Theory and Empirics
Edited by Neri Salvadori, Pasquale Commendatore and Massimo Tamberi
7. Myrdal, growth processes and equilibrium theories Carlo Panico and Maria Olivella Rizza 7.1. INTRODUCTION It is generally recognised that Myrdal’s work on development and underdevelopment made three important contributions. He proposed a cumulative causation approach in opposition to the dominant one, which he called the stable equilibrium approach. He pointed out that analyses of development processes, which only focus on economic factors, are irrelevant and misleading because historical, institutional, social and cultural factors also matter. He disputed the existence of a body of economic thought that is ‘objective’ in the sense that it is value-free. This chapter confirms the views expressed by the literature, clarifying some aspects of Myrdal’s position that have not been sufficiently explored. Moreover, it points out the existence of a contribution to another point, which the literature has broadly overlooked,1 namely the fact that he criticised the logical consistency of the dominant theories, stating that they were based on unsatisfactory assumptions regarding the characterisation of individual preferences. These assumptions were the heritage of utilitarian moral philosophy and rationalist psychology, which at the beginning of the 20th century the other social sciences had abandoned. Myrdal himself stated that in The Political Element in the Development of Economic Theory (1930) he had focused on the subjective element of the neoclassical theory to criticise its logical consistency, that is ‘to demonstrate that certain practices of reasoning common in economics were logically defective’ (Myrdal, 1958, p. 237).2 Yet, those who assessed his contributions (see Lundberg, 1984; Reynolds,...
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