lecture eleven, development

consequence of neoliberalism in LA has been the 'lost decades'. 1980-2000 are quite a dramatic contrast with what preceded them.

this poses a question, of course: why? and it also is an indictment of the promises neoliberalism made, of course

basic facts of LA growth: stagnating productivity growth (in both TFP and LP). stagnation in investment, both private and public. it's not surprising that these go together, of course—productivity presupposes investment, insofar as technical change requires buying/installation of new equipment.

public hasn't stood in for private investment. nor has there been, as a result, the expected 'crowding in' effect, that development economists have spoken about, due to income- or linkage-effects of public investment ('crowding out', remember, is meant to happen for (1) saturation of mkts; (2) raises interest rates, pushing out potential borrowers)

these economies, in sum, get trapped in a low-level equilibrium, feeding off the anemia off each other.

moreover, even where investment has been happening, productivity has been stagnant. this means that it's probably going toward low-productivity sectors: (1) services; (2) informal sector

in LA you've been getting more employment per unit of investment, versus other parts of the world. why? well, it seems that investment is going into labour-intensive industries precisely because labour mkts in LA are very loose, and there's great incentive to rely on low wages rather than invest in new machinery. in Palma's argument, this is because of the deregulation of the labour market. labour can be 'sweated'--absolute surplus value is the investment strategy, which ends up being deleterious for productivity growth.

liberalization has, in sum, had the effect that structuralists/keynesians would have anticipated. investment has flowed into low-productive sectors. the comparative advantages of LA as 'resources' and 'people'

according to Holzner/Kurtz, the consequences of neoliberalism for democratic participation has been poor (three mechanisms).

of the three factors, Vivek thinks that numbers one and three are less convincing. number two, though, the dismantling of organizations is important.

re: (1), resources → participation need not be

re: (3), it's not the case that the State was giving encouraging signals in the pre-reform era (they were all mildly to seriously hostile to political participation, from the poor). the poor participated even though they were getting negative signals. it could be the case, of course, that the intensity of negative signals has decreased. but Vivek doesn't thing this can do the work he wants it to.

other facts might be important, which show up in Kurtz. first, no mention of the degree of repression in explaining nonparticipation—if you looked, you would find evidence of more coercion, which is a direct deterrent. second, de-industrialization should lead to less mobilization, b/c of difficulties of collective action in informal sector.

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TFP vs. LP? TFP does not decompose output in terms of source (capital vs. labour vs. technology). LP, on the other hand, is measured in terms of worker-hour or worker-year. the reason TFP is shady is b/c it relies on a particular understanding of how capital-labour come together to make products. at the heart of the controversy is the way capital is measured. it's easy to measure if there are 4 identical machines; but how do you measure qualitatively different forms? you can only do it in monetary terms. the problem here is that you include in your equation things that come on the other side of the equation (this is the 'Cambridge Capital Controversy'). [see Jesus Felipe, 'What does TFP mean?']

Joan Robinson argument that capital is not 'putty' (as it is for neoclassicals), but lumpy. this is where high wages might well lead to technical change (Capital can't just throw out workers, b/c they have fixed investments, etc.), even as they might also slow down the pace of investment.

discussion re: the degree of the impact of low wages on the pace of technical change. Vivek position that low wages are, more or less, 'fatal' for the pace of technical change—axis of competition is, increasingly, rationalization.

investment per worker vs. investment decline? has been investment in primary commodity production, maquila sector?

industrial policy in LA?