Another Nobel Prize for Economics? The Peace Prize this Time

I have long thought that the discipline of economics should be given the Nobel Prize for Peace in recognition of the demonstration of how social cooperation under the division of labor results in a regime of private property and freedom of trade.  From David Hume and Adam Smith to J. B. Say and Frederic Bastiat to Ludwig Mises and F. A. Hayek, the demonstration of how the harmony of interest can emerge on the market through the pursuit of mutually advantageous exchange is the core message of the discipline of economics and the foundation for peaceful coexistence among all people.

Well the committee got it right this year when they gave the award to Muhammad Yunus for his work with micro-lending and the positive impact it has had on the world's poor.

Work at GMU has long addressed the issue of micro-lending and economic development.  Emily Chamlee-Wright's thesis work under the late Don Lavoie was based on field work on micro-lending among female entrepreneurs in Ghana. Emily's work was subsequently published as The Cultural Foundations of Economic Development and is an excellent work.  More recently, Steve Daley and Frederic Sautet have published a study of micro-finance in the Philippines, which raises several very critical issues that go to establish the limits of micro-finance as a panacea for economic development.  Micro-lending can get people started, but the crucial issue is the graduation into the commercial market.

I am thriled for Yunus and hope this will bring renewed attention to the plight of the underdeveloped world and the policy options needed to address the issue of extreme poverty.  I do hope that the media attention will not use the occassion to endorse the grand plans that have been proposed by Jeff Sachs and others to "end world poverty" just because they sound good and obviously are well-intentioned.  Sachs has a lofty goal no doubt, but one that will cause great misery if not pursued with humility and respect for local conditions.  So rather than allow the attention brought by this prize to Yunus's great innovation to help the worlds poor to embolden the social planners and would-be saviors of teh world to  pursue their grand designs, the work of thinkers such as P.T. Bauer and William Easterly should be remembered.  The path to development, as Yunus's micro-lending demonstrates starts with small scale trading and indigenous entrepreneurship.

Here is my  review of Easterly's White Man's Burden that appeared in Economic Affairs -- 
Download review_of_bill_easterly_the_white_mans_burden.pdf   .

(An alternative version of my review also appeared in the South African Journal of International Affairs).

Comments

[sleeper]

Pete – Your Economic Affairs review of Easterly’s latest book is outstanding--really well-written and nicely summarizes the state of the art from the Adam Smith perspective. You are too kind to Stiglitz and Sachs.