Notes on Dani Rodrik

Notes on Dani Rodrik’s One Economics, Many Recipes (2007) (I'm always late getting to the party).

One thing to like about Dani Rodrik: his modesty. Of course, as a development economist, he has a lot to be modest about. It is hard to think of a profession that has been more crashingly, resoundingly, repeatedly, publicly wrong over 50-60 years in the advice it has offered (cf. this guy, passim, ad nauseam).

In fairness, Rodrik isn’t personally responsible for many, if any, of the excesses and illusions of his trade. Rather, he shows signs of having learned from them.. Indeed his point of departure would be the “Washington Consensus” the summum bonum of development wisdom, or as Rodrik presents it, the “Augmented Washington Consensus”—the mantra of first principles that are presumed to underlie attempt at economic development.

What keeps Rodrik’s list from being just another anodyne position paper is that he actually tries to measure the effectiveness of the consensus in action. And surprise: it doesn’t work very well. Consider the “Asian Tigers”—Korea, Taiwain, Thailand, even China itself. Every one of them has achieved growth under terms that the Consensus would deem impossible. Or South America: hardly any place in the word has worked harder to stand by first principles. Its reward: stagnation. Even Africa has taken impressive steps to clean up its act with little or nothing to show for it.

Rodrik doesn’t present himself as a radical here. By his own avowal,his tastes are quite orthdox. Rather his point is that agendas like the “Consensus,” are too abstract, too formalized, too immune for the texture of experience.

The strategy has the virtue of putting Rodrik into the small and honorable company of those who understand the first principle of market ideology: that a market is an artifact, created, nurtured and sometimes distorted and destroyed by those who live in it. So just as there are many recipes, there are many markets, and some can do their jobs in ways that academics can scarcely have anticipated.

Rodrik is great at the telling counter-example, suggesting how abstract principles may go awry. He’s got plausible and interesting stories about how some places (China, Korea, Taiwan) work well in spite of the rules and how some (Brazil) work well in spite even of themselves.

He is, perhaps inevitably, less elegant at prescription. He operates on the principle that most of life is learning-by-doing, and that entrepreneurship, by definition, is discovery of stuff that you didn’t know in advance. This is probably true enough in itself, but it leaves the reader with the suspicion that you’ll need managers as clever and self-critical as Rodrik himself (plus a huge dollop of luck) to make it work.

By fortuity, just a few hours after I finished Rodrik, I read Greg Mankiw’s complaint that “mere Muggles” (link) don’t get free trade. Rodrik, as it happens, offers a ready-made response: free trade is not an end in itelf; it is an instrument. Free trade may help to bring economic growth but there are economies that have grown without it (that woud be us, among others) and those that have not grown with it. Institutions are richer than theory, and economics is richer than doctrine (cf. Rodrik's own blog, with a useful comment thread (link)).

Brad DeLong says that Rodrik is “the finest political economist of [DeLong’s] generation” (link). That’s a bold claim. It might be true, but I don’t need to endorse it to say this is about the best single book on development that I’ve read for a very long time.