James Angresano has published extensively on comparative economic systems, the transformation of Soviet and Eastern bloc economies following the collapse of communism in the late 1980s, and Gunnar Myrdal. In this book he combines these interests to provide both an intellectual biography of Myrdal’s evolving thought and a demonstration of how Myrdal’s methodology in particular can be applied to an analysis of the practical economic and social measures required to address the “transformation problem” in Central and Eastern Europe.
In covering this material, the book presents two major theses. The first is that contrary to the view of many biographers of Myrdal who stress the continuity of his thought, there are three distinct but overlapping periods in Myrdal’s intellectual development. The second is that the application of neoclassical prescriptions to the transformation of Central and Eastern Europe (CEE), as evident in the application of “shock therapy” to the economy and society, has had demonstrably adverse outcomes compared to more evolutionary policies tailored to particular economic structures, cultures and histories of nations within the CEE. The application of Myrdal’s approach to growth and development and to the “transformation” of economies and societies, it is argued, would have both reduced the enormous social dislocation following shock therapy and improved economic growth and equity.
The intellectual biography charts the evolution of Myrdal’s thought by identifying the changes in subject matter and methodology over time. The book manages in a concise way and without being overly deterministic to integrate the key developments in Myrdal’s thought with the key experiences in his life. Most of the assessments linking his thought and life are based on Myrdal’s own reflections and judgements. (These reflections in turn are drawn largely from interviews between Angresano and Myrdal, of which more will be said later.) The intellectual biography divides the subject’s development into three periods, designated GMI to GMIII.
The first covers the period 1915‐1933 and focuses on Myrdal’s shift from the study and practice of law to economics and concentrates on the early works which were to become a foundation for the Stockholm School of economics. Myrdal’s doctoral dissertation, Change and the Problem of Price Formation (1927), analysed the effect of uncertainty on price formation, introduced the distinction between ex ante and ex post into entrepreneurial decision‐making and introduced a dynamic model of economic analysis by explicitly rejecting static equilibrium and ceteris paribus conditions. The other major works of this period were The Political Element in the Development of Economic Theory (1930), in which he investigated the nature of objectivity in social science research and the normative foundation of economic theories. Many years later Myrdal was critical of the “positivist” conclusion that facts and causation could be known independently of “normative judgements” (p. 44). In Monetary Equilibrium (1931), Myrdal adapted Wicksell’s notion of cumulative change to the determination of interest rates, prices and output. Written in the context of the early years of the Great Depression, Angresano compares and contrasts this work with Keynes’s General Theory.
Angresano characterises GMI as essentially part of the economics mainstream, albeit one who was highly critical of neoclassical ahistorical deductive methodology, assumptions regarding optimising human behaviour and focus on static equilibrium. Although arguing for the importance of understanding the historical and institutional bases of economic doctrines, GMI was still sufficiently attached to the purity of rationalist theory to be repelled by the “naïve empiricism” and rising influence of the American institutionalists. Indeed, along with Ragnar Frisch and Irving Fisher, Myrdal initiated the formation of the Econometric Society to resist this influence (p. 42).
The second period, GMII, from 1929‐38 (overlapping with GMI) is characterised as the emergence of Myrdal as a political and social economist. As a Social Democratic member of Parliament Myrdal advocated greater equality and with other members of the Stockholm School developed a theoretical rationale for macroeconomic stabilisation policy for a depressed economy based on deficit spending, lower taxes and public works. These radical economic reforms, Myrdal realised, could only be achieved by a thoroughgoing social and institutional transformation of Sweden. Consequently, Myrdal embraced a multi‐disciplinary methodology encompassing economics, sociology, psychology, history and statistics. During this period Myrdal was involved in a number of official inquiries into social issues including a study into poverty and declining birth rates in Sweden (1934). This study marks the first time he expanded the notion of cumulative causation to include a range of social and cultural factors.
The third and final period involves the transition to a dedicated “institutional economist in the American tradition” (p. 67). This intellectual shift was associated with Myrdal’s invitation in 1932 by the Carnegie Foundation to undertake a study into race relations in the USA. The resulting opus, An American Dilemma: The Negro Problem (1944), fully reflected Myrdal’s multi‐disciplinary perspective and the first detailed enunciation (in an appendix to the book) of his methodology of circular and cumulative causation. This approach was extended in the monumental study Asian Drama (1968), which examined the possibility of a wholesale transformation of Asian states through “modernisation”. Angresano also provides an account of the substantial shift in Myrdal’s view of the notion of objectivity in social science that occurred in this period.
Using the social science methodology and key findings of GMIII’s study of social and economic transformations, Angresano criticises the policies underlying the transformation of Central and Eastern Europe. In particular, he is critical of the shock‐therapy strategy involving for example rapid and large‐scale privatisation of state enterprises, withdrawal of state subsidies for production and consumption and restrictive policies to control inflation. Angresano advocates an evolutionary approach to economic reform and argues that it is essential to transform the widespread cultural and psychological tendencies in the CEE which are inimical to the creation of a successful market economy. These include a popular mistrust of banks and financial institutions, a tendency to equate entrepreneurship and speculation, a mercantalist view that the financial success of an individual entails a reduction in the wealth of others, and a view that wholesale theft of state property and tax avoidance are entirely legitimate activities. Angresano compares and contrasts the approach adopted in the CEE with that in China following the post‐1978 economic liberalisation.
The appendix (of some 26 pages) is drawn from interviews between Myrdal and Angresano in 1981, and is a real asset. The questions are addressed mostly to Myrdal’s intellectual development, and Myrdal provides a fascinating account of the key people, experiences and turning points in his life as well as an assessment of his key contributions to academic thought and practical policy. It is always interesting to hear, as it were, the colloquial “voice” of important figures as opposed to the well turned phrase in their (auto)‐biographies or their sometimes turgid academic prose. There are extensive endnotes and the bibliography, especially of Myrdal’s own works and correspondence, is comprehensive.
The book does not extend to a discussion of Myrdal’s intellectual legacy in the social sciences. It is well known that Myrdal’s methodology of circular and cumulative causation and ideas, such as the origins of regional and national income inequality and the potentially immiserating effect of free‐trade, has been especially influential on the school of thought associated with Nicholas Kaldor and his adherents such as A.P. Thirlwall. This school of thought embraced Myrdal’s disequilibrium approach but substantially narrowed the scope of their analysis to a strictly defined economic domain. They have largely ignored the complex social, cultural and political analyses entailed in Myrdal’s application of his circular and cumulative methodology. An integration of the major advances in disequilibrium economic analysis provided by this school and the institutional framework of Myrdal would be a formidable basis for political economy.
A criticism of Angresano’s work concerns the rhetorical device adopted in the last chapter where the author lays out a Myrdalian approach to transformation policy in the CEE. Rather than simply saying that his own policy prescriptions are consistent with or supported by Myrdal’s approach, Angresano begins many sentences with assertions such as “Myrdal would agree” or “Myrdal would endorse” (pp. 126‐27). It is presumptuous to be seeking such a direct endorsement for one’s own and others’ ideas from Myrdal, who after all, died over a decade ago and before the Eastern Bloc collapse. Another stylistic matter which some may find inhibits the prose flow is the extensive quotation from secondary sources. (Angresano provides a defence of this approach, p. 168, Note 2.)
The book would be especially useful for under graduate studies in the history of economic thought, Institutionalist economics and economic method, given the concentration on Myrdal’s methodological concerns and the clear differentiation of it and the neoclassical approach. The book would also be useful for courses on the transitional economies of the CEE by providing a critique of and alternative analysis to the dominant neoclassical theory and practice within the CEE. While the book provides a succinct and comprehensive exposition, its perspective on the subject is uncritical. The overall book length is close to 200 pages, though the text excluding endnotes, appendix and bibliography is 145 pages, making it a concise text for under graduates.
