Analysis of poverty is poor (1 of 2)

March 22, 2012

Your lead book review does no favours to those wary of the forthcoming research excellence framework ("A wealth of detail on a conundrum", 15 March). Howard Davies knows a bit about failure from his leadership of the Financial Services Authority ahead of the 2008 crisis, but his seductive ploy of "failing" the US authors of Why Nations Fail for not using quantitative methodology elides more serious failings. These include not only its narrow focus on political institutions in a search for "the origins of power, prosperity and poverty" (the book's subtitle) but also a calamitous ignorance of social institutions and social movements more generally.

The REF stands and falls by panel members being able to interpret the papers and books they read. So it is instructive to examine what Davies fails to notice about the text he quotes. The first, most pressing, matter is a naive and uninformed reliance on the mode of comparison. Any well-trained student of anthropology knows it beggars belief to draw comparisons between England and Ethiopia. As Davies notes, Daron Acemoglu and James Robinson state: "The reason Ethiopia is where it is today is because, unlike in England, absolutism persisted until the recent past." This is not true "up to a point" as Davies insists: it is a schoolboy howler, worthy of the worst excesses of jingoism.

Complicit in this is a slippage in key terms. What the thesis boils down to is not that "the strongest indicator of a successful economy is the presence of 'inclusive', rather than 'extractive', political institutions", as Davies repeats. "Extractive regimes" are instead juxtaposed with countries said to have "inclusive economic institutions": in other words, dictatorship versus democracy. This is banal: indeed, Davies might recall regimes with which he has had some dealings; Colonel Gaddafi's so-called "smashing of the state" obliterated all the institutions Libya enjoyed, save those that kept control of money and violence.

REF panels might also ask how well the key distinction in a thesis holds up. "Extractive regimes" are here defined as "structured to extract resources from the many by the few". This would be analytic if countries with "inclusive economic institutions" did things differently. Have the authors heard of Marx? Or read Weber's thesis on the importance of the accumulation of capital for the rise of capitalism? Indeed, Davies' mock questioning of a lack of quantitative methodology seems more relevant than he notices. Just remind me, which country's wealth is not in the hands of the top 10 per cent, or even the 1 per cent?

So what is Davies doing extolling this mishmash of political dogma and managerial discourse? Has he lived too long in the fast lane not to notice the poverty around him in London, or the immigrants fenced off to the outer suburbs of Paris by the Périphérique? He praises this tract by two LSE graduates as written "with imagination and care", but there is nothing imaginative in their setting out to "prove" neoliberal doctrine as universally true, when its own structuring of what is "level" in the playing field rules out the very topic of poverty the authors claim to address.

Rolland Munro, Keele University

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