elsewhere [Griffin 1996] that lack of formal credit opportunities available to small- and medium-scale enterprises represents a particularly damaging barrier to rapid growth in the MSE sector [Griffin 1996]. Another problem emerging from the fieldwork is the “inside stand” problem at the Fifth Avenue market, and as such, policymakers should work with vendors toward a possible reorganization of stand locations. At the same time, however, it is worth mentioning that if an effective way to reorganize the stands and hence minimize the inside stand problem, having all stands being “outside” ones will further increase (the already cut-throat) competition along the Fifth Avenue market significantly. Again, a possible way to alleviate this problem would be to allocate Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. I l l more space in the city for vendor markets (which are considerably restricted at the moment). In large part, policymakers will thus have to weigh their desire for a “clean” looking city (meaning without too much of a vendor presence around town) against the livelihoods of people vending for a living. Still another policy area which became clear in the course of the research concerns the vendors’ working conditions, in particular regarding vendors’ selling bays. The feasibility of providing vendors, perhaps with some cost recovery, with durable selling bays could be investigated. Not only could more durable selling bays cut down on the quick rotting of goods and thus grant vendors a more predictable and certain environment in which to purchase supplies to be sold, but it will also improve the working conditions of the vendors, who will themselves then be better protected from the sun, rain, and wind. Many vendors noted that they hoped that the city council would invest in such infrastructure, though many noted that they themselves would need to participate in the design of such shelter, as the vendors know best what types of shelter would be optimal. It is also clear that vendors at the Fifth Avenue market come from a diversity of backgrounds. Approximately half (46.8 percent) of vendors were neither in the job market (formal or informal) nor in school immediately prior to vending. Another large percentage of vendors (39.6 percent), however, were in fact employed prior to vending, with the most common working background being that of a housekeeper. Finally, 13.5 percent of vendors were in school immediately prior to vending. Thus, there would seem to be a diversity of life paths that can lead one to vending. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 112 Another significant and most interesting finding of the study is the relationship between and role of vendor income in total household income. Vending is the sole source of personal earned income for approximately 90 percent of vendors at the Fifth Avenue market, meaning that only 10 percent of vendors personally do something else to earn money. While approximately a third of vendors live in households where other income sources exist, for approximately two-thirds of households, the vendor’s income is the sole source of household income. This finding may well be related to Zimbabwe’s economic troubles, but in any event, the importance of investigating vending markets as potentially primary sources of household income is underscored. This finding speaks to the class structure of vending as a household economic activity, for despite the difficulties involved with getting by on a vendor’s income, vending is oftentimes the sole source of household income. Some additional suggestions for further research can be offered. First, despite an emerging picture of vending at the Fifth Avenue market as a difficult economic activity oftentimes without significant profit, the fieldwork did reveal a significant degree of differentiation among the livelihoods appropriated by the vendors. For example, some vendors’ stands were well-stocked with impressive metal racks and stands for displaying goods, while other vendors sold from the ground and only had one or two bunches of goods for sale. Likewise, some vendors reported being able to save some of their income in a bank, while others described their business as more “hand to mouth.” For purposes of analysis, three livelihoods Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 113 were described (a, b, or c), and differentiation was explained in particular with regards to gender and household access to other forms of employment, and formal sector employment in particular. As such, further analysis into this differentiation may prove useful. Research should also look into the gender dynamics of vending. Why is it that vendor businesses at the Fifth Avenue market with at least one male owner tend to do better, as evidenced by the high number of male-owned firms identifying their personal livelihood situation with livelihood (a)? Moreover, research could focus on the gender dynamics between vendors and Scania pushers who deliver most of the goods to the vendors’ stands. As produce vending is primarily a female activity, and as scania pushing is most definitely a male activity, how do gender dynamics play themselves out between these two groups? Finally, another important research endeavor will be to compare the particularities of the Fifth Avenue market with other vendor markets in the city (and elsewhere). For example, one of the most interesting findings of this study was the unexpected, at least in the mind of the researcher, and relatively high percentage of people who reported vending as generally the only source of income within the household (67.3 percent). Is this unique to the Fifth Avenue market? For example, one can imagine that perhaps vendor income for various types of vendors (City Council market, walkaround seller, suburb stand, etc.) plays different roles in total household income. Is the reliance on vendor income as a primary income source unique to the “formal” City Council vendor markets, or is it the pattern for other Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 114 types of Zimbabwean vendors as well? Questions such as these, however, will only be able to be addressed once additional primary research projects on the topic become available. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 115 ENDNOTES 1. It would be difficult to describe Zimbabwe’s economic performance over the past several years as anything but dismal. Unemployment currently stands at over 60 percent, inflation at over 100 percent, and the economy contracted by an estimated 8 percent in 2001 [BBC, January 14, 2002]. Foreign exchange reserves are depleted, and the country is currently facing a serious food shortage, with approximately three million people at risk for starvation in 2002 [Financial Gazette, May 16, 2002]. Most observers would agree that the explanations for Zimbabwe’s economic woes can be found in a combination of the ruling party’s economic and political policies, governmental corruption, and failed international development strategies. Meredith [2002] provides historical perspective on Zimbabwe’s transformation from the “breadbasket” to the “basketcase” of Southern Africa. 2. The target audience for the policy recommendations in this study is the Bulawayo City Council and the Bulawayo Upcoming Traders Association (BUTA). 3. It may also be significant that this is the way in which the current study is structured. 4. I would like to thank Albert Nyoni for his translation skills and cultural assistance in the research of this chapter. In particular, Mr. Nyoni was key in helping to ensure that my survey instmment made sense in the cultural context. Deep thanks and appreciation also go to the many friendly vendors I spoke with during the course of the fieldwork. 5. From one point of view, education figures offered here can be considered to be overestimates, in that many students complete, though fail, their 11th year of Zimbabwean education, also called “O-level.” The percentage of students passing or failing their O-level examinations is not reflected in the data. 6. “Police harassment” as a problem noted by the vendors refers primarily to vendors who sell illegally by walking around town with their merchandise. One group of young men in particular noted that their business strategy was to rent a Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 116 stand by the day from someone else, and then to use the stand as a “home base” from where individual sellers prepare their merchandise for walkaround sale. 7. Another interesting phenomenon, though less common, is an activity engaged in primarily by the vendors selling beans, grains, nuts, and traditional foods bought or gathered in rural areas. Prior to leaving the urban area for the rural area to buy supplies, some vendors purchase an assortment of consumer goods, such as plates, utensils, and other items thought to be in demand in rural areas. Once in the rural area, the vendor then sells these goods, and uses the money to purchase supplies again to be sold in the urban vending market. 8. I attempted to collect quantitative income data from the vendors, with some success. However, there were several factors in the way of collecting enough high-quality quantitative income data for purposes of analysis. First, as income fluctuates on a daily and weekly basis, getting comparable data proved difficult. And second, asking people about their profit for a given week or month (using something like sales minus costs) is problematic, as costs are incurred not on a weekly or monthly basis, but on an variable basis depending on what the vendor is selling. This is not to say that reliable quantitative income data could not be obtained from the vendors - the point is that a purpose-designed survey or more detailed qualitative device would have to be designed and administered several times throughout the year in order to obtain an accurate reflection of income generation and distribution among the vendors. Unfortunately, this was out of the scope of this particular study. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 117 REFERENCES Abedion, I., and M. DeSmidt. “The Informal Sector in South Africa.” The South African Journal of Economics. Vol. 68 No. 4 [1990], 404-424. Aryee, G.A. “The Urban Informal Sector: Some Conceptual and Policy Issues.” ILO/SATEP Seminar Papers. Lusaka: 1981. Ashe, J. “Synthesis and Overall Findings.” In Farbman, M. (ed.). Assisting the Smallest Economic Activities of the Urban Poor. Washington, D.C.: Pisces Studies, 1981. Banda, Moses, and Griffin Nyirongo. “Zambia: The Informal Sector in a Beleaguered Economy.” In Guy Mhone (ed.). The Informal Sector in Southern Africa. Harare: Sapes Trust, 1996, 81-104. BBC. “Neighbours fear Zimbabwe contagion.” http://www.bbc.com. January 14, 2002. Brand, Veronica. One Dollar Workplaces: A Study of Informal Sector Activities in Magaba, Harare. Harare: University of Zimbabwe School of Social Work, 1982. Chambers, Robert. Whose Reality Counts? Putting the First Last. London: Intermediate Technology Publications, 1997. Daniels, Lisa. Changes in the Small-Scale Enterprise Sector from 1991 to 1993 Results of a Second Nationwide Survey in Zimbabwe. GEMINI Technical Report No. 71, 1994. Financial Gazette. “Agency says 3 million may starve by next month.” http://www.fingaz.co.zw. May 16, 2002. Financial Gazette (Staff Reporter). “250,000 Set to Lose Jobs.” July 6-12, 2000, 2. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 118 Griffin, Keith. “Macroeconomics Reform and Employment: An Investment-Led Strategy of Structural Adjustment in Sub-Saharan Africa.” ILO Discussion Paper 16. Geneva: ILO, 1996. Kabra, Kamal Nayan. “The Informal Sector: A Reappraisal.” Journal of Contemporary Asia. Vol. 25 No. 2 [1995], 197-232. Lewis, Arthur. “Economic Development with Unlimited Supplies of Labour.” The Manchester School Papers. Vol. 22 [1954], 139-191. Lubell, Harold. The Informal Sector: In the 1980s and 1990s. Paris: OECD, 1991. Matsebula, Michael Sisa. “Swaziland’s Urban Informal Sector: Its Characteristics, Constraints and Production from an Aggregate Viewpoint.” In Tieleman, HJ. (ed.). Scenes of Change: Visions on Development in Swaziland. The Netherlands: African Studies Centre, 19S8. Matsebula, Michael Sisa. The Urban Informal Sector. Harare: Sapes Trust, 1996. Meredith, Martin. Our Voices, Our Guns: Robert Mugabe and the Tragedy of Zimbabwe. New York: Public Affairs, 2002. McPherson, Michael. Micro and Small-Scale Enterprises in Zimbabwe Results o f a Country-Wide Survey. GEMINI Technical Report No. 25, 1991. Mhone, Guy (ed.). The Informal Sector in Southern Africa. Harare: Sapes Trust, 1996. Ndoro, Herbert. “Zimbabwe: The Informal Sector in a Decontrolling Formerly ‘Socialist’ Economy. In Guy Mhone (ed.). The Informal Sector in Southern Africa. Harare: Sapes Trust, 1996, 21-54. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 119 Ngwira, Austin. “Malawi: The Informal Sector in an Inequitable and Statist Market Economy.” In Guy Mhone (ed.). The Informal Sector in Southern Africa. Harare: Sapes Trust, 1996, 55-80. Peattie, Lisa. “An Idea in Good Currency and How Its Grew: The Informal Sector.” World Development. Vol. 15 No. 7 [1987], 851-860. Sethuraman, S.V. The Urban Informal Sector in Developing Countries: Employment, Poverty and Environment. Geneva: ILO, 1981. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 120 CHAPTER 3 ECONOMIC TRANSITION AS A CRISIS OF VISION: COMPARING CLASSICAL AND NEOCLASSICAL THEORIES OF GENERAL EQUILIBRIUM The dominant contemporary view of the classical vision of a capitalist market economy (that is, the analysis of the impact of its institutional structure on economic behavior and performance) provided by such founders as Smith, Ricardo, and Marx, is that of essential continuity with the neoclassical economics that succeeded it. Or at least, it is often held, the basic elements of economic discourse embodied in the late twentieth century version of neoclassicism, notably that found in or inspired by the Arrow-Debreu [1954] model of competitive general equilibrium, insofar as they differ from those of the classical forebearers, constitute a more or less seamless web of intellectual progress [Blaug 1997]. Much of the attraction of the neoclassical, Arrow-Debreu general equilibrium vision of the world is that it is regarded, implicitly or explicitly, as providing the formal theoretical basis of Adam Smith's classic insight that the unintended consequences of economic agents acting in their own best interests will lead to social coherence rather than chaos.1 Arrow-Debreu general equilibrium, it is commonly thought, captures the very essence of Adam Smith’s invisible hand, and thus it follows that an Arrow-Debreu vision of equilibrium and the economy best informs Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 121 the process and policy recommendations for economic transition in post-Communist economies. As I shall argue, however, the classical vision of a capitalist economy explicated by Smith, Ricardo, and Marx differs in critical ways from the neoclassical view embodied in the Arrow-Debreu model of general equilibrium. Indeed, as Garegnani [1976] has argued, the very notion of equilibrium, its vision and meaning, changed as the Arrow-Debreu model of general equilibrium became the dominant mode of representing the workings of market economies. As shall be discussed, these competing paradigms of equilibrium clash on a number of fundamental issues - efficiency, power, the role of time, the nature of exchanges, the importance of institutions, and the types of conditions sought by the contending theories. It is primarily the contemporary neoclassical vision of the economy that underlies the current shock therapy policy recommendations by Western advisors, and which I believe has had devastating effects on several of the transitional economies. In contrast, I shall analyze shock therapy through the theories of the classical economists in order to highlight alternative policy recommendations. Moreover, once the facticity of significant differences between classical and neoclassical theories of equilibrium is accepted, it is a small leap to the proposition that classical perspectives may well be superior, at least in some ways, to those embodied in neoclassicism. As Joan Robinson [1974, 48] aptly put it, the challenge to develop a more satisfactory economics is upon us. Indeed, the failures of shock therapy in post-Communist transitional economies reinforce the need for a better Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 122 economics. My argument, drawing inspiration from Robinson’s comment, it that some of the important lessons we seek may be found by looking back to “clasp the hands” of the classicals. Beginning in the early 1990s, Western economists were invited to play key advisory roles in the transitions of the former socialist countries to market economies. One can only imagine the intellectual seductiveness and policy appeal of such an invitation, one that was in effect asking Western economists to make over the former socialist countries in their own image. A decade after the transition, however, I would argue that the efficacy of shock therapy as economic policy advice is perhaps as questionable as that of shock therapy as medical treatment. This point has been made forcefully by many economists, recently for example, by Joseph Stiglitz [1999]. Stiglitz argues that the failures of shock therapy and so-called “rapid” reform in the former socialist countries have much less to do with government failures to administer the appropriate shocks, and much more to do with the fact that the economic theory underlying transition, inspired by the Arrow- Debreu general equilibrium view of the world, misunderstands the nature and workings of capitalism and the economic system in fundamental ways [Stiglitz 1999; also see Hoen 1998]. The “failures of the reforms that were widely advocated go far deeper - to a misunderstanding of the very foundations of a market economy, as well as a failure to grasp the fundamentals of reform processes” [Stiglitz 1999, 3]. For Stiglitz, “part of the problem [of shock therapy] was an excessive reliance on textbook models of economics” [Stiglitz 1999, 3].2 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 123 If the problematics of the preference for neoclassical over classical theories of equilibrium were restricted to academic debate, the practical import of such theories might be less alarming. But if it is correct to say that destruction of established institutions by shock therapy, combined with laissez-faire strategies regarding creation of needed new ones in such countries as Russia and Eastern Europe during the last decade were generally based on neoclassical views of equilibrium, and that this was at least one significant factor in explaining poor economic performance, then the general presumption of superiority of insight of contemporary equilibrium theory over classical visions of the economy and economic change may be questioned. And, conversely, if superior economic performance in such countries as China can be attributed, at least in part, to more classical, evolutionary strategies, then perhaps one corollary “lesson” is that the advice to “clasp the hands” of the classicals is by no means misdirected. The basic argument of the chapter is that the aforementioned shift in equilibrium theorizing from classical to neoclassical economics has not been a healthy one, and that economists looking to address real-world problems (such as transition), or for that matter those involved with the design of graduate economics education, may do well to dust off their copies of the classics, as rich, useful interpretations of the economy can often be found therein. The chapter thus considers transition as an example of a contemporary issue where the ideas, theories, and general methodological orientation of the classical economists can shed considerable light. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 124 The organization of the remainder of the chapter is as follows. In the following section, I compare the Arrow-Debreu and classical theories of general equilibrium, focusing on seven issues: efficiency, the role of markets, the importance of institutions, time, the nature of exchange, power, and the types of conditions sought by the theories. Second, the chapter turns to the issue of transition, and argue that to their detriment, transition efforts have often been based on a neoclassical view of equilibrium, rather than on a classical, dynamic theory of equilibrium and market development. In this section I compare and contrast the Chinese and Russian experiences in reform, as regards the role of markets, time, power, and institutions. Third, as Adam Smith's name is often invoked in connection with the former socialist countries' transition to market economies, I look to the work of Adam Smith with regard to transition, and argue that Smith, far from being a supporter, would very much be a critic of shock therapy, strict laissez faire, and transition as often currently practiced. I conclude by considering some of the implications of the analysis, both for economic policy and for the economics discipline. CLASSICAL AND NEOCLASSICAL THEORIES OF GENERAL EQUILIBRIUM Table 3.1 (below) identifies seven issues in equilibrium theorizing, and summarizes what I generally characterize as the classical and neoclassical conceptualizations of each issue. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 125 Table 3.1: Equilibrium in Classical and Neoclassical Economics Issue Efficiency Role of Markets Equilibrium Conditions Time Nature of Exchange Power Institutions Classical Dynamic; Developmental Creative role within a “disequilibrium” system of exploration Necessary; Equal rate of profit condition (center of gravity) within a system-wide markup pricing model Real historical time Exchange occurs in real historical time at dis equilibrium and equilibrium prices Provides a degree of tension within the theory and points to policy implications Central to analysis; Necessary to economic activity Neoclassical Allocative To facilitate exchange Sufficient; Consistency; Center of gravity issue not addressed; goal to find where equilibrium “could” exist Ahistorical; Logical; Euclidean Exchange occurs only once equilibrium prices are reached Destroys the framework of equilibrium De-emphasized; Hinders smooth operation of the system Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 126 Efficiency, the Role of Markets, and Equilibrium Conditions Classical Theory The classical economists were concerned with the creative role of markets in realizing dynamic efficiency. The economy was envisioned as an “ongoing, self- reproducing process of production and accumulation” [Foley 1990, 666]. The function of markets in classical economics was not merely to facilitate exchange once production had occurred, but rather, to unleash the creative role of markets. For Smith [1976 (1776)], the “greatest improvement in the productive powers” of labor, and hence output, is the division of labor, which in turn is a positive function of the extent of the market [7]. The role of markets for Smith is to enable production to expand both qualitatively and quantitatively, and thereby, to foster the “wealth of nations.” Marx was also impressed by the creative, powerful role of markets in capitalism, expanding production possibilities and enabling the economy to develop in ways not remotely possible under feudalism. For Marx, the power of capitalism to unleash the productive powers of society was self-evident. The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground. What earlier century had even a Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 127 presentiment that such productive forces slumbered in the lap of social labor? [1848 (in Sweezy and Huberman 1964), 10]. The classical vision further articulates the role of markets and system-wide equilibrium by arguing that markets play a crucial role in a disequilibrium system of exploration of profit opportunities. To this effect, the classicals presented the idea of a systemic tendency toward the equalization of profit rates across industries. In their attempt to maximize profits, entrepreneurs (or capitalists) will search for and explore profit opportunities, increasing investment where profit opportunities lie, and decreasing investment in sectors where profit opportunities become less attractive. Smith argued that the tendency to search for the highest rate of profit occurs in an actual economy and in real historical time and that natural prices represent the center of gravity of the economy given its specific institutional structure. The natural price .. .is, as it were, the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever the obstacles which hinder them from settling in this center repose and continuance, they are constantly tending towards it [1976 (1776), 65]. Marx [1910 (1898)] argues that the equalization of profit rates is the consequence that generally obtains whenever, from whatever reason, the average rate of profit comes to differ in different spheres of production. Capital and labor would be transferred from the less remunerative to the more remunerative branches; and this process of transfer would go on until the supply in the one department of industry would Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 128 have risen proportionately to the increased demand, and would have sunk in the other departments according to the decreased demand. This change effected, the general rate of profit would again be equalized in the different branches [19]. The approach to general equilibrium developed by Smith and Marx is one of adjustment toward an equal rate of profit within a system-wide markup pricing model. That is, the prices of production (similar to what Smith called the “natural” price) will be determined in the long-run by a markup of profit over costs that is equi-proportionate across industries. The theory of system-wide equilibrium in classical theory thus asks the question of what prices are necessary, given a particular set of institutions and production structure, to reconcile with a long-run equal rate of profit. This is an exploration and adjustment story through capitalist markets that takes place in real historical time. The goal is to understand this process as it develops toward the applicable center of gravity. One is therefore looking for “necessary” and not “sufficient” prices given the historical set of institutions inherited by the economy. Neoclassical Theory Modern neoclassical equilibrium theorizing is built on a Walrasian [1954 (1874)] foundation.3 In neoclassical general equilibrium theory (hereafter, GET), one does not search for the necessary conditions under which general equilibrium will obtain; GET is concerned with determining the possible conditions under which Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 129 a general equilibrium could theoretically emt--hence, the set of equilibrium prices in GET reflect “sufficient,” and not “necessary,” conditions. The definition of a Walrasian general equilibrium of a pure exchange economy is quite straightforward, and consists of two elements. First, there must exist consumption bundles and a price vector such that at the particular price vector, individual utility is maximized. The second element is that the end result of all of the exchanges which occur to obtain the first condition must lead across-the-board to market clearing (no excess demand or supply). The bulk of the work on GET, from Walras to Arrow-Debreu, focuses upon showing the possibility of the existence of this general result. This is what is meant by the “proof of the existence of general equilibrium.”4 The emphasis in neoclassical equilibrium is not on production and dynamic efficiency as in classical equilibrium, but rather on static, allocative efficiency. In fact, in the implied economy of GET, sometimes described as a pure exchange economy, production does not play a fundamental role in the discussion. In contrast to the classical theory where the dynamic interaction of production and exchange (circulation) plays a central role in the analysis, GET offers a one-sided theory of a capitalist economy focusing on exchange and regarding production as a relatively passive set of input-output relations. Markets do not play a production-based, creative role in neoclassical equilibrium, but rather are for the purposes of facilitating exchange. As Foley puts it Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 130 [The] owners of commodities seek to exchange with each other to reach more satisfactory proportions in their holdings.. . They spend the day haggling over the relative prices of apples and lettuce, until they find equilibrium prices at which the amounts offered for sale are just matched by the amounts demanded. The same produce goes home at the end of the day in different carts [Foley 1990, 666]. This is not a production-based story. Rather, it is an exchange story. In fact, one completes the logical sequence of the proof of the possibility of the existence of general equilibrium without saying a word about the dynamic role of markets and equilibrium. In contrast to the classical view of markets and equilibrium, which sought to explain why markets exist and why they function the way they do, and to develop a causal schema between social phenomena, neoclassical GET makes no causal claims whatsoever. The extent of GET is to say that a general equilibrium solution can be found to an axiomatic economy, hence saying that at least in principle, a general equilibrium solution to the blackboard economy is possible.5 There is no equal rate of profit condition in neoclassical equilibrium. This means that the classical story of adjustment and of exploration of profit opportunities through entry and exit fails to have a counterpart in neoclassical GET. In fact, the neoclassical version of the story does not search for necessary conditions at all; rather, neoclassical equilibrium theory investigates under what possible conditions a general equilibrium could theoretically exist, i.e., it searches for sufficient conditions. David Kreps [1990] admits that “one thing that the concept of a Walrasian equilibrium doesn’t provide is any sense of how markets operate. There is Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 131 no model here of who sets prices, or what gets exchanged for what, when, and where” [195, emphasis in original]. Similarly, Kenneth Arrow has remarked that each “individual participant in the economy is supposed to take prices as given and determine his choices as to purchases and sales accordingly; there is no one left over to make a decision on price” [1959, 43], Thus, with regard to the issues of efficiency, the creative role of markets, and equilibrium conditions sought, the neoclassical general equilibrium program is largely silent on some of the key issues which inspired Adam Smith and the classics— that is, the dynamic nature of competition, exploration, markets, equilibrium, and disequilibrium. If the issues deemed so important by the classicals are swept aside by neoclassical GET, then what does GET contribute beyond the classicals? One could argue that it is the formal, mathematical solution to general equilibrium that accounts for GET’s popularity. More importantly, I would argue, are the powerful normative claims of GET, claims that provide a confident rationale for much of the shock therapy policy recommendations. The normative claims of neoclassical equilibrium are the two so-called fundamental welfare theorems— first, that any competitive equilibrium is Pareto-optimal, and second, that any desired Pareto optimum can be achieved as a competitive equilibrium given a suitable redistribution of initial endowments [Arrow and Hahn 1971, 6]. Given the large number of technical assumptions one has to make in order to draw out the two welfare theorems from the axiomatic edifice, the popularity of these normative claims may seem peculiar. However, as Alexander Rosenberg [1992] suggests, the link to the two welfare Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 132 theorems is one of the strongest elements of neoclassical equilibrium, allowing GET to become a framework for mathematical political philosophy. Hahn makes a similar point when he writes: “It is well known that on certain assumptions an Arrow- Debreu equilibrium of an economy can be shown to be Pareto-efficient. Everyone who has understood this latter concept and the assumptions required to prove the result also understands that to claim this efficiency for any actual economy would be a singularly weak claim in an argument designed to persuade us that the economy is also in some sense morally to be approved” [1973, 4]. For Hahn, the Arrow-Debreu model of GET is primarily useful as a negative heuristic, telling us in a counterfactual sense what the economy must look like in order for the claims of existence and optimality of an equilibrium set of prices to hold. GET suggests to us the limits of policy advice rather than providing a formal theoretical framework guaranteeing the efficacy of such advice. Time, the Nature of Exchange, Institutions, and Power Classical Theory It is not possible to read the classical economists without realizing that their analyses are set in real historical time. As Joan Robinson put it, the “main preoccupation of classical economists was with an historical process of accumulation in a capitalist economy and its relation to the distribution of the product of industry between the classes of society while the neo-classicals concentrated upon conditions Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 133 of equilibrium in a stationary state” [1974, 48]. For classical theory, decisions “to consume today are analyzed in the light of their consequences for the future. Time in the classical model has no end; the economy always faces a continuing future” [Foley 1990, 666]. Moreover, the classical economists did not shy away from the gritty world of institutions, for as Robinson makes clear, “the classics... .were concerned with actual contemporary problems and put their arguments in terms of the structure and behaviour of the economy in which they were living, while the neoclassics enunciated what purported to be universal laws, based on human nature-greed, impatience and so forth” [1974, 53]. While the analyses of the classicals were continuously framed within a particular institutional framework, the neoclassicals “rarely say anything at all about the kind of economy to which an argument is to be applied. The suggestion is that the same laws which govern the supposed behaviour of Robinson Crusoe are equally valid for the conduct of the Gosplan, or rather for what its conduct ought to be, and for analysing the vagaries of Wall Street” [Robinson 1974, 53]. Exchange in classical economics takes place both at equilibrium and disequilibrium prices. Prices fluctuate in real markets and thus not all purchases can be called equilibrium purchases, as it is the very act of exchange that drives the dynamic adjustments that the classicals see as central to the nature of a capitalist economy. Market prices for the classicals can be explained by “the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity [Smith 1976 (1776), 63]. For the classical Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 134 economists, when quantity demanded is greater than quantity supplied, the market price will have a tendency to increase, and should quantity demanded be less then quantity supplied, one can expect market price to fall. A variant of the classical equilibrium framework outlined here is taught to all introductory economics students as the partial long run analysis which results in a zero rate of profit as an equilibrium condition.6 In stark contrast, the neoclassical GET that provides the core of graduate education has stripped modern equilibrium theorizing of this and other stories of dynamic adjustment, reformulating equilibrium in non-historical and allocative terms. Furthermore, the existence and importance of time in classical economics allowed Marx to discuss temporal aggregate demand problems almost half a century before John Maynard Keynes and Michal Kalecki. Marx was clear in his criticism of Say’s law, and based his critique on the recognition of the role that real historical time plays in opening the door for aggregate demand problems and economic crises. Nothing could be more foolish than the dogma that because every sale is a purchase, and every purchase a sale, therefore the circulation of commodities implies an equilibrium of sales and purchases. If this means that the number of actual sales is equal to the number of purchases, it is a mere tautology. But its real purport is to show that every seller brings his own buyer to market with him .. . .No one can sell unless someone else purchases. But no one is forthwith bound to purchase because he has just sold [Marx 1975 (1867), Vol. I, 113], Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 135 Power provides a degree of tension within classical economics. For Marx, of course, differential power between those who own the means of production and laborers who do not, facilitates the exploitation by the former of the latter. For Smith, power is explicitly recognized as a potential obstacle to the efficacious or equitable operation of the invisible hand and market system generally. For example, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices” [Smith 1976 (1776), 145]. Does power then destroy the operation of the equilibrium mechanism in classical economics? No, but it does outline some obstacles which can potentially exist for the market mechanism. Power in classical economics does not destroy the framework of adjustment to equilibrium, but rather identifies key areas where public action will be necessary to promote or supplement competition and to allow for the operation of dynamic adjustment. The analyses of Marx and Smith do not only extend the scope of the classical argument; they also help to correct what some contemporary economists perceive as a logical flaw of neoclassical GET. Under perfectly competitive, long-run equilibrium, power, in effect, is evicted from the analysis. By contrast, in classical economics, “power helps the market to function” [Wintrobe 1998, 33n]. For instance, workers are believed to be “in need of a master” [Smith 1976 (1776), 73] and therefore are “obligated” to offer to sell their labor-power to some capitalist employer [Marx 1975 (1867), Vol. I, 169]. In the absence of differential power, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 136 workers would become proprietors, the labor market would atrophy, and “surplus values” would be competed away. Hence, the “notion that markets spontaneously solve these problems [of the effects of differential power on competition and equilibration] by themselves, so widely believed and propagated, is simply logically incorrect” [Wintrobe 1998, 33n]. Neoclassical Theory Neoclassical equilibrium is not set in real historical time but rather in logical time, where questions of dynamic adjustment are reduced to the concept of stability, and where stability is theorized as mechanical movements in reversible Euclidean space. The specific and variegated institutional details of history that matter so much in classical theorizing have no counterpart in neoclassical equilibrium. For GET, exchange does not occur at disequilibrium. Rather, the auctioneer, an “ad-hoc” addition to the neoclassical equilibrium system, calls out prices until equilibrium prices are reached, and only then does exchange take place, exchange which allows for the simultaneous clearing of all markets. The clearing of all markets which emerges as a result of the prior implementation of market clearing prices requires the auctioneer to be correct each time equilibrium prices are acted upon; that is, in GET, the stability stories are all decided at time “0,” and are not acted out through the ebbs and flows of real historical time. In fact, GET provides no vision of the everyday trading by market participants, because trading outside equilibrium, or “false trading,” is not allowed in the analysis. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 137 Stated differently, the exchange which occurs once the auctioneer has hit the nail on the head in the selection of prices, will by definition follow a path of equilibrium, for if this were not the case, people would not have acted upon the auctioneer’s announcement of the particular prices. Therefore, the description of exchange in GET is not that prices adjust when out of disequilibrium (a dynamic, and classical-oriented theory); rather, the story is that trading does not take place until the auctioneer calls out market-clearing equilibrium prices. Therefore history, n or time, plays no significant role. Process and uncertainty (in contrast to risk) drops out of the discussion, and hence the dynamic issues focused upon by the classical economists (and other issues identified later by Keynes, Kalecki, and the institutionalists) are pushed off the table in neoclassical GET. Finally, neoclassical GET is coherent only if one assumes that no power exists in the economy. No one can have a significant degree of power (with the exception of the auctioneer, of course, who is assumed to be omnipotent) so as to influence prices or output. Should any degree of market power be present, the market-clearing equilibrium of GET will not obtain. And more importantly, unlike in classical theorizing where one is provided with policy leads for how to think about and address issues of power, in GET, practical policy issues of power are not addressed, as it is simply assumed that no individual person or firm has it. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 138 Two Frameworks not on the Same Track From the analysis above, it should be clear that neoclassical equilibrium has not “disproven” or “undermined” classical theories of equilibrium in a direct sense. Rather, GET has undermined the equilibrium stories of Smith and the classics indirectly, by shifting the discussion of dynamic capitalist development toward a static, ahistorical, blackboard exercise devoid of discussion of the processes of actually existing economies. And furthermore, I would argue that this shift in equilibrium theorizing toward static conceptions of equilibrium, rooted in Walras and culminating in Arrow-Debreu, has had an impact on the policy prescriptions offered by economists. Let us now consider the case of economic transition as regards the light shed upon it by the respective visions of an economy offered by classical (Smith-Marx) and neoclassical (Arrow-Debreu) perspectives. CLASSICAL VS. NEOCLASSICAL ECONOMICS - MARKET DEVELOPMENT VS. SHOCK THERAPHY Neoclassical Shock Therapy vs. Classical Market Development If the trend toward static over dynamic, exchange over production, ahistorical over historical, and so on, were a debate limited to academia, perhaps this trend would not be so alarming. However, as the chapter argues, to their detriment, the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 139 shock therapy programs implemented in the former Soviet Republics and some Eastern European countries have been generally based on a neoclassical view of equilibrium, rather than on a dynamic theory of equilibrium and market development.8 Keith Griffin [2000] provides an excellent summary of shock therapy as an exercise in comparative statics. The goal of shock therapy in the former Soviet Republics and Eastern Europe was to transform as rapidly as possible command economies into market economies characterized by neoclassical general equilibrium conditions. Consistent with neoclassical economics, the details of the transition, or historical and institutional factors, were considered to be relatively unimportant. Rather, importance was placed upon the desired end-result of the process - having a market economy in general equilibrium. Institutions were thus tom down overnight, and it was expected that the institutions of market capitalism would quickly and spontaneously emerge to take the place of the old institutions. These reforms included such things as the rapid privatization of state-owned enterprises, the immediate dismantling of central planning and controls, the comprehensive and instantaneous liberalization of prices, foreign and domestic, and the use of foreign capital to ease the pain of adjustment. The vision of change underlying shock therapy was thus a mechanical one; it was “assumed that using the proposed stabilization measures as stimuli, the desired induction to changes in economic behavior was virtually guaranteed, as a chemist's combining of particular elements is certain to produce a specific reaction” Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 140 [Angresano 1996, 459]. But as argued by the classical economists, economies are socially and historically embedded in institutional settings, and therefore from the classical point of view the applicability of the pre-given and nomothetic theoretical framework of shock therapy, insensitive to society-specific particularities where power is real and the emergence of new institutions are not automatic, is questionable.9 In somewhat of a more theoretical mode, Herman Hoen [1998] argues that key to understanding the neoclassical predicament in offering useful policy advice to reform economies is the lack of institutional and historical analysis in the core of neoclassical theory.1 0 “Standard neo-classical economics does not explicitly take institutions into account. These are assumed to exist, but do not restrict the behaviour of economic agents” [Hoen 1998, 8]. Thus, while Hoen argues that “Institution building must be at the core of reform economics... .[w]ithin neo classical economics, the nature of transformation is a matter of instantaneous adjustment of rational agents without a past” [3; 9]. The core of neoclassical economics, from Hoen’s perspective, has little to add “to the understanding of the transformation into a market economy,” save for the idea that rapid and comprehensive reform from the neoclassical perspective may make sense, as “the assumption of rationally behaving agents leads to the perception that exogenously implementing the new rules of the game may prove successful” [Hoen 1998, 9]. And as such, a market economy “can be pragmatically constructed by dissolving the institutions of central planning. There is an instantaneous adjustment of agency Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 141 behaviour, which in fact means that in the pure world of neo-classical economics transformation simply entails a jump from one equilibrium to another” [Hoen 1998, 9]. Nevertheless, shock therapy has often failed miserably in practice [Griffin 2000; Stiglitz 1999],1 1 The argument behind so-called “rapid reform” was that though the pain of reform would be severe, it would be short-lived, because the market economy would emerge to replace the old system quickly. The alternative was seen as reforming slowly, which may lessen the pain at any one point in time, but draw out the disease for longer than would be the case once the correct dose of shock therapy was administered. This “rapid vs. gradual” transition metaphor turned out to be quite misleading, however. The so-called rapid reformers, notably Russia, taking a neoclassical view of equilibrium and markets, focusing on the outcome and not the historical process, and placing over-emphasis on allocative efficiency (vs. dynamic market development), have yet to recover on all accounts, while the evolutionary reformers, such as China and Vietnam, by proceeding sequentially in their reforms, by paying attention to the details of transition (and thus history), by placing importance on dynamic market development, and by more effectively managing a disequilibrium system (rather than assuming a quick adjustment to an equilibrium one) have reformed much more quickly than the so-called “rapid” reformers of shock therapy. Similarly, while China and Vietnam proceeded on an experimental basis, exploring and fostering the development of different institutional arrangements, the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 142 shock therapy countries made the mistake of ignoring their lack of capitalist institutions, or assumed the problem away by holding that such institutions would emerge automatically and quickly enough. As one learns from the classical economists (and more recently as well, the Keynesians and institutionalists), however, capitalist institutions do not emerge overnight, and therefore to focus merely on the outcome and not the process is ill-advised. The Russian and Chinese Experiences Looking at the reform efforts and comparative performance of the Russian and Chinese economies, one can see that China, representing an evolutionary approach to reform inspired more by a classical vision of equilibrium and the development of markets, has fared much better than Russia, a prime example of rapid shock therapy which, in principle, is consistent with an Arrow-Debreu, neoclassical vision of the market economy. Comparative Performance The contrast between China's and Russia's approaches to reform extend to their respective performance.1 2 Average annual growth in China's GDP, 1990-1997, was 11.6 percent, while the Russian economy experienced negative growth at an average annual rate of 7.7 percent [World Bank 1999]. Over the same period, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 143 China's gross domestic investment over the same period grew at an average annual rate of 14.2 percent, while the corresponding figure for Russia shrunk by 14.9 percent per annum [World Bank 1999]. All told, since 1989, Russia's GDP has almost halved, while China's has nearly doubled [Stiglitz 1999, 1]. In the 1980s and early 1990s, China was one of only three economies in the world whose GDP growth rate exceeded 9 percent annually. The value of its exports rose by nearly 12 percent per year. The index of per capita consumption more than doubled between 1978 and 1992, from 100 to 252, and housing space did similarly, while TVs per 100 people rose from 0.3 to 19.5 and physicians per 10,000 people increased by 50 percent, from 10.7 to 15.4. In Russia between the late 1980s and the early-mid 1990s, by contrast, virtually every indicator of overall economic performance plummeted dramatically, indeed, catastrophically. An index of net material product dropped from 100 to 48, gross industrial output to 50, and exports to 63. Moreover, things got worse as the 1990s proceeded. Textile and shoe production fell by one half between 1991 and 1993 and consumption dropped in 1992 by more than 30 percent [Nolan 1995, chap. 2; Khanin 1993, 17]. It should be remembered, moreover, that even in the context of the inefficiencies of Soviet central planning, growth remained respectable up to the shock therapy era. Soviet growth in the seven year period ending in 1988 averaged an annual rate of 3.5 percent, while post-shock therapy Russian growth has been negative [Griffin and Khan 1995, 162], Average life expectancy in Russia has also plummeted over the course of transition, falling from 69 years in 1989 to 65 years in Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 144 1999 [U.S. Bureau of the Census]; Russia's mortality crisis claimed an estimated 1.3 to 3.1 million people between 1990 and 1995 alone [Bloom and Malaney 1998,1]. Other indicators of the severity of the Russian depression are unemployment, inflation, and real income. By mid 1994, unemployment in Russia was 10 million or about 13 percent, inflation had reached the drastically rapid rate of 1292 percent, and average real income by summer 1992 had dropped precipitously to 57 percent of its 1986 level. China's growth since the introduction of reforms in 1978, on the other hand, is especially impressive in that reform brought a slow acceleration in growth; that is, though China's pre-reform economic growth was impressive, reforms seem to have accelerated this rate of growth, and in no year since the introduction of reforms has China's growth been negative, in stark contrast to the Russian case. Mortality has steadily dropped and real incomes have steadily expanded. Inflation and unemployment have been moderately low compared to Russian experience (though inflation has ranged from rates lower than 1 percent to nearly 20 percent [Nolan 1995, 17-23, 294-97], Finally, in terms of distribution, the Chinese experience with reform has been much more egalitarian than that of Russia. In China, rapid growth and a commitment to an egalitarian distribution of assets and productive resources (particularly in agriculture) have dampened pressures that might otherwise significantly increase inequality and poverty in the course of reform. Indeed, the reduction of poverty in China since the beginning of the reform era has been Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 145 “remarkable.” The combination of uninterrupted growth and anti-poverty policies, according to World Bank estimates, has reduced the total number below the poverty line from 270 million in the late 1970s to about 100 million by 1990. Inequality grew somewhat, as the role of market forces spread. However, rural incomes expanded more rapidly than did urban incomes, and this, combined with falling poverty and growth, moderated the social impact of increased inequality [Nolan 1995, 12].1 3 In contrast, Russian inequality has risen sharply since the introduction of reforms. Individuals living below Russia's official poverty line increased from 27 percent in 1992 to 41 percent in 1995, such that there “are indications that a group of long-term poor may have emerged” in Russia [Klugman and Braithwaite 1998, 44- 45]. No doubt, the unusually long and severe Russian depression of the 1990s would have caused an alarming spread of poverty even if inequality had remained the same. But along with the “spiraling collapse” there occurred a “massive” unequalizing redistribution of wealth and income, and an “explosive” growth of the real income of a “new capitalist class,” associated with the “rampant individualism” of the reform era and a state, weakened by disintegration of central governmental power in the late Gorbachev period, evidently unwilling or powerless to guide the reform process along more egalitarian paths [Nolan 1995, 21, 295-96]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 146 The Vision of Markets and Market Development, Real Historical Time, Power, and the Importance of Institutions. Chinese reform since 1976 has been based on a sequential (or historical) approach of flexible and pragmatic trial-and-error. Chinese reformers “were flexible, adapting to changing circumstances rather than adhering to a strict ideology or loyalty to past commitments” [Angresano 1996, 531]. For China, reform was a disequilibrium process of exploration of economic organization, for what worked and what didn't work. China's incremental and sequential reform allowed it to explore various organizational structures of production, including “urban and rural collectives (TVEs), joint ventures and individually owned (private) enterprise, [and] experimental institutions or regions (e.g., a stock market, special economic zones)” [Angresano 1996, 544], The vision of markets in Chinese reform was thus consistent with a classical focus on dynamic market development, economic exploration, and on a regional basis, diversity of reform outcomes. The evolutionary nature of Chinese reform allowed for the development of institutions necessary for the creation and evolution of new working rules and capabilities. This was the method employed in Chinese agriculture, industry, and foreign trade [Griffin and Khan 1995, 156-157], There were several alternative arrangements proposed to the agricultural commune, and still more variants experimented with on a regional and local basis.1 4 After a period of local and regional experimentation, a national model, the household responsibility system, was Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 147 agreed upon and adopted, with allowances for local variation. In industry, reform didn't attack the large state-owned enterprises wholesale, but rather focused first upon creating cooperative, individual, and private businesses from village and township enterprises. Thus, the “weight of the state sector in industrial output was rapidly reduced by allowing small-scale private enterprise to emerge” [Griffin and Khan 1995, 157], In foreign trade, China did not follow the standard recipe of rapid tariff, quota, and foreign capital reform, but rather, proceeded on an experimental basis by promoting carefully selected joint ventures, by slowly liberalizing trade and adjusting the exchange rate, and by promoting semi-free trade in two Special Economic Zones. When the latter proved to be successful, freer trade was promoted in several coastal cities. With an emphasis on sequence and regional variation, China's reforms were just as much bottom-up as they were top-down. This “lack of uniformity [of reforms], abhorrent to a Western-trained economist, had positive advantages during a period of transition: it enabled policymakers to avoid the political confrontations that would have been created by an attempt to impose a uniform national policy from the beginning, it provided valuable experience and information that could be used to fine-tune policies and it gave policymakers time to build political support on the basis of demonstrated achievements” [Griffin and Khan 1995,157], In contrast to the Chinese experience, Yeltsin's Russia, throughout much of the 1990s, followed a more revolutionary approach, popularly characterized as “shock therapy” or the “big bang” toward old institutions and laissez faire toward Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 148 new ones. The goal was to replace the former (state) socialist economy with a market capitalist system, embodying such measures as: abandonment of the remnants of the old arrangements for central planning, allocation, and control; privatization, both of large state enterprises and emergence of new, small and medium-sized firms; elimination of state controls over most prices; macroeconomic stabilization to check inflation, through austere monetary and fiscal policies; and freeing of the economy from obstacles to international trade and investment. Shock therapy was more than the sum of these various policies, however imperfectly or incompletely applied in practice. The intention at least, was to start afresh, wiping out all vestiges of the prior Soviet system and starting at institutional ground zero. It was believed that the communist system had to be leveled quickly to prevent the old elite from foiling plans to move to a market economy based on private property, and to make that move irreversible. Consistent with a neoclassical, general equilibrium view and focus, experimentation and exploration of various forms of social organization and institutional development were, at best, secondary concerns, and systemic reform was seen as something that could be best accomplished rapidly and comprehensively. Such a perspective is informed by a neoclassical view of the economy, where the institutions upon which an economy is to be built are believed to emerge spontaneously once the state gets out of the way of natural market forces. “Economic problems solve themselves: markets spring up as soon as central planning bureaucrats vacate the field” [Sachs 1993, xiii]. Unfortunately, and in contrast to the neoclassical presumption, however, economic Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 149 problems do not solve themselves, and desirable market structures do not emerge spontaneously in the absence of a working institutional and regulatory framework. While creativity and experimentation should have been the “order of the day” to remobilize social resources, Russian shock therapy was very much top-down [Stiglitz 1999, 9]. In contrast to the Chinese reforms, Russian shock therapy involved little experimentation and exploration. Reform was systemic and homogeneous, rather than experimental and encouraging of regional diversity. Again, this stems from a neoclassical view of markets as primarily allocative: “Get the prices right, and the rest will follow” [Chen 1993,140], Thus, while in China “emphasis was placed on growing out of systemic inefficiencies and on using a high rate of investment to reallocate resources and increase microeconomic efficiency,” in Russia, “policymakers seem to have been unduly preoccupied with systemic reform and static allocative efficiency at the cost of stifled growth” [Griffin and Khan 1995, 165]. Proponents of shock therapy based on “market fundamentalism” in both Russia and the West, tend to neglect or reject history in the process of economic transformations and transitions [Amsden et al., 1994, 4]. At the very least, this results in a “highly abstract type of theorizing which dominates modem Western economics [and] does not lend itself to understanding the complex process of institutional change and development which characterizes a transition from one economic system to another” [Kotz, with Weir 1997, 275], In extreme versions of such arguments, historical context and specificity are rejected outright in favor of a kind of theoretical universalism. Peter Aven, for example, Minister of Foreign Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 150 Economic Relations in Russia, claimed (in 1992) that “there are no special countries from the point of view of economists. If economics is a science with its own laws— all countries and all stabilization plans are the same” [cited in Goldman 1994, 106]. Classical and other perspectives (for instance, institutionalist, Post Keynesian), by contrast, while no less generous in praise of capitalist market economies, emphasize historical context and specificity, and draw “lessons” from history concerning the pace and comprehensiveness of transitional change. First, rapid, especially both rapid and comprehensive, transitions into capitalism in history have been rare at best. The classic instance of capitalist transition-out of feudalism in Western Europe in early modern times— and its transplantation to North America— took several centuries. Countries that played the economic game of “catching-up” to Great Britain in the late nineteenth century— notably, Germany, Russia, the United States, and Japan, took at least decades. The reconstruction of the capitalist economies of West Europe after World War II, and transitions to industrializing capitalism in such developing countries as South Korea on the one hand and to hybrid forms of economy in former state socialist countries such as China on the other, similarly can be measured in decades rather than months or just a few years. Thus, “history shows that gradual economic transitions can indeed work” [Kotz with Weir 1997,193]. Second, according to Yeltsin's critics, inside and outside Russia, what one might call transitional incrementalism not only can work, but may well be essential Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 151 or necessary. Because market capitalism is decentralized, with many loci of decision-making, it “necessarily takes a significant period of time to develop” [Kotz with Weir 1997, 193], Shock therapy's conceptualization of rapid and comprehensive transition to capitalism is inconsistent with the institutional inheritance from Soviet state socialism. “It may be that the only effective way” to construct capitalism out of state socialism is to follow the lead provided by capitalism's emergence out of feudalism, as the Chinese have done, and build “at the edges” and in the “interstices” of the “pre-existing economic system” [Kotz with Weir 1997,197]. Moreover, shock therapy in Russia has generated dramatic inegalitarian shifts in the distribution of wealth, power, and income, away from the majority of working people, pensioners, and farmers, to bankers and financial “oligarchs,” mafia-like families and groupings, and some industrial managers and former members of the party-state elite. Growing inequality, combined with overall depression, inflation, and stagnation, has brought massive social costs, political disillusion, and erosion of an already fragile democracy, and threatens to “undermine the entire process of transition to capitalism in Russia” [Kotz with Weir 1997, 199]. Another lesson from history is that “activist governments” have typically regulated and guided emerging markets and capitalists in practice, ranging from provision of credit, to industrial policies, to support to infant industries. Such measures, rather then thwarting capitalist market development, “seem to be essential to the success of that process today” [Kotz with Weir 1997, 194], Even if Russia were willing to wait Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 152 for the decades, if not centuries, that a (relatively) “spontaneous” strategy of capitalist creation might well require, it is “unlikely that, in the face of powerful industrialized capitalist economies as competitors, Russia could ever achieve an industrialized capitalist economy without an activist state to guide its development” [Kotz with Weir 1997, 193-194, 197-199]. ADAM SMITH: PRECURSOR OF SHOCK THERAPY AND LAISSEZ- FAIRE? Rapidity and Spontaneity in the Transition to a Market Economy Adam Smith is often characterized as a precursor of contemporary theories of shock therapy and laissez-faire, that is, that transition from pre- or non-market economy to what today is described as market capitalist economy and society, can efficaciously, perhaps best, be accomplished rapidly, spontaneously, and with little guidance or regulation by government. However, it is my contention that Adam Smith would very much be a critic, and not a wholesale supporter, of “shock therapy” combined with laissez faire, as often practiced. As such, before concluding the chapter, a more focused consideration of what Smith may have had to say on the subjects of transition and laissez-faire, as can be gleaned from a reading of Wealth of Nations (hereafter Wealth), would be well worthwhile. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 153 In an often-cited commentary, Smith states that if “all systems of preference or restraint are removed, the obvious and simple systems o f natural liberty establishes itself o f its own accord” [Smith 1976 (1776), Vol. II, 208, emphasis added]. Taken at its face value, and leaving aside Smith’s several important caveats, this statement does suggest an element of spontaneity, rapidity, and laissez faire in both the emergence and functioning of “natural liberty.” Smith, however, does make powerful qualifications, leaving his net position as more moderate and closer to an evolutionary view than to a rapid and automatic one. First, Smith here presupposes a “modem commercial society” and, in that context, says in effect that “natural liberty” (or “free competition”), in the absence of systems of preference or restraint, is derivative from self-interest. This is a fairly strong claim, but not nearly as strong as the (mis)interpretation of this passage as claiming that a commercial society itself historically emerges spontaneously and without collective assistance and guidance in, for example, the rearrangement of property relationships. Second, even if it is supposed that the historical emergence (as well as functioning) of free competition and market processes exhibit elements of automaticity because in Smith’s analysis the division of labor is rooted in a “certain propensity of human nature,” namely, the propensity to “truck, barter, and exchange,” that process, Smith observes, and hence the historical spread of market economy and commercial society, is no more rapid than it is automatic. Indeed, it is “very slow and gradual” [Smith 1976 (1776), Vol. I, 17]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 154 Free Competition, Monopoly, and the Natural Order Third, there is no question but that Smith propounds the wisdom and desirability of a “freely competitive market economy” once a modem commercial society emerges in the historical process of development. Free competition is a “system of natural liberty,” minimizes inequality in the context of a private property regime, fosters social coherence instead of chaos, and promotes good economic performance through economic growth, stability, and efficient resource allocation. Thus, for example, Smith argues that “every individual,” in a freely competitive economy, “necessarily endeavors” to direct his capital and industry so that production “may be of the greatest possible value” and the “annual revenue of society” is maximized [Smith 1976 (1776), Vol. II, 477]. In acting this way, “every individual,.. .generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it” [Smith 1976 (1776), Vol. II, 477]. In many instances, he is thus “led by an invisible hand which was no part of his intention” [Smith 1976 (1776), Vol. II, 477], Generalizations such as these, however, play a relatively modest role in Wealth. His argument for harmony in a system of natural liberty typically is set in some concrete problem or specific data. In such contexts, Smith subjects his analysis to numerous and major qualifications. Partly for this reason, “natural liberty” is more a vision of an ideal future than a description of an extant economic system. In another caveat, Smith states that, in a regime of “natural liberty,” “every man” is Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 155 “left perfectly free to pursue his own interest in his own way” [Smith 1976 (1776), Vol. II, 208]. But only, he adds, “as long as he does not violate the laws of justice, ” that is, only within a functioning legal and moral system [Smith 1976 (1776), Vol. II, 208, emphasis added]. In a country of transition, like Russia, for example, where corruption and crime are rife, the “laws of justice” are frequently violated as business and financial oligarchs scramble for wealth and power in an atmosphere where “nobody care(s) about legal or illegal, right or wrong,” and a yawning chasm separates a few billionaires at the top of the social hierarchy from a nation of paupers underneath. A “strong,” if not authoritarian, central government may well then be needed to counter disorder, collect taxes, and get the funds to do such “basic jobs” as “keeping hospitals running, paying teachers, and getting pension checks to senior citizens on time” [Mead 2000]. Next, Smith presupposes the absence or supercession of monopoly for natural liberty (and associated minimalist government) to prevail. This requires major reforms to establish the requisite preconditions for competition and thereby enable “every man” to “bring both his industry and capital into competition with those of any other man, or order of men” [Smith 1976 (1776), Vol. II, 208]. These reforms include free choice in occupations, free trade in land, and commercial free trade internally and externally. Again, in a monopoloid country like Russia, this would require an activist government to confront the “oligarchs,” dissolve the monopolies, and establish competitive conditions. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 156 Fourth, Smith acknowledges “flaws in the natural order,” that is, “exceptions to the doctrine of a natural harmony in the economic order even when left to take its natural course” [Viner 1927, 316]. A major source of disharmony is massive inequalities in the distribution of power, even in a regime of natural liberty. As noted, Smith believes that power inequalities are lower under free competition than under monopoly. But Smith makes painstakingly clear that monopoly behavior is widespread. Consequently, things are not left at “perfect liberty,” free competition does not actually prevail, and substantial inequalities emanate from monopoly power, even in the absence of public policy designed to foster monopoly. A second form of power inequality is that rooted in unequal distribution of wealth. In an “early and rude state of society which precedes both the accumulation of stock and the appropriation of land,” wealth power based on such asset ownership is nonexistent and the “whole produce of labour belongs to the labourer” [Smith 1976 (1776), Vol. I, 53-54]. In modern commercial society, by contrast, the “produce of labour” is shared among workers, “undertakers,” money lenders, and landlords, and the greater the inequality in asset ownership, the greater the inequality in income distribution. In the highly inegalitarian British society of the late eighteenth century, where land is scarce and expensive, the ownership of land and capital is highly concentrated, and wage labourers “make up the far greater part o f . . .political society,” “rent and profit eat up wages, and the two superior orders of people oppress the inferior one” [Smith 1976 (1776), Vol. II, 76]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 157 A third example of economic inequality and social disharmony in Wealth lies in the relationship between employers and employees. Typically lacking ownership of land or capital and the economic capacity or managerial skills to function effectively as independent proprietors, most “workmen stand in need of a master,” under whose thumb their employment is directed, production is overseen, and market relationships are skewed to the employer’s “advantage” [Smith 1976 (1776), Vol. I, 73]. Masters and workers dispute over the terms of employment. It is easy “to foresee which of the two parties must, under all ordinary occasions, have the advantage in disputes, and force the other into a compliance with their terms” [Smith 1976 (1776), Vol. I, 74]. Workers seldom benefit from “tumultuous combinations” to raise wages, “partly from the interposition of the civil magistrate, partly from the superior steadiness of the masters, [and] partly from the necessity which the greater part of the workmen are under, of submitting for the sake of present subsistence” [Smith 1976 (1776), Vol. 1,76], Workers may obtain benefits from extensions in the division of labor and greater use of machinery. But these benefits are alloyed with harmful effects. Society often “does not place the greater part of individuals” in positions of well- rounded division of labor which provide opportunities for cultivation “of all the abilities and virtues which that state requires” [Smith 1976 (1776), Vol. II, 302-03]. The worker’s “dexterity at his own particular trade seems.. .to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 158 of the people, must necessarily fall unless government takes some pains to prevent it,” notably through education [Smith 1976 (1776), Vol. II, 302-03, emphasis added]. Exceptions to Laissez-Faire and Free Trade A characterization of Adam Smith’s views on institutions and policies as one of laissez-faire could not be literally true because (selected) government actions in economic life are themselves an integral part of the natural order, indeed, as in the instances of free competition and the maintenance of justice, essential prerequisites to its efficacious operation, and do not interfere with the “system of natural liberty.” The “modem advocate of laissez faire,” Jacob Viner aptly wrote [in 1927, 324-25], “who objects to government participation in business on the ground that it is an encroachment upon a field reserved by nature for private enterprise cannot find support for this argument in the Wealth of Nations. ” Smith’s proposals for institutional and policy reform may be classified as negative and positive, general and specific, and domestic and foreign. Negatively speaking, the flaws in the natural order noted earlier indicate striking disharmonies between such realms as private versus public, masters versus workers, rich versus poor, and monopoly versus competition. These flaws suggest a potentially substantial agenda for a governmental role in fostering public welfare. Positively speaking, Smith takes a middle ground position. In general, he propounds, in effect, a functional division of labor between private and public Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 159 realms. On the one hand, there is a private sector, the arena of the production and sale of what today one would call divisible, marketable goods. Because, even in principle, “no human wisdom or knowledge could ever” suffice to enable government to provide a “proper performance” therein, the sovereign is “completely discharged” from “the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interests of society” [Smith 1976 (1776), Vol. II, 208]. In general, the sovereign’s duties are limited to a public sector wherein government has the knowledge, wisdom, and experience to provide a “proper performance” or where the private sector is ill-equipped to provide a socially desired (public good), “which it can never be for the interest of any individual, or small number of individuals to erect and maintain; because the profit could never repay the expense .. .though it may frequently do much more than repay it to a great society [Smith 1976 (1776), Vol. II, 209]. Smith lists three general duties for government: protecting society from the “violence and invasion of other independent societies;” internal order and justice, or protecting every member of society against the “injustice or oppression” of others through provision of “an exact administration of justice;” and the erection and maintenance of “certain public works and public institutions,” for example, education and other forms of public infrastructure, such as roads, dams, and harbor facilities [Smith 1976 (1776), Vol. II, 208-209], Although Smith’s argument thus limits the role and functions of government in economic life, government is strategic, indeed necessary, for the successful Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 160 conduct and performance of a market economy. Qualitatively, although the institutions and policies of government are limited, and are determined by collective choice, they are of “great importance,” as essential components of the public infrastmcture [Smith 1976 (1776), Vol. II, 208]. Quantitatively, Smith proposes to limit government by function, not by size. A government might be limited to Smith’s three major duties, yet might well be quite large and activist, as, for example, in building new institutions and infrastructure for the transition to a market economy. Additionally, the richer the economy, the more advanced the technology, and the more complex the social relationships, the greater the expansion in both the functions and the size of government. When Smith turns from the general to the specific, his exceptions to laissez- faire multiply. For example, although he was a sharp critic of monopoly and of pro monopoly government policies in general, he supported the protection of temporary monopolies through such devices as patents and copyright laws. Similarly, he favored market choice and allocation, again in general; but he approved of government regulations over markets in selected instances, such as government restraint on maximum interest rates (at 5 percent), to discourage lending to prodigals and spendthrifts. When governments are parsimonious and efficient (as in Venice and Amsterdam), their management of business projects is “proper.” When governments are corrupt and inefficient (as in England), then their good management of mercantile projects is highly “doubtful.” Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 161 Finally, Smith is an enthusiastic advocate of “free trade” as a general principle. Again, however, his general support for the principle is qualified by important exceptions in particular circumstances. For instance, he states that because defense is “of much more importance than opulence,” the Navigation Acts, promoting the British merchant marine, “are perhaps the wisest of all the commercial regulations of England” [Smith 1976 (1776), Vol. 1,487]. He further observes (albeit with some qualifications) that by foreign trade regulations, such as tariffs, “a particular manufacture may sometimes be acquired sooner than it could otherwise, and after a certain time may be made at home as cheap (or cheaper) than in the foreign country” [Smith 1976 (1776), Vol. I, 479]. This infant industry argument clearly shifts from a static, allocational focus, typical of neoclassical analyses, to a dynamic, developmental one, more characteristic of classical approaches. Moreover, partly because exports facilitate the sale of goods that are in “surplus” at home, trade restrictions may serve as a useful bargaining chip to obtain mutual reductions in tariffs and other trade restraints. Smith also states that the transition toward freer trade should proceed gradually. If high duties or prohibitions were removed “all at once,” as enthusiastic Western advisors have often proposed for former Communist countries in the 1990s, considerable “disorder,” including severe unemployment, might well ensue, as imports expand, but exports lag behind [Smith 1976 (1776), Vol. 1,491]. To suppose that free trade “should ever be entirely restored in Great Britain,” he concludes, is “absurd” and utopic [Smith 1976 (1776), Vol. I, 493]. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 162 In short, Smith “saw a wide and elastic range for government... .He did not believe that laissez faire was always good or always bad” [Viner 1927, 327-28]. Of course, neoclassicism also includes some analysts and practitioners who exhibit elements of skepticism and eclecticism about their own main line arguments. But this frequently occurs despite rather than because of the adherence to a neoclassical general equilibrium type of modeling, and remains in contrast to a more classically- inspired economics that puts the issues of power, institutions, and dynamic social change in real historical time more at the center of professional discourse. CONCLUSION In the early 1980s, Hahn reflected on the use of GET as an argument for the free market policies of Margaret Thatcher and argued that her economic policies were based on a dangerous misappropriation of the Smithian metaphor of the invisible hand as everywhere equally applicable. He argued instead that a “wishy washy, step by step, case by case approach seems .. .to be the only reasonable one in economic policy” [1982, 21]. And he despaired that “The age of prophets and of witches is upon us and such an age is not friendly to reason” [1982, 21]. Given the results of the recent shock therapy “experiments” his despair was all too prescient. Robert Heilbroner and William Milberg have argued that contemporary economic thought is plagued by a crisis of vision [1995]. Perhaps this crisis is most evident in modem neoclassical, general equilibrium theorizing, which seems to be Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 163 largely irrelevant to the workings of, and problems facing, actually existing economies. The problem, as argued by McCloskey [1994], is that for all of the time and attention it has received from the economics discipline “the general equilibrium theorem of Arrow and Debreu . . .[does] not, strictly speaking, relate to anything an economist would actually want to know” [135]. For unsurprisingly, “under some assumptions the equilibrium does exist and under others it does not; under some assumptions the equilibrium will be efficient and under others it is not. Well, so what? Sometimes it rains and sometimes it does not. In some universes the moon is made of green cheese and in others it is not” [McCloskey 1994, 135]. In conclusion, the main focus of the argument of this chapter can thus be seen as a plea for a return to (or at least a refocus in the direction of) classical views of the economy and equilibrium, as exemplified by Smith and Marx. As demonstrated by the example of transition, classical interpretations of the economy can often provide valuable guidance and insight, while the formalism and ahistorical nature of neoclassical equilibrium can often hinder practical investigations and policy advice regarding the institutional evolution and dynamics of actually existing economies. While the classicals acknowledged, and put at the center o f analysis, the issues of power, the creative and dynamic role of markets, the exploration of profit opportunities, history, and institutions, all of these issues are assumed away, or at best given minimal importance in the neoclassical vision of general equilibrium theory. And yet, as noted, these are often precisely the issues that need to be at the center of professional focus when it comes to policymaking and applicability to real- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 164 world situations. On the issue of transition specifically, Ronald Coase in his Nobel lecture made the point effectively when he noted that Even more surprising . . .is the neglect of the market or more specifically the institutional arrangements which govern the process of exchange... .The value of including such institutional factors in the corpus of mainstream economics is made clear by recent events in Eastern Europe. These ex- communist countries are advised to move to a market economy, and their leaders wish to do so, but without the appropriate institutions no market economy of any significance is possible. If we knew more about our economy, we would be in a better position to advise them [1992,713-714]. A return shift to classical views of the economy and equilibrium would offer a richer atmosphere where economists and graduate students of economics would be more challenged to pursue the analysis of many of the pressing economic issues of our time. I believe that economics, even (or especially) at the center of its professional discourse, needs to be a discipline that focuses on the analysis of actually existing economies. That is, as Joan Robinson has argued, economics should be “concerned with actual contemporary problems” and thus, put its “arguments in terms of the structure and behaviour of the economy” in which we live [1974, 53]. The implications of this argument reach deep into the structure and direction of the discipline, and, if the situation is to improve, require substantial changes away from what Coase has called “blackboard economics” [1992, 713]. More specifically, it requires substantial changes in the sociology of how economic Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 165 research is evaluated, and how scientific research is to be conceptualized by the economics discipline. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 166 ENDNOTES 1. I recognize that there are many meanings to the terms “neoclassical” and “classical” and some would argue by linking the term neoclassical to Arrow- Debreu general equilibrium models I have presented an overly narrow conception of neoclassical theory today. I am also aware that others will consider my classifying Marx as a classical economist as inappropriate. I wish to maintain this basic dichotomy in this chapter, however, because I feel it captures well the basic difference that has informed the analysis of systemic change in the some of the transition economies and especially as regards the shock therapy policy recommendations. It should also be noted that a version of this chapter will appear in a future volume of the Eastern Economic Journal, as a co-authored article with John Elliot and Stephen Cullenberg. 2. Stiglitz’ concern for the transition is quite warranted. Out of 22 formerly socialist, transitional countries in Eastern Europe and the former Soviet Republics, only three had reached their 1989 levels of GDP a decade into the transition [Economist 1999, 150]. And indeed, when compared to textbook niceties, a Bulgarian account of reform, ten years in the making, is quite telling [Doncheva 1999, 10]. “What has happened in these ten years? .. .[We now have] hordes of unemployed workers, beggars in the streets, old people digging in rubbish containers for some rag or moldy piece of bread. Our social fabric is falling apart... .1 see more and more children who have dropped out of school. Their parents cannot provide them with shoes and clothes, never mind textbooks and paper. Things are no better for the elderly. In 1989, my friend’s mother’s pension had been about 105 leva a month. Now it is 46 leva a month, a little more than $24. Many people, especially those who are older than 30, are not working. Nobody needs them; nobody offers work to them ... .We in Bulgaria have learned the hard way what those pretty [reform] slogans m ean... .1 live in misery, but I manage. It is the sight of the old men and women digging into the rubbish containers that is breaking my heart.” 3. Geoffrey Hodgson [1999, 39-40] argues that a distinction should be drawn between Walras’ theory and what is commonly referred to today as “Walrasian theory.” Walras himself, Hodgson notes, considered the possibility of changing preferences, something that is not to be found in the main thrust of what has come to be known as Walrasian theory. See Currie and Steedman [1990] for more “evolutionary” interpretations of Walras. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 167 4. See David Kreps [1990] for the formal proof of the possibility of general equilibrium. 5. Deirdre McCloskey [1994, 133] writes: “From everywhere outside of economics except the department of mathematics the proofs of existence of competitive equilibrium will seem strange. The proofs do not claim to show that an actual existing economy is in equilibrium, or that the equilibrium of an existing economy is desirable... .[Instead, it shows] that certain equations describing a certain blackboard economy have a solution, but they do not give the actual solution to the blackboard problem, much less to an extant economy.” 6. At the undergraduate introductory level of economic principles, the notion of long run partial equilibrium that is taught is indeed of a much more classical nature. In this analysis, the entry and exit in and from competitive industries results in price adjustments until price is equal to minimum long run average cost, thus enforcing the zero profit equilibrium condition. The zero profit condition in this context is equivalent to the equal rate of profit condition of the classicals, because the neoclassical notion of cost embodies the opportunity cost of alternative investments. This partial equilibrium approach derives from the work of Alfred Marshall [1952 (1924)], who, for some purposes (such as equilibrium), can be considered more in the classical than the neoclassical tradition. 7. Some observers may (inaccurately) argue that “time” does enter into GET with Arrow and Debreu’s theory of contingent claims markets. The basic idea is that in making consumption decisions, the consumer can trade not only oranges for apples today, but oranges today for oranges tomorrow. This does not qualify as recognizing and accounting for real historical time. Uncertainty in this theory, moreover, is once again pulled under a classic probabilistic structure where either subjective or objective probability distributions are assumed known, effacing the concept of uncertainty of its strategic importance in real time capitalist decision making. See Hodgson [1999, 39-40] for a brief but excellent discussion of the lack of a role for real historical time in neoclassical theory. 8. By exploring a dichotomy between classical and neoclassical theorizing, I do not mean to imply that only classical theorizing offers useful policy guidance on issues such as transition. Rather, I only mean that classical theorizing does in fact offer useful policy guidance, including on issues such as transition. For example, Murrell [1991] argues that while standard neoclassical economics has Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 168 little to offer the analysis and policy prescriptions of transition, much can be gained by an emphasis on recent developments in the economics of information. I have no reason to quarrel with this argument. Just because I believe that the classicals have important things to say on issues of transition does not mean that I believe that nobody else does. 9. James Angresano [1989] provides a contemporary classical-institutional theoretical and research framework which places economies in their socially- embedded contexts. 10. In addition to an analysis of the relationship between reform economics and neoclassicism, Hoen explores possible connections between transition and two other schools of economics, namely Post-Keynesianism and Austrian economics. As noted elsewhere in this chapter, many (if not all) of my arguments for the strengths of classical economics also apply to the economics of John Maynard Keynes, in particular as regards Post-Keynesian interpretations of Keynes on the issues of uncertainty, time, and the importance of institutions. Hoen’s discussion of Austrian economics is particularly interesting, and some affinities with my argument can be found there as well, as well as key differences. Unfortunately I do not have time to explore these issues here, and thus the reader is referred to Hoen [1989, 13-17]. The reader may also wish to consult McKinnon’s [1992] treatment of Hayek on the question of transition. 11. The literature on transition is volumous; I cannot do full justice to the impressive and varied body of work on the subject here. As such, the reader may find the following references useful. General reviews of the transition literature can be found in Elliott [1995], Hall and Elliott [1999], and Hall [1999], Elliott [1997] addresses the role of institutional change in transition. Elliott and Hall [1999] discuss Russia’s “Rocky Road” to Capitalism, tracing out within an historical context the views of reform of Gorbachev and Yeltsin. Brown [1999] assesses institutional change and performance in Estonian transition, focusing upon monetary aspects. Giffin and Ellington [1995] compare Polish and East Asian reform, and argue for the role of government in fostering the development of a market economy. McKinnon [1991] gives a theoretical treatment of the case for a gradualist reform policy. The edited volume by McMillan and Naughton [1996] offers multidisciplinary perspectives on Asian experiences in reform. Murrell [1991] doubts the relevance of standard neoclassical economics to the reform experience, noting that recent theoretical developments in the economics of information may offer a more useful reference point for transition efforts. Murrell [1996] assesses the progress of reform, and argues that institution Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 169 building takes time. Nolan [1988] analyzes rural reforms in post-Mao China; also see its critique by Griffin [1990]. On the issue of comparing the Chinese and Russian experiences with reform, the reader is referred to Nolan’s [1995] impressive work, aptly entitled China’s Rise, Russia’s Fall. Reardon [1996] analyzes the transition experiences of the Baltic republics of Estonia, Latvia, and Lithuania. In contrast to my interpretation of the evidence, Woo, et al. [1997] argue that the Asian and Eastern European reform experiences can be understood using a single explanatory framework of adherence to neoliberalism as the determinant of success; also see its critique by Lo [1998]. 12.1 do not claim that an evolutionary transition strategy is invariably better than rapid reform. Transition strategy in Belarus, for example, has been more gradualist than in the Russian Federation, but in many respects it has exhibited an even more abysmal economic record. Likewise, the Czech Land implemented a transition program even closer to shock therapy than did Russia; but its economic performance has been much stronger. 13. Despite rapid growth of rural incomes, however, there remains a large gap between urban and rural incomes in China. Per capita, household income in urban China is 2.42 times that in rural areas [Griffin and Khan 1995, 178]. This figure, moreover, understates the urban/rural gap, as consumer subsidies are higher in urban areas. This urban/rural divide remains both a challenge and an opportunity for Chinese policymakers in their continued reform efforts. 14.1 am not arguing, of course, that China's reformers have always chosen the correct reform paths, that their outcomes have been perfect or optimal, or that their reforms have brought about the best possible institutions. For example, the argument could be made that the agricultural commune could have been saved and reformed rather than abandoned. See Griffin [1984] for a discussion of the variety of reform experiments in rural China. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 170 REFERENCES Amsden, Alice, Jacek Kochanowicz and Lance Taylor. The Market Meets its Match: Restructuring the Economies of Eastern Europe. Cambridge: Harvard, 1994. Angresano, James. “An Evolutionary-Institutional Approach to the Study of Comparative Economics.” Journal o f Economic Issues. Vol. 23 No. 2 [1989], 511- 517. 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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 171 Coase, Ronald. Essays on Economics and Economists. Chicago: University of Chicago Press, 1994. Currie, Martin and Ian Steedman. Wrestling With Time: Problems in Economic Theory. Manchester: Manchester University Press, 1990. Doncheva, B. “Look, What Was the Point for Bulgaria of Listening to the West?” International Herald Tribune. November 12, 1999, 10. Economist. “Forecast Level of GDP in 1999.” November 20, 1999, 150. Elliott, John. “Contending Perspectives on Post-Communist Transition: Strategies for Economic Transformation.” International Journal of Social Economics. Vol. 22 No. 9,1995, 28-42. Elliott, John. “The Role of Institutional Change in Post-Communist Transition.” International Journal of Social Economics. Vol. 24 No. 7/8/9 [1997], 859-872. 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Arthur Lewis's Development Economics: Economics as Pedagogy." World Development. Vol. 14 No. 2 [1986], 165-180. Woo, Wing Thye, Stephen Parker and Jeffrey Sachs, eds. Economies in Transition: Comparing Asia and Eastern Europe. Cambridge: MIT Press, 1997. World Bank. World Development Indicators 1999. Washington D.C.: World Bank, 1999. Zerubavel, Eviatar. "The Rigid, the Fuzzy, and the Flexible: Notes on the Mental Sculpting of Academic Identity." Social Research. Vol. 62 No. 4 [Winter 1995], 1093-1106. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 191 APPENDICES APPENDIX 1: PRIMARY AND SECONDARY SURVEYS Below are the primary and secondary surveys utilized in the study of “Farm Produce Vending in the Context of Economic Hardship: an analysis of the Fifth Avenue Market of Bulawayo, Zimbabwe”. Additionally, many of the more qualitative issues explored in interviews have also been omitted, as specific questions were not asked about a variety of topics, but rather were allowed to simply emerge as interesting topics in the flow of conversation. Primary Survey: (1) Interview Number and Details: (2) When did you start vending produce? When did you start vending produce here? (3) What were you doing before you started vending produce? Why did you change? (4) Who owns the business? (number, gender, family members?) Are you the only owner? (5) How many workers do you have (total)? (6) Description of workers (gender, children, part-time): (7) To whom am I speaking (owner, gender, age)? Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 192 (8) What are your biggest problems that you face in your business (allow to list): (9) Why did you choose to begin farm produce vending as an occupation (instead of doing something else) (allow to list reasons and to briefly elaborate)? (10) Please describe your household - number, gender, and ages of members and location of home (make sure that only those living in the house are listed). Please also discuss each member’s employment status (job, vending, not working, etc.). (11) Considering all sources of cash income for your household, what proportion of household income does this business contribute? (a) all; (b) more than half; (c) less than half; (d) about half; (e) don’t know. (12) How many businesses are you operating right now? Please explain? (13) Are you currently married? (14) What grade or form of education did you complete? (15) What are the main things that you spend your money on that you make from the business? (16) How do you know what prices to charge for your goods? (17) Many people in the market sell similar items to those you sell. How do you entice customers to buy specifically from you? (18) Do you negotiate prices and how often? Secondary Survey: (1) We would like to ask you about your current economic status. Which of the following most closely describes your current economic situation? Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 193 (a) You are able to purchase food, regularly pay rent, and pay for transportation and school fees with relatively little hassle. You may not be able to buy luxury goods (offer examples), but you may have been able to acquire some durable goods (offer examples), and you can eat meat on a regular basis (three or more times a week). You are most likely able to regularly save a percentage of your income in a bank account. (b) You are generally only able to purchase basic food (com meal and vegetables), though you may eat meat on an infrequent basis. You are able to pay rent, transportation, and school fees, though perhaps just barely, or sometimes late. You cannot generally manage to save much money in a bank or other formal institution. (c) You are frequently unable to purchase enough food for your family (you generally only eat basic food), and you have significant trouble in paying rent, transportation, and school fees. There are regular times when you do not have enough money for rent, transportation and school fees, and thus there are many times when you do not pay them, often paying them late. You are not able to save money in a bank. (2) How would you rate your current economic status: (a) versus that of one year ago?; (b) versus that of five years ago? Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 194 APPENDIX 2: PHOTOGRAPHS OF THE BULAWAYO FIFTH AVENUE MARKET Photograph 2.1: Fifth Avenue Market Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 195 Photograph 2.2: Women Selling Vegetables, Dry Goods, and Cooking Utensils Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.3: Women Selling Vegetables and Crocheting Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.4: Man and Woman Selling Dry Goods Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.5: Women Selling Vegetables Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 199 Photograph 2.6: Scania. Hired to Deliver Goods to Stands Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.7; Houses. Nkulumane High Density Area Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 201 Photograph 2.8; House (Exterior View) and Family, Nkulumane Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 202 Photograph 2.9: House (Interior View) and Family. Nkulumane Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 203 Photograph 2.10: Block of Flats, Makokoba High Density Area Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.11; Inside Stands Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Photograph 2.12: Inside Stands, Close-up Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 206 Photograph 2.13: “Bit” - Stand with Little Produce Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 207 Photograph 2.14: “Some” - Stand with Medium Amounts of Produce Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 208 Photograph 2.15: “Lots” - Well Developed, Well Stocked Stand Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

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Asset Metadata

Creator Peters, John Edward (author)

Core Title Economic transition, micro- and small -scale enterprise in Zimbabwe, and the significance of participatory development to institutional economics

School Graduate School

Degree Doctor of Philosophy

Degree Program Political Economy and Public Policy

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag economics, general,Economics, theory,OAI-PMH Harvest,sociology, social structure and development

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Dekle, Robert (committee chair), Motamedi, Farideh (committee member), Myers, Dowell (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c16-376855

Unique identifier UC11340064

Identifier 3103958.pdf (filename),usctheses-c16-376855 (legacy record id)

Legacy Identifier 3103958.pdf

Dmrecord 376855

Document Type Dissertation

Rights Peters, John Edward

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA