THE NEW DEVELOPMENTISM AND REGULATION THEORY Robert Boyer Institute of the Americas (Vanves, France) Prepared for: “1st New Developmentalism’s Workshop: Theory and Policy for Developing Countries ” , Sao Paulo, July 25th 2016
INTRODUCTION The historical background Regulation Theory emerges out of the confrontation of US and French long run history with conventional theories …But early extension to Chile, Venezula and recent large investigation on Argentina.
SYNOPSIS I. Old structuralism in Latin-America and “ Régulation ” Theory (RT). II. The new developmentism and RT. III. Conclusion.
I. OLD STRUCTURALISM IN LATIN-AMERICA AND “RÉGULATION” THEORY. 1. Common features. The intrinsic instability of modern economies.
A synthetic overview of alternative economic theories Market economies as Stable Structurally unstable Subjective New Irving classical Fisher Value macro (1933) Theory Marx, Keynes, Minsky, Objective Classical Régulation Theory political Structuralist Theory economy
The dialectic between the domestic and the international.
Fordism : domination of domestic compromises over the external constraints
Contemporary world: the hierarchical domination of external constraint
The interwar crisis and the Second World War: turning points In the design and architecture of institutional forms In economic theorizing : A structurally unstable pure market economy
A viable growth regime is up to an active and coherent economic policy: Fordism
2. Differences. All the theories are born local and historically embedded. Latin America : a c olonial past still shapes economic specialization, conceptions about State, productive and social heterogeneity France / US : Central industrial economies have been organizing the international relations to nurture their own growth regimes.
Hence different idiosyncratic theorizations
How institutional forms shape any growth regime: against technological determinism
Fordism : The core model of post-world war II (US, France ) High productivity Stable capital/ labour Limited increases potential compromise international openness Modernisation of Their acceptance Focus of labour Outlet for productive systems by workers struggles upon wages consumption goods Large productivity increases Allow High accumulation rate High Pull effect upon profit rate capital goods
The heteronomy of rentier regime according to regulation theory
II. THE NEW DEVELOPMENTISM AND REGULATION THEORY. 1. Common analyzes. Against single minded and mono-causal analyses.
An overview of conventional development theories Development as a Ecological Contents/ Self- Higher standards Technological and Human develop- Less Empower- form of freedom sustainability perpetuating of living organizational ment (health poverty ment Explanatory goals growth modernisation education) factors Neo-classical theory of growth Development of capital S OLOW (1956; 1957) Schumpeterian theory Entrepreneurship H AGEN (1962) Theory of An appropriate pricing equilibrium system S CHULTZ (1964) Open economy model The opening up of an K RUEGER (1979) economy Theory of endogenous growth Human capital L UCAS (1988 ; 1993) The new institutionalism The basic institutions N ORTH (1981; 1990) of capitalism World Bank Good governance (1993-2001) State and Absence of corruption corruption M AURO (1995) Democracy and Growth Democracy B ARRO (1996) Development as a form of freedom Promotion of rights S EN (2000) and freedom Ecological model M EADOWS (1972); Environment C HAKRAVORTY (1997)
Limits of Keynesianism An implicit theorizing of the interwar configuration: overcapacity. A short run analysis of involuntary unemployment. A largely closed economy. Limited international interdependency . A financial system governed by domestic factors. A stagnationnist perspective.
The destabilizing role of financial liberalization.
…. Brusque reversals in capital flows towards emerging economies Source : Artus Patrick (2011), “Pourquoi les capitaux sortent -ils des pays émergents quand l’aversion pour le risque est forte?”, Flash Economie , 755, 10 Octobre, p. 2.
…Wide swing in nominal exchange rates Source : Artus Patrick (2011), “Pourquoi les capitaux sortent-ils des pays émergents quand l’aversion pour le risque est forte?”, Flash Economie , 755, 10 Octobre, p. 3. …. That may anticipate recurring exchange regimes wars
Limits of a pure rentier economy: highly dependent from the world economy
The impact of finance led regime: the propagation of animal spirits to rentier regimes. + Dividends High stock Easy access Profit + + and market to Pension funds price credit + + Consumption Production + + Employment Diffusion of - Careful management Financial norms of investment + Globalised Shareholder value as a Highly reactive Financial new form of competition wage labour regime and governance mode nexus
A second impact: the overcapacity and cutthroat competition associated with Chinese industrial growth regime.
2. Some differences. The difficult financing of a welfare State with oil rents.
The complementarity between Welfare and Innovation systems: the Nordic countries
Difficult transition out of a rentier regime The complementarity specialization of Latino- American rentier regimes and Asian industrialist regimes 30 Dominican Republic 2006 Turkey 2000 25 Dominican Republic 2000 20 Turkey 2006 Uruguay 2000 15 Costa Rica 2006 ACR Services marchands Poland 2000 India 2006 10 Costa Rica 2000 Uruguay 2006 Hong Kong 2006 Hong Kong 2000 5 Australia 2006 Czech Republic 2000 Hungary 2000 Australia 2000 Slovak Republic 2000 India 2000 New Zealand 2006 Poland 2006 South Africa 2006 Slovak Republic 2006 Hungary 2006 New Zealand 2000 Czech Republic 2006 0 Mexico 2006 Mexico 2000 Chile 2000 South Africa 2000 Korea 2000 Taipei 2006 China 2006 AMLAT 2000 China 2000 Taipei 2000 Bolivia 2000 Thailand 2000 Malaysia 2006 Peru 2000 -5 Korea 2006 Colombia 2006 Argentina 2006 Chile 2006 Thailand 2006 Brazil 2000 Malaysia 2000 Ecuador 2006 Peru 2006 AMLAT 2006 Colombia 2000 -10 Brazil 2006 Ecuador 2000 Venezuela 2006 Argentina 2000 Bolivia 2006 Ireland 2006 -15 Saudi Arabia 2006 Source: Miotti, Quenan, Torija Zane (2012) Venezuela 2000 Saudi Arabia 2000 Ireland 2000 -20 -60 -50 -40 -30 -20 -10 0 10 20 30 40 ACR Industrie Manufacturière
Only Norway but social democratic before oil producer
The endogeneity of crisis in any growth regime
Brazil: from a successful inclusive growth to a systemic crisis 1. The pillars of Latin-American inclusive growth
Many factors have been interwined into a complex set of interacting processes GEOPOLITICS POLITY 1. Rising 2. Bubble 3. Reversion 9. U turn of 8. General demand of driven of the political shift primary US terms of alliances after towards good from economy trade a major crisis democracy industrializi (Argentina ) ng Asia Growth Higher and with More less equity ability to volatile tax growth 4. Correction of 5. Wiser 7. New 6. Social the excesses macroeconomic institutions demands of early management for labour for deregulation markets welfare reforms (Brazil) SOCIETY / WELFARE ECONOMY
4. Brazil: from slower growth to an open structural crisis Source: Artus Patrick (2013), p. 3.
Domestic demand dynamism but industrial production stagnation: Brazil since 2008 Retail sales Industrial production Source: Artus Patrick (2013), p. 5 .
CONCLUSION C1 – The major teachings from Régulation Theory The specificity of rentier regimes of Latin America. Financialization exacerbates the domestic disequilibria of quite any regime. A growing complementarity between Latin American rentier regimes and industrial led Asian regimes.
C2 – An interpretation of Brazilian trajectory A genuine socioeconomic regime: hybrid between industrial and rentier. A significant continuity from Cardoso to Lula Presidencies : an implicit sociopolitical compromise. The fragility of a growth regime more and more dependent from the demand of natural resources. The endometabolism hypothesis: success leads to systemic crisis.
C3 – Latin America at odds with the shift against globalization in the rest of the world Latin America: end of “ progressist ” governance. US, UK: Limits of “neoliberal policies” ?
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