Louis Proyect: The Unrepentant Marxist

October 3, 2009

Columbia Business School: toxic ideology dump

Filed under: Africa,economics,imperialism/globalization — louisproyect @ 5:51 pm

R. Glenn Hubbard

William Duggan

As part of the fall-out from the financial crisis, business schools are now seen as training grounds for what FDR once called malefactors of great wealth–the more prestigious the business school, the worse the malefaction obviously. Columbia University’s Business School Dean, R. Glenn Hubbard, served as chairman of the Council of Economic Advisers under George W. Bush and has been one of the nation’s more intransigent defenders of free market fundamentalism. While it is difficult to rank people such as Hubbard in terms of the harm done to American workers, he surely is a finalist in the competition for evil economists.

Hubbard is a fellow at the American Enterprise Institute, one of the country’s foulest neoconservative think-tanks, and a regular contributor to the Wall Street Journal editorial page where he defended Bush’s tax cuts for the rich, scuttling the Kyoto Protocol on climate change and most recently defended the health insurance industry against even the mildest reforms.

Apparently not content to ravage American society, he has donned a safari cap and penetrated the Dark Continent in order to help the benighted natives achieve prosperity. For those who follow the activities of a-list economists, it should be well understood that “helping the Africans out of poverty” is a must for those aspiring to the Nobel Prize and other honors bestowed by bourgeois society.

Hubbard and fellow Columbia business school professor William Duggan (about whom later) have just come out with “The Aid Trap: Hard Truths About Ending Poverty“, published by Columbia University Press. The book argues that aid to governments and NGO’s does not work and that a new Marshall Plan geared to small businesses is the key to success. While I doubt that anybody who reads this blog will be tempted to waste $22.95 on such nonsense, you can get an idea of what these evil professors propose in an August 2009 article by Hubbard on the Foreign Policy website.  Titled “Think Again: A Marshall Plan for Africa“, it makes the case for bringing Africa “back to life” in the same way that Europe was. Although I have become fairly inured to this sort of rightwing garbage over the years, Hubbard’s article took my breath away. It might have even been enough to make a Goebbels blush.

Hubbard starts from an absurd premise, namely that the African economy is “overregulated” and that markets have never been given a chance:

But take a look at the World Bank’s annual report, “Doing Business,” and you’ll realize that many African economies have never had a business market to fail — thanks to their governments’ dense, unnavigable regulations.

This certainly does not describe the continent’s largest economy: South Africa. Since the ANC took power, it has adopted an economics strategy that could have been drafted by Hubbard himself. The Growth Employment and Redistribution Strategy (GEAR) has embraced free markets for the avowed purpose of creating a local bourgeoisie of the kind that is supposedly necessary for job creation and prosperity. Indeed, it has brought prosperity to the few while the unemployment rate has soared to 23.5 percent. It is doubtful that stringent regulations have led to such a disaster. In fact, the main cause is a collapse of the mining and steel industries attributable to declining exports in a world economy suffering from the hangover brought on by one bottle too many of R. Glenn Hubbard’s snake oil medicine from the Bush years.

The other major economy is Nigeria’s, which is largely dependent on foreign oil companies. 80% of the Nigerian government’s income is from oil, and over half of all oil money comes from Shell.  And the last time I noticed, Shell Oil was not having a problem with overregulation.

The 500,000 tribal Ogoni of the Niger delta in southern Nigeria have watched as their traditional fishing and farming livelihood has been laid waste by Shell Oil’s extraction of oil, with full complicity of the national government, which has allowed large parts of the Ogonis’ homeland to be ruined. The Ogonis’ land has been contaminated not only by oil wells and pipelines, but also by gas flares that burn 24 hours a day, producing intense heat and chemical gas fogs that pollute nearby homes as they render farm fields barren and unproductive. The constant flaring of natural gas also contributes measurably to global warming. Several Ogoni who protested the ruination of their homeland and the impoverishment of their people have been convicted of false charges and executed.

Shell has extracted oil from the Niger Delta since 1958. Shell operates a joint-venture consisting of Nigerian National Petroleum Corporation, Elf and Agip. Shell is by far the largest foreign oil company in Nigeria, accounting for 50 per cent of Nigeria’s oil production. Nigeria generated roughly 12 per cent of Shell’s oil production world-wide in the late 1990s.

According to one observer on the scene, “Rivers, lakes and ponds are polluted with oil, and much of the land is now impossible to farm. Canals, or `slots’, have permanently damaged fragile ecosystems and led to polluted drinking water and deaths from cholera. Gas flaring and the construction of flow stations near communities have led to severe respiratory and other health problems…”

Going from the ridiculous to the ridiculouser, Hubbard next makes the case for colonialism even more unabashedly than Niall Ferguson, or Cecil Rhodes for that matter. Referring to the concerns that pro-business policies would lead to a new colonialism, Hubbard assures his readers that this might be such a bad thing:

“Strong Businesses in Africa Will Be the New Colonialists.”

First, Africa was poor before colonialism, and for many countries, colonialism may well have made Africa richer. There were some exceptions, such as the Belgian Congo in the early 20th century, where forced labor for rubber extraction made the people poorer. But overall, Africans in 1960 were healthier, lived longer, and had higher incomes than Africans in 1900. Ghanaian economist George Ayittey calls the colonial era the “golden age of peasant prosperity” in Africa, when the vast mass of rural Africans joined the world economy for the first time. By 1960, this was even true in the Belgian Congo. The hospitals, ports, schools, railways, and roads of Africa date from the colonial era. Certainly Europeans benefited unfairly from colonialism, but for Africans the result was still an improvement over their former poverty.

You’ll notice how deftly Hubbard sidesteps the issue of slavery, which was essential to the colonization of the Western Hemisphere. If Africa was not being colonized in he same fashion as Jamaica or Brazil in the 1700s, it was still essential to the sugar plantations whose profits enriched Europe in this period. The loss of able-bodied men and women to the slave trade robbed Africa of the possibility of emerging as a relatively strong and self-reliant economic entity.

Hubbard moves from the ridiculous to the obscene when he describes Congo as “prosperous” in 1960, seemingly defined by the presence of “hospitals, ports, schools, railways, and roads of Africa date from the colonial era.” Except for the hospitals, every other sign of prosperity is associated with the extraction of minerals that certainly left Europeans richer.

But even more to the point, how in the world can one mention Congo, colonialism and the year 1960 in the same breath without referring to the overthrow of Lumumba in that year? Acting on behalf of Western corporations, upon whose behalf Hubbard has advocated forcefully for decades, the breakaway province of Katanga succeeded in ruining the chances of the Congo to benefit from its minerals. For the better part of four decades, the country was bled dry by a corrupt dictator supported by the West and by conservative think tanks in particular as a bulwark against Communism.

It is also of course worth mentioning that the Marshall Plan only succeeded because WWII destroyed so much of the European economy that it became ripe for a new cycle of capital accumulation. With funding from a cash-rich U.S.A., European corporations went into high gear supplying new markets for housing, automobiles, clothing, and other consumer goods. Furthermore, there was an added incentive to make the Marshall Plan work since it was necessary to stave off socialism. With the disappearance of the Soviet Union, there is little need to pump money into the African economy except, of course, on a strictly for-profit basis. Hubbard regards Zimbabwe as an abject lesson in the failure of statist economies, but he neglects to mention how fully integrated the country is in global markets, even on a basis that sounds like a Jonathan Swift satire:

Meals come only once a day for Helen Goremusandu, 67, and the six children she is raising. With prices for the most basic food products increasingly beyond her reach, that daily meal often consists of nothing more than boiled pumpkin leaves, washed down with water.

About a mile away, a Zimbabwean government grain mill is churning out a new product: Doggy’s Delight. Announced by its creators in January, the high-protein pet food is aimed at the lucrative export market, one of the dwindling sources of foreign exchange in a collapsing economy.

–Washington Post, March 3, 2008

Well, who knows. Maybe Hubbard believes that a Marshall Plan is best suited for boosting the sales of Doggy’s Delight. From the standpoint of comparative advantage, that’s what Africa seems cut out for nowadays.

Although R. Glenn Hubbard’s reputation preceded him, I had no foreknowledge of his co-author William Duggan. The Columbia University Business School website advertises him as an expert on the role of strategic intuition, whatever the hell that is. It sounds rather like a talent that is honed at seminars at Holiday Inn conference rooms rather than at a prestigious institution like Columbia University. But then again, maybe there is less there than meets the eye. It turns out that you can take a course from Duggan that puts it all together:

Fall 2009
B8799-012: Napoleon’s Glance
TR – B Term, 04:00PM to 05:30PM
Instructor: William Duggan

This course offers a key skill for strategy, leadership, and decision-making in business, your career, and your personal life. Other courses teach the science of management, through analytical tools and techniques: this course teaches the art, through strategic intuition – otherwise known as Napoleon’s glance.

The term “Napoleon’s glance” comes from the early strategy literature. The word “strategy” entered the English language in 1810, as military scholars rushed to study the success of Napoleon Bonaparte, who won more battles than any other general in recorded history. Over time the study of strategy spread to other fields, especially business. The first scholarly study of strategy, On War (1832) by Carl von Clausewitz, shows the key to Napoleon’s success as coup d’oeil, which means “glance” in French. Today we recognize coup d’oeil as strategic intuition: ordinary intuition is just a feeling, but strategic intuition comes from real knowledge and experience, brought together in a flash of insight to suit the situation. It’s the “big Aha!” – or a series of little ones – that shows you the way ahead.

This course helps you see how coup d’oeil works and how to apply it.

I suppose that a Holiday Inn conference room is the place for it after all.

* * * * *

Columbia Business School’s Dean Glenn Hubbard sings about wanting Alan Greenspan’s job that went instead to New Fed Chair Ben Bernanke. Parody created by Columbia Business School students

17 Comments »

  1. Economists never cease to amaze. They praise the “free market” endlessly, without a lick of evidence. That Hubbard and Duggan could use their “analysis” in the case of the nations of Africa is obscene but not surprising. Economics can be applied anywhere and at any time because the predictions of the theory are built into the assumptions and no evidence is needed. All is self-evident.

    However, if you come into contact with these swine, what you find is that they are almost uniformly authoritarian, always willing to suck up to power and agree to the suppression of workers, peasants, the poor. Look at Milton Friedman and Arnold Harberger’s diehard defense of Pinochet. I believe that James Duesenberry once argued that the U.S. slaughter of Vietnamese and devastation of the countryside during the war in Vietnam was a blessing in disguise because it sped up urbanization and this would in the end make the nation more prosperous.

    You really have to go to graduate school in economics and teach in an economics department to grasp the depravity of these people.

    Comment by michael yates — October 3, 2009 @ 6:51 pm

  2. There’s no doubt that many African countries are used as resource and labour mines by outsiders, once Arabs and Europeans, nowadays China, too, and the Devil take the locals.

    Three questions, though:

    1. Many new African states claimed to be “socialist.” They haven’t done particularly well. Why not?

    2. Why have South Korea, Vietnam, Malysia, and Taiwan done so much better economically than most of Africa? They’ve had their colonial pasts, wars, tyrannical and corrupt rulers, and other traumas.

    3. Can the truly low average IQ in much of Africa (60-80) possibly be irrelevant to the story? Leave genetics out of it if you like–without massive improvements in infant and child nutrition, can these countries educate enough technically competent people for development on any model?

    Comment by Grumpy Old Man — October 3, 2009 @ 7:52 pm

  3. You write:

    “You’ll notice how deftly Hubbard sidesteps the issue of slavery, which was essential to the colonization of the Western Hemisphere. If Africa was not being colonized in he same fashion as Jamaica or Brazil in the 1700s, it was still essential to the sugar plantations whose profits enriched Europe in this period. The loss of able-bodied men and women to the slave trade robbed Africa of the possibility of emerging as a relatively strong and self-reliant economic entity.”

    But Africans sold other Africans into slavery (to European slave traders) even when they were not colonized.

    Comment by Mutant Ninja Turtle — October 3, 2009 @ 8:10 pm

  4. Lawrence Summers, now a member of the Obama administration, said about Africa:

    “I think the economic logic behind dumping a load of toxic waste in the lowest

    wage country is impeccable and we should face up to that . . . I’ve always

    thought that under-populated countries in Africa are vastly under-polluted.”

    Nice pick Obama.

    Comment by Glenn — October 4, 2009 @ 1:02 am

  5. Woah, isn’t South Africa ripe with crony capitalism, patronage and government welfare? You make it sound like Ayn Rand’s paradise.

    Comment by Bhaskar — October 4, 2009 @ 1:28 am

  6. Well, the point is that there is no such thing as Ayn Rand’s paradise. The fundamental flaw in neoclassical economics is that it cannot account for the power of the wealthy to tilt the playing field in their favor. It posits “economic actors” like Aetna Insurance on one side and the consumer of health insurance on the other. Hubbard’s writings are riddled with this kind of nonsense.

    Comment by louisproyect — October 4, 2009 @ 1:34 am

  7. Yes according to the real world, or perhaps we shall say ‘actually existing’ free market South Africa is doing its bit. I have to say that the whole crony capitalism thing seems to me to be a Democrat criticism against the Republicans that avoids any genuine anti-capitalism. Cosy relationships between the private and public sector are par for the course in the real world.

    Comment by SGuy — October 4, 2009 @ 2:42 am

  8. Just imaging Ayn Rand Land Theme Park. You want to relax and sit down on a bench, you get charged ‘No free butt rests buddy’ your thirsty and go over to a water fountain and find that costs to ‘Hey free water is socialism buddy!’.

    Comment by SGuy — October 4, 2009 @ 2:46 am

  9. “I have to say that the whole crony capitalism thing seems to me to be a Democrat criticism against the Republicans that avoids any genuine anti-capitalism.”

    What? I was referring to South Africa and the gross mismanagement of the capitalist state by the ANC. Read Patrick Bond’s piece IN POWER IN PRETORIA? it was in the NLR a few issues back.

    Comment by Bhaskar — October 4, 2009 @ 6:48 am

  10. “I have to say that the whole crony capitalism thing seems to me to be a Democrat criticism against the Republicans that avoids any genuine anti-capitalism.”

    What? I was referring to South Africa and the gross mismanagement of the capitalist state by the ANC. Read Patrick Bond’s piece IN POWER IN PRETORIA? it was in the NLR a few issues back.
    OH! You’re my new favorite blogger fyi

    Comment by Bhaskar — October 4, 2009 @ 8:25 am

  11. Grumpy Old Man:

    On your points one and two: Independent African states which claimed to be “socialist” very often imitated the stalinist model, which I would think by now has been pretty well established were not “socialist”. They were post-imperial economies in struggle for autonomy which, in addition to being caught up in the contradictions of building independence, still found themselves pressured by the economies of the north to produce goods for the capitalist world consumer market over any internal development, which leads to cronyism and insider corruption. These tendencies in turn feed the suppression of democratic features within production relations, and without democratic expression, socialism is nothing. The economies you mention are all subject to the characteristics I mention here, and if they are doing remotely better than any African states who still wish to preserve their autonomy, it’s because they themselves have long since given enormous amounts of economic control to the dominant players in the world economy. Don’t tell me you’ve never heard anything about neo -colonial or comparador classes.

    Your point three: As a teacher, I rarely meet or hear of anyone anymore who wants to talk about the overall assessment of human intelligence or capabilities with IQ ratings, but knock yourself out. But since your political reference is unabashedly eurocentric or at least one which measures human development by the standards of the imperial west, I don’t suppose I should be suprised that you believe in schematics that measure growth or performance with that standard.

    Comment by Michael Hureaux — October 4, 2009 @ 12:57 pm

  12. “But Africans sold other Africans into slavery (to European slave traders) even when they were not colonized.”

    That might be relevant if you were arguing against the unique depravity of European civilization, maybe, but any moral equivalence between African and European cultures does nothing to minimize the destructive impact of colonialism in Africa. Slavery in pre-colonial Africa was qualitatively different from the later Trans-Atlantic Slave Trade in various ways. For one slave labor was used by local elites to service the local economy. In the colonial slave trade massive amounts of laborers were removed from their native land and taken elsewhere, Africa never saw the labor their value created. Also the colonial slave trade (and later the trade in minerals etc.) as is typical of imperialistic economic relationships reorganized entire societies around servicing European economic interests through the “rational” desire of local elites to have access to European cash in order to purchase European goods. To assume after centuries of this a society can readily adapt to a prosperous independence even whilst the former colonial powers are breathing down its neck is just… too naive for words.

    Comment by gonzalez — October 4, 2009 @ 2:37 pm

  13. [Middle English sclave, from Old French esclave, from Medieval Latin sclāvus, from Sclāvus, Slav (from the widespread enslavement of captured Slavs in the early Middle Ages). See Slav.]

    Slav – A member of one of the Slavic-speaking peoples of eastern Europe.

    No wonder whites are so ignorant and backward. They even captured members of their own race to use as slaves. They have a history of depravity. Can whites ever be expected to live outside of an exploitative system such as capitalism?

    Their institutions of learning are populated with the likes of R. Glenn Hubbard and William Duggan; and they, for the most part, see no irony in this.

    Comment by Glenn — October 4, 2009 @ 7:07 pm

  14. On the subject of the “Doing Business” rankings, it’s ironic that these educated fools would cite them as evidence for their pro-market idiocy. That’s because in 2008 the Independent Evaluation Group at the World Bank ran the numbers and found that the rankings didn’t correlate in any statistically significant way with improved growth. African business may or may not be overregulated, but it’s not at all clear that less regulation will unleash the gushing economic growth that Duggan and Hubbard seem to think. The economic problems of the continent, starting with low and declining commodity prices and onerous debt, have more to do with imperialism and unrestrained corporate power than enfeebled entrepreneurialism.

    The folks at CEPR made a similar point with respect to a World Bank paper that “discovered” growth was GOOD for the poor. CEPR pointed out that on top of seriously fudging the numbers, the paper ASSUMED that IMF/World Bank policies were good for growth, rather than showing it. Indeed, as the CEPR economists found, the neoliberal prescriptions were a disaster for growth rates in countries that implemented them.

    http://www.50years.org/cms/ejn/story/151

    Also, check comrade henwood’s stuff on the foul nature of Columbia’s business school:

    http://www.leftbusinessobserver.com/BizSchool.html

    Comment by Nik — October 5, 2009 @ 2:56 am

  15. “As a teacher, I rarely meet or hear of anyone anymore who wants to talk about the overall assessment of human intelligence or capabilities with IQ ratings, but knock yourself out. But since your political reference is unabashedly eurocentric or at least one which measures human development by the standards of the imperial west, I don’t suppose I should be suprised that you believe in schematics that measure growth or performance with that standard.”

    Actually, East Asians do better on these tests than Europeans. Does that make the tests Sinocentric? Moreover, the discrepancies are so great that even if we assume some cultural bias in the tests, it is insufficient to explain the variance in the results.

    If a teacher like yourself doesn’t meet anyone who wants to talk about IQ, perhaps it’s because the results are so inconvenient to the educrats as to make the subject taboo.

    Comment by Grumpy Old Man — October 6, 2009 @ 6:23 pm

  16. Regarding GOM’s point #2 about East Asian economies, comparing these with Africa is really apples and oranges. Taiwan and SK were subject to Japanese rather than European colonialism, which entailed exactly the same amount of political oppression and brutality as the latter, but also sharply different economic policies. The Japanese actually made heavy investments in the industrialization of “their” colonies, as well as in high-productivity agriculture that was able to compete on the world market. The point was to create an economic sphere completely free of dependency on the West; since Japan had almost no natural resources, they used Korea, Taiwan, etc. as platforms for industrial exports to the mother country. For example, industrialization of Korea by the Japanese was so thorough that even after the destruction of a good bulk of the peninsula’s infrastructure during of the Korean War, the populations of both Koreas were able to rebuild relatively quickly thanks to embedded knowledge of techniques.

    Just as importantly, one must take into account the political conjuncture of the Cold War. The East Asian countries in question were in a far more strategically important geopolitical position for the U.S. in this period than any country in Africa: the result was a tremendous amount of direct subsidization of their economies (prior to the rapprochment between the U.S. and the PRC, something like 40% of the capital in the Taiwanese economy derived from U.S. grants). Furthermore, these countries were “allowed” by the West to pursue strict protectionist trade policies that fostered more industrial development from an already-advantageous base.

    None of this applied to Africa, or to much of the rest of the Third World, for that matter.

    Comment by Steve — October 7, 2009 @ 11:24 pm

  17. #16

    Valid points, but it’s too easy to attribute everything to outside malefactors, or at least, actors. Asians and Africans were actors in theirvown dramas, too.

    One must also consider centuries of participation in the Sinosphere, a highly literate Great Tradition. Most of Africa had nothing comparable.

    Comment by Grumpy Old Man — October 8, 2009 @ 2:38 pm


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