Back to development
Jaime Ornelas Delgado*
INTRODUCTION ( ...continuation )

However, at the beginning of the 21st century, the evident failure of the Latin American economy, based on a self-regulated economy, brought development issues back to the national and international agenda, although it is now doubted whether reducing them exclusively to the growth of GDP was sufficient to allow our nations to overcome their dependence and underdevelopment. For this reason, development issues and the concept itself need to be faced critically if paths set apart from neoliberalism are to be forged and the secular structural problems that have made Latin America one of the most unequal regions in the world are to be overcome.1

The following reflections and subsequent analysis explore development as a theoretical-practical concept along historical-logistical lines. A progressive discourse begins with the ideas and analysis of the historical conditions that led to the concept of development in metropolitan countries as diverse strands of economic thought –the neoclassical and the Keynesian. Theories like that of W.W. Rostow and his stepped, lineal vision of development are emphasized in order to reveal the colonial nature of the term and highlight the failure of development policies. This paper ends with various reflections aimed at building an agenda for the deconstruction of development.


For some time before and after the general crisis of capitalism from 1929 to 1933, most explanations of what happened in Latin America and what should happen in future were based on theories devised outside of the region. At this time, economists of various streams of thought – though essentially affiliated to the neoclassical and Keynesian schools-, exercised a strong influence on Latin American economic thinking, proposing to focus study, the Second World War having barely ended, on development issues and the growth of our countries.

Economists as diverse as Joseph A. Schumpeter (1912 and 1958), Arthur Lewis (1955), Gunnar Myrdal (1957), W.W Rostow (1960), Nicolas Kaldor (1961) and Lauchlin Currie (1966), to name a few of the authors known in Latin America, proposed analyzing the essential development issues, which in general and with minor variations, were associated with the increased value of economic production, a fact that for neoclassical economists assumed full employment of factors in a permanently balanced market and for the Keynesians the constant expansion of effective demand through government stimulus.

The neoclassical trend, whose influence grows in the West in the last quarter of the 19th century, suffers its first defeat for be incapable of recognizing crises, and in particular to offer a valid explanation for that of 1929-1933. This trend had the peculiarity of building a set of analytical tools based on the theoretical principles of classical economics, only now serving to address partial aspects of the economic system.

In reality, the neoclassical economists brought little to the ideas elaborated by their classical predecessors concerning the working of the economic system, one aspect of which, the market, they analyzed with the old instruments of the classicists. In fact, since its appearance, the neoclassical school has repeated a tautology turned absolute truth for all times: “The market price is rational if it occurs in a competitive market and a competitive market exists if the price is the price of the market” (Hinkelammert, 1997: 13). The market is thus regarded, not only as intelligent, but also as the most efficient mechanism for the allocation of productive resources and formulating prices.

In short, it is possible in general terms to demonstrate the neoclassical theory of growth by means of an:

Equilibrium algorithm, in which ‘development’ is compared with GDP growth per capita, and within the margins of formal models where institutions and uncertainty are absent, the markets behave perfectly, economic agents are perfectly informed about the future, companies know the tastes of their consumers and have perfect access to the functions of production that they must use to supply them. (Katz, 2008: 7)

1 A recent ECLAC study concludes: “Latin America and the Caribbean are rife with inequalities. The aggregate income distribution indicator is useful not just because it provides a telling picture of the divides that afflict the region, but also because income gaps are underlain by or embody other divides that have proved mutually reinforcing in a kind of vicious circle. For one thing, education and knowledge gaps are human development gaps, therefore not only is education vital, but also nutrition, preventive health care and training. Knowledge gaps are gaps in the positive exercise of freedom, understood as the set of capabilities needed to implement life plans. In the region, it is the norm for young people from the fifth quintile to complete secondary school and the exception for young people from the first quintile. If complete secondary education is required to gain access to employment options that can halt the intergenerational reproduction of poverty, this educational divide is perpetuating inequality throughout people’s lives and between generations (ECLAC, 2010: 43).