Photo: Ramesh Pathania/Mint
Photo: Ramesh Pathania/Mint

Book Review | The Tyranny of Experts

William Easterly's latest work offers good reasons to reconsider the current mainstream approach to development

The issue of alleviating poverty has drawn a slew of failed solutions across the world. More notably, except for minor changes the same failed solutions have been tried all through history. If it is Bill Gates today donating a major part of his wealth to the cause of ending malnutrition and improving health standards in Africa, it was the Rockefellers in the 20th century doing pretty much the same in Asia. The same goes with governments of rich countries sourcing funds to help the less fortunate citizens of poor countries.

For the most part, these do-gooders have perceived the problem of poverty to be a technocratic one. If Africans do not possess access to clean water and healthy food, the solution must be obvious: direct funds and talent from the rich world to provide for these basic necessities. The possibility that there could be more fundamental reasons to why the poor do not develop the means to rise above abysmal living standards is seldom thought of. Or, in other words, efforts to alleviate poverty have shed undue focus on the symptoms of poverty rather than its cause.

By tracing the actual roots of poverty to the lack of recognition of the poor’s rights—defined strictly in the negative sense—The Tyranny of Experts by William Easterly provides a vital counter to the technocratic view on poverty that has come to dominate the intellectual class of development experts. Easterly links the neglect of the real causes of poverty to the debate between two Nobel laureates—Friedrich Hayek and Gunnar Myrdal, who were awarded the prize in 1974—that “never happened".

Hayek and Myrdal represented polar opposites on the question of economic development: conscious design versus spontaneous order. Myrdal believed economic development could only be achieved through conscious direction in the form of a central plan of action. In the absence of a careful plan prepared by intelligent technocrats, the economy would be in disarray and misery would ensue. Hayek, on the other hand, saw the economy as a self-organized order driven by the narrow self-interests of private individuals. But when left to their own devices, individuals solved their own problems—including the ones that concern development experts—through the means of peaceful cooperation.

Easterly believes development economists have adopted Myrdal’s view on the subject despite its lack of merit. This he traces to the patronage from donors who prefer the control (illusory or real, and well-intended or ulterior) that Myrdal’s idea of planned development offers. On the other hand, Hayek’s solution to poverty—requiring the grant of legitimate political and economic rights to the poor—inevitably goes against established interests and the idea of control. But when granted such freedom, the poor solve their problems for themselves, and often better.

For one, the market system allows individuals to specialize in lines of production deemed most valuable in the market. This not only allows the poor to command higher economic returns by specializing in particular activities, but also leads to a larger general economic pie. In the process—and more importantly—the market solves the incentive problem that plagues systems designed by technocrats. That is, by driving individuals to satisfy their own interests by solving others’ problems, the market offers individuals the incentive to engage in rational self-interest. Not to forget, the huge incentives the system of private property offers people to engage in frugality and innovation essential to higher standards of living.

The market, in other words, provides a spontaneous solution to the perennial problems of optimal resource allocation and incentives that have plagued the plans of well-meaning technocrats for centuries. Easterly’s latest work, not unlike his previous ones on the subject, offers good reasons to reconsider the current mainstream approach to development.

Prashanth Perumal is Assistant Editor (Views) at Mint.

Comments are welcome at views@livemint.com

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