Modernity, economic crisis and international aid—why history is important

Published in Issue 3 (May/June 2014), Platform, Volume 22

Iron and Coal by William Scott Bell, 1855–60. Did the English industrial revolution have its roots in sixteenth-century administrative changes, or was it something that came about over a 60-year period or so from near the end of the eighteenth century onward? (National Trust, Wallington, Northumberland)

Iron and Coal by William Scott Bell, 1855–60. Did the English industrial revolution have its roots in sixteenth-century administrative changes, or was it something that came about over a 60-year period or so from near the end of the eighteenth century onward? (National Trust, Wallington, Northumberland)

An older generation of Keynesian economists—in Ireland Paddy Lynch comes to mind, and also James Meenan—usually studied a wide range of subjects, including history, before specialising in a particular field. Economics did not exist in isolation as an academic discipline; it was part of a broad spectrum of study that was seen as intricately interconnected. The great biographer of Keynes, Robert Skidelsky, originally a historian, has urged a return to older teaching practices in Britain, but to no effect.

Over the past decades, mathematics has come to dominate economics to the exclusion of all else, playing a role not unlike that of Latin and Greek under an older dispensation of dogmatic rule: a way of silencing the peasants. Much present-day economics makes no recourse to history as an empirical or theoretical resource, but rather seeks to analyse phenomena—all phenomena—discretely on their own terms. The range of its imperialist ambition should not be underestimated. An assumed omniscience makes everything fair game, even as the results are palpably plodding.

From this ahistorical, and theoretically apolitical—which indicates the depth of lack of self-awareness—vantage, assumptions are made in the most powerful international financial institutions as to what the ‘solutions’ to current economic problems are, plans are drawn up accordingly, and pliant governments are expected to implement them without too much question. That is the position Ireland has been in: it is also the position of many developing countries in hock to the World Bank and the International Monetary Fund.

During the boom, Ireland became a significant foreign aid donor, particularly in Africa. Much was made of how this chimed with Ireland’s past: the famines of before gave Irish people a particular sympathy for those who were in danger now. Less was made of any lingering post-colonial sympathies with radical politics, abroad or domestically. At a popular level, I found that there was a sense of continuity between Ireland’s past and present. But among the ‘élites’, particularly in the civil service, it was seen as a manifestation of how Ireland had left its past behind it: history had ended and God’s peace reigned on earth.

Clio by Pierre Mignard, 1689. According to the economists, Clio, the muse of history, is very untidy, but they’ll soon sort that out: get rid of those books for a start. (Museum of Fine Arts, Budapest)

Clio by Pierre Mignard, 1689. According to the economists, Clio, the muse of history, is very untidy, but they’ll soon sort that out: get rid of those books for a start. (Museum of Fine Arts, Budapest)

Ireland was now a prosperous modern country where (sometimes) brilliant technocrats (never under-estimate their self-regard, however ill-founded) implemented ahistorical, scientifically rigorous economic policies to stunning effect. They were now in a position to take their place at the world podium and teach others how to do likewise (noblesse oblige, with a generous expense account). No longer a post-colony, Ireland’s commitment to aid was a sign of its detachment from poor countries. Ireland was a poster boy for post-Keynesian neoliberal economics, its new missionary role to bring the good news to the world’s downtrodden—modernity with a human face (if they didn’t read history, they didn’t read Dorian Gray either).

Contemporary modernisation embodies the idea of a single route to modernity summed up in the phrase ‘best international practice’, something always exterior and unquestioned, and something where general interest and personal interest always coincided perfectly. It is a phrase we hear somewhat less of in recent times as it is now clear that our betters were making a hames of it.

Yet an awareness of history challenges the idea of incorporating unquestioningly a number of key historical variables—e.g. property rights, exorbitant pay rates at senior level, labour supply, a free press—into the analysis of what brings about expanded economic opportunities, increased production and forms of political freedom to produce a single, clear (and cheap) route to modernity and the end of history. Historians, by emphasising the uniqueness of time and place, not only at national level but also regionally and more locally, are sceptical of precisely that kind of ‘grand scheme’ that has run roughshod over so many people, with tragic and disastrous consequences.

They are sceptical of ideas of a known future created in accordance with human reason: they know that high-minded, well-intentioned schemes, perhaps implemented by high-minded, well-intentioned officials (or perhaps not), result in unforeseen consequences of sometimes-hideous proportions (famines in China and Ethiopia, the western financial crisis of the first decades of the 2000s and mass unemployment).

By the very nature of what they do, historians are permanently aware that policies have an impact—almost, it seems, inevitably—in ways that their initial advocates neither desired nor foresaw: history and linear progression can seem like exclusive categories. They also operate in different time-scales to both political and business cycles. Did the English industrial revolution have its roots in sixteenth-century administrative changes, or was it something that came about over a 60-year period or so from near the end of the eighteenth century onward?
Whichever, historians know that a country cannot go from being in effect on the semi-periphery of the world economy to being the second richest country in the world in something over a decade without something being profoundly wrong: it just doesn’t happen—and it didn’t.

That particular places have particular cultures, power structures, expectations and ways of doing things that confound the predictions of economists is beyond the competence of mathematical economists to factor into their models. It is something with which they have been practically incapable of dealing. Despite their economic muscle, economists in the international financial institutions have never been able to bend African states unconditionally to their will, or to understand why not.

That Ireland, too, might have its own particular characteristics, its own social solidarities, its own way of doing things, has similarly been ignored. In this context, historians are aware that at any given time and place there may be a number of optimal policy options. All of today’s leading economies, including the US and UK but also Germany, France and Japan, progressed to industrialisation behind protective barriers; so did Korea and China, and so too did Ireland. This is not to argue that in every single case protectionism is a prerequisite for late-developing countries wishing to industrialise. It is, however, to challenge the idea that free trade always is. And it is also to recognise that there may be as many different national routes to development as there are national economies: multiple policy options are needed.

If the various international financial institutions were aware of their own institutional history they might consider exactly how policy is made. At different times they have insisted on diametrically opposed policies; different hypotheses were used at different times to justify similar arguments for and against protectionism. They select their evidence to suit a priori determined policy outcomes: nowadays, privatisation and liberalisation are the unquestioned desired outcomes. That is not an intellectual option open to historians, who insist on seeing the evidence first. It is not, at the level of theoretical economics, defensible either.

Self-delusion, overweening self-interest and crass ignorance brought about the present mess. But even now, if the economic debate were opened up beyond economics and economists, more intelligent, more realistic and less brutally insensitive policies would flow from an understanding that historical momentum and local subjectivities are more determining of outcomes than the adherence to policy application in a historical vacuum.

Eoin Dillon has recently completed a book on the World Bank and the African state.

Further reading

C.A. Bayly, V. Rao, S. Sretzer & M. Woolcock (eds), History, historians and development policy (Manchester, 2011).
R. Skidelsky, Keynes: the return of the master (London, 2009).

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