Gunnar Myrdal: The Moral Economist
The rise of the camera phone has allowed us to capture the world in the form of candid videos more than ever before. We get front row seating to the tensions of racial disparity here in the United States. We also get to watch the Middle East and other regions in the world crash and burn as people die due to warfare, diseases, and hunger. All the while, the clash between globalism and nationalism only seem to make things worse.
Is it the end of the world as we know it?
Maybe, but what’s happening today isn’t novel. Throughout history, the world has continuously gone through its tribulations and economists have attempted to get at the forefront of helping us navigate through the hard times.
An economic crusader
One economist, with a sweet name, won the Nobel prize for it. Gunnar Myrdal, a Swedish economist, along with the Austrian Friedrich Hayek, won the prize in 1974 “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.”
Though both made big moves in this arena, their moves were in different directions. As institutional economists, both emphasized the importance that politics and institutions have in understanding the economic underdevelopment and ruckus in the world, but it was Myrdal that thought governments should be the entities spearheading the issues by correcting the institutional problems. Hayek, on the other hand, thought we should limit the scope of the role of government in solving these problems, as they are largely responsible for these very issues, and let market forces take it on. #awkward
Throughout his prize acceptance speech, he chastised governments of developed countries for not aiding underdeveloped countries. Though the United States is the number one provider of foreign aid, Gunnar called them out for masking their military and national interests under the guise of foreign aid. Very little of the foreign aid is aimed at ending hunger and diseases and is instead aimed at regime building and commercial interests. Safe to say, he wasn’t a big fan of this.
He was an economic crusader, the “moral economist,” wanting to rid societies of corruption, prejudice, and hunger, by equalizing the distribution of power, both domestically and across the globe. To do this, economics would have to incorporate the “non-economic factors” like culture, politics, geography, and other things that are hard to put into math equations. Also, benevolent and developed governments should have a strong hand in making this happen.
Feed them and they will rise
His government call to action was based on institutional economics. His qualm with conventional economics was that it did not include the social and political factors when looking at the development problems of societies. To really look at these problems we must consider the entire social system, not just prices and quantities. Institutional economics shows that everything is interrelated and dependent on each other. This would lead to what he calls circular causation. “If there is a change in one condition, others will change in response.” As an illustrative exercise, try squeezing one side of an inflated balloon and see what happens to the other side.
“Improved nutrition among poverty-stricken masses in an underdeveloped country will raise labor productivity and, in turn, increase the opportunity to improve production and nutrition further.” Though he called this an abstract example, he was hinting that we should be helping those in poverty by feeding them. In his prize lecture, he said that the only way we could do this, though, is if rich countries stop eating so much!
“It is estimated that if the average American were to reduce his consumption of beef, pork and poultry by 10 percent, 12 million tons or more of grain would be saved. This would mean making so much more food aid possible, saving perhaps five times as many million people as tons released, or even more, from starvation in the poorest countries.”
He not only called for policies that would decrease levels of consumption and waste from rich countries, but also for “family planning” policies that would limit the amount of kids a family could have. Reason being: food is tight and that’s a problem when the amount of mouths to feed keeps growing exponentially. Family planning policies could be subsidized sterilization, contraception, or straight-up prohibition like China’s “one-child policy.” This isn’t old news. Bill Nye just proposed “penalties for having too many kids.”
The racial dilemma
Myrdal also used his economic goggles to address the “Negro problem” in America around the ’30s and ’40s. Shoot, we are still struggling with this problem today as evidenced by the Black Lives Matter movement and all the candid videos of racial oppression. It’s hard to put protests, morality, and culture into economic models, but Myrdal still attempted to give it a look through economic lenses. In his pivotal book in economics, “The American Dilemma” he gives historical context and picks apart the institutional framework that has allowed for racial prejudice to be baked into the American cake. The novel economic approach at analyzing this issue made this book a key influence on several policy efforts in the United States.
His book laid the groundwork for policies addressing racial integration and affirmative action. It influenced the results of Brown vs. Board of Education that we all learn about in high school. Applying his circular causation argument to the blatant racism in the United States, he claimed that the only way to solve the problem would be to either:
1) Cure the prejudice amongst white people toward blacks, or the better option
2) Have the government raise the standard of living of blacks so that white people can start to view them with less prejudice and instead view them as one of their own.
In a commencement speech at a historical black college, he gave an ironic, yet empowering, suggestion to the students telling them that they must be willing to get out from their black bubble and integrate into the white community. By using the skills they’ve acquired in college to become productive members of society, protests, and government support, social inequality could be eradicated.
Gloomy as his outlook was on economics and the state of the world, he was optimistic with how democracy was making strides in helping with these issues. What’s more, he helped influence economics to take on more of an all-inclusive approach when trying to tackle these issues.
We certainly haven’t figured out how to end corruption and prejudice in the world. Countries are fighting to keep “unwanted” people out. Governments continue to squander aid money and would rather build up their military. Inequality of wealth and power is rampant and still seemingly oppressing other groups of people.
Though we still have a ways to go, Myrdal’s impact on economics is getting us closer to solving these problems.
