Stones in the river (continued)

Completely fascinated by this New Yorker article about the Chinese economist who’s the head economist at the World Bank. A central tenet of the varieties of capitalism approach I’ve written about extensively on this blog is that there is more than one way to achieve US/European levels of prosperity, and that at least one of those ways involves much more coordination among firms and with government than we see in the US/UK model.

Continental Europe and Japan offer alternative modes (varieties) of capitalist development. For Japan, and the other East Asian “tigers” like South Korea and Singapore, the timing of their development is very important. After World War II, the U.S. continued to have a strong military presence in the region, essentially providing a basis of security. As a result, these countries focused on economic development, and did so in a relatively egalitarian way, involving the countryside in the process (unlike in Latin America, where development has exacerbated existing inequality, particularly in the absence of land reform in most countries).

In this context, China’s development in the last 30 years is interesting, because it happened not with the U.S. de facto providing security through its presence in the region, but through a complex and destructive internal history including the horror of the Great Leap Forward (between 30 and 45 million people died in the attending famine) and the gradual economic (not political) opening under Deng Xiaoping, against the backdrop of Cold War US-Russian rivalry. And the approach, as I focused on yesterday, was “tinkering gradualist,” as Justin Lin, the economist, puts in the article.

Crucially for the varieties of capitalism approach, the government played a key role in promoting development. Lin

“favors a kind of ‘soft’ industrial policy, in which a clamorous free market produces new industries and firms, and the government spots the best prospects and helps them grow by giving them tax breaks and building infrastructure like ports and highways…to rise out of poverty…markets are ‘indispensable’ but government is ‘equally indispensable.'”

Two things there: 1) Wow, that first part sounds a lot like the Social Innovation Fund. Industrial policy for the nonprofit sector? 2) The last phrase is a perfect summary, to me, of the basic varieties of capitalism argument. And it’s a perspective that’s very much needed in current political debates about the role of government.

The question is how philanthropy fits in to all of this. It’s traditionally been seen as part of the third sector between government and business. If we apply a Lin-style developmental/varieties-of-capitalism view, where does philanthropy fit in? To be continued….

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One Response to “Stones in the river (continued)”

  1. The Blog Briefly Known as "Democratizing Philanthropy?" » Blog Archive » Stones in the river (conclusion…?) Says:

    […] The Blog Briefly Known as "Democratizing Philanthropy?" BETA version, new title in the works. New post each Tuesday, Wednesday, Thursday (for now). « Stones in the river (continued) […]

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