June, 2004

The Limits of Economic Expertise: Prophets, Engineers, and the State in the History of Development Economics - Working Paper

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What role is there for government in promoting the economic well-being of citizens within its national boundaries? If one assumes that political authority derives its legitimacy in part from the satisfaction it affords its subjects, then it follows that a "good" government will adopt policies that will enhance the economic well-being of its citizens. What exactly those policies are has been one of the main subjects of controversy in economics since its founding. Some have contended that the role of government is to be at best a referee, whereas other economists have argued the government must serve as an active player in the economic game. This paper identifies two theoretical tensions that exist in this debate. First, from Adam Smith onwards a large part of the teachings of economics stressed the mutually beneficial aspects of trade. But in order for the gains from exchange to be had, some level of coercion is postulated by the economist in order to ensure the provision of the basic framework of property and contract. Second, there is an interesting relationship between the epistemic outlook of economics and the disposition of the economist that plays itself out in the history of development economics.