The Racist Roots of Neoliberal Development Economics

The first Mont Pèlerin Society meeting (1947) in Switzerland. Original image: https://www.wsj.com/articles/SB10000872396390443995604578002432460754000.

Lars Cornelissen

Dr. Lars Cornelissen holds a PhD in the Humanities. His research is on the intellectual history of neoliberalism. He writes on neoliberalism, critical theory, and intellectual history. He currently works as the Academic Editor for the Independent Social Research Foundation (isrf.org).

Neoliberalism, conceived as an intellectual and political project, was and is centrally concerned with markets. This much is clear to anyone who has studied it for any length of time. What is less well known is to what extent the neoliberal conception of the market is racialized. How, in other words, does the category of race feature in the neoliberal paradigm?

An answer to this question may be found in the early writings of several prominent neoliberal development economists. As a subdiscipline of economics that came into its own in the early 20th century, development theory concerns itself principally with the problem of material growth: how and under what conditions do economies expand and grow? One perennial problem for development economics is the persistence of poverty in certain regions of the world. Why, it asks itself, are some countries rich while others have remained poor?

Neoliberalism began to take shape as a proper intellectual movement in the immediate post-war period. The Mont Pèlerin Society (MPS), which spearheaded what some historians call the ‘neoliberal thought collective,’ was founded in 1947, quickly becoming the beating heart of neoliberalism.[1] Its members would convene biannually to debate matters of theory and policy, the explicit aim being to forge a comprehensive political-economic program that could, in due time, become a guiding light for national and international governance alike.

From the moment of its inception, neoliberalism largely took shape as a combative doctrine, developing in opposition to a range of extant political-economic philosophies and formations. This included Soviet socialism and Keynesian liberalism, as well as less tangible and more spectral adversaries such as ‘collectivism’ or ‘planning’. Crucially, however, one political movement that, in its most formative period, troubled neoliberalism deeply was decolonization.

Decolonization, as a splendid recent study by Quinn Slobodian shows, struck fear into the hearts of neoliberals because in their eyes it posed a grave threat to the global capitalist order.[2] It is crucial to remember here that, in the context of the Cold War, the Soviet Union appeared to many decolonial movements as a valuable ally in the struggle against Empire. This is why decolonization was, to the neoliberal consciousness, practically synonymous with the spread of Soviet influence.

In seeking to formulate a retort to decolonial movements, neoliberal economists set out to formulate a new theory of economic development. The aim was to invalidate then dominant theories which held that material ‘underdevelopment’ or ‘backwardness’ (as it was known at the time) was the result of centuries of colonial exploitation. In the eyes of neoliberals, such theories served only to bolster claims for independence, thus by implication increasing the risk of Soviet expansion.

This was the historical and theoretical context that framed the writings of such early neoliberal development economists as Herbert Frankel (1903–1996) and Péter Támas Bauer (1915–2002), both of whom did research for the British Colonial Office at crucial points in their careers. They set out to compose an analytical framework aimed at mapping the determinants of ‘underdevelopment.’ Their main theoretical gambit was to blame ‘underdevelopment’ on colonial or post-colonial populations themselves, who they deemed biologically and culturally ill-equipped to stimulate growth of their own accord.

That this was a racially charged argument is already clear from the way that their writings were peppered with assumptions and tropes that bore a clear colonial signature. For example, Frankel described West Africans as “vultures” in a 1957 paper, arguing that they routinely preyed on any wealthy family members they might have.[3] Several years prior he had already argued that “Africa is not a politically mature but a politically immature continent,” which in his view meant that Africans were not ready for post-colonial independence.[4] Unironically alluding to Rudyard Kipling he mused that given these circumstances, “the ‘White Man’s Burden’ has become the burden of the free world in much more than metaphorical terms.”[5]

Bauer, for his part, maintained for all of his career that most colonial populations were characterized by “a certain physical and mental inactivity or torpor” which, he added, was in large part due to prevailing “climatic conditions.”[6] As late as 2000 he opined that “low productivity” in poor countries “reflect[s] the want not of land but of ambition, energy, and skill, which also explains the low level of productive capital.”[7]

The founding fathers of neoliberal development theory were thus no strangers to the patently racist trope of the lazy native or immature savage, which they passed off as sober scientific analysis. The colonial pedigree of this branch of neoliberal thought reached further than its reliance upon such Victorian imaginaries, however. Particularly in the work of Bauer, these tropes were themselves embedded in an explicitly racialized framework. He believed, in other words, that the relative poverty of some populations had its roots in biological traits.

He argued, for instance, that “[t]here are manifest and striking differences between racial and ethnic groups in such qualities as industry, thrift, enterprise,” and that these resulted directly in “differences in economic performance.”[8] These “ethnic differences in economic performance,” he wrote elsewhere, were rooted in “biology” and “genetics”.[9] For him, the study of economic development must therefore take stock of biological, that is to say racial, differences.

Shaped in large part by Bauer, neoliberal development economics grew into a comprehensive science of differences. The aim of this approach was to map the various traits that had an impact on how rapidly this or that population was likely to develop. Racialized differentiation was key to this effort, even if in due course the category of race was rearticulated as culture. Mirroring a broader process that saw 20th-century thought gradually subsume signifiers of race under the name of culture or religion,[10] neoliberal development theory similarly came to view cultural attitudes, traditions, and beliefs as primary determinants of material growth.

Even if it gradually abandoned the concept of biological race, however, neoliberal development economics never relinquished its racist underpinnings. As a result, its current more sanitized articulation remains grounded in the view that some populations are incapable of achieving economic development of their own accord. Whether this lack is chalked up to biological differences or to cultural attitudes or traditional beliefs, the basic premise remains the same: the ‘West’ is the superior civilization, the apex of cultural and material development.

In the hands of the most recent generation of neoliberal development economists, the racist underpinnings of this paradigm have surfaced in a particularly grotesque manner. Faced with persisting poverty across the globe, prominent neoliberals such as Deepak Lal and Niall Ferguson have come unashamedly to advocate a new age of Empire, spearheaded by the anglophone world. This, in their view, would be the only way for the ‘Third World’ to rise out of poverty.

Writing about Africa, Lal argues for instance that “little short of costly direct imperialism is likely to provide the good governance that is a prerequisite for the economic advancement of the continent.”[11] Ferguson, meanwhile, claims that “for some countries some form of imperial governance” is to be preferred over “full independence.”[12] He adds, for good measure, that “backward agrarian societies” in particular would “benefit immeasurably from something like an American colonial administration.”[13]

Racist thinking thus pervades neoliberal development economics, a school of thought that offers little more than nakedly colonial reasoning and nostalgia for Empire. We would be wrong to dismiss it as inconsequential pseudo-scientific cant, however. With the ascendency of neoliberalism in the 1970s the racial imaginaries that its intellectual pioneers constructed became a crucial determinant of the violence by which neoliberal capitalism was rolled out across the globe. From military coups in Latin America to violent ‘shock therapy’ in post-communist Eastern Europe or post-apartheid South Africa, neoliberal globalization has proved time and again that the violence it engenders is distributed unevenly, targeting populations that it has racialized as other with particular vehemence.

Although its neoliberal custodians like to proclaim it ‘color blind,’ the capitalist market is anything but. Such is obvious from a brief glance at neoliberal development economics. Born out of the fear that decolonization could threaten the spread of capitalism, this body of thought has always sought to lock its object of study—poor populations—into a racial matrix. Here, race is imagined to bear directly on developmental progress; and here, late 20th-century racial capitalism and Empire find their staunchest apologists.

[1] See Philip Mirowski and Dieter Plehwe (eds.), The Road From Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge, MA 2009: Harvard University Press).

[2] Quinn Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge, MA 2018: Harvard University Press).

[3] S.H. Frankel, “Undeveloped Countries,” Mont Pèlerin Quarterly 1, 1 (1959): 17. The original quotation is as follows: “If you go to any West African Bank you will see people outside the bank waiting for their relatives who draw money, and ready to pounce on them like vultures, because they have the ‘right’ to be supported or assisted by a relative who has some wealth.”

[4] S.H. Frankel, The Economic Impact on Under-Developed Societies (Oxford 1953: Basil Blackwell): 169.

[5] Ibid.: 139.

[6] P.T. Bauer, “Development Economics: The Spurious Consensus and Its Background,” in: Streissler, E. (ed.), Roads to Freedom: Essays in Honour of Friedrich A. von Hayek (London 1969: Routledge): 29.

[7] P.T. Bauer, From Subsistence to Exchange and Other Essays (Princeton, NJ 2000: Princeton University Press): 102.

[8] P.T. Bauer, Economic Analysis and Policy in Underdeveloped Countries (London 1965 [1957]: Routledge): 74.

[9] P.T. Bauer, Dissent on Development: Studies and Debates in Development Economics (London 1971: Weidenfeld and Nicolson): 300.

[10] For a discussion of this process, see for instance Achille Mbembe, Critique of Black Reason (Durham 2017 [2013]: Duke University Press).

[11] Deepak Lal, In Defense of Empires (Washington D.C. 2004: The AEI Press): 27.

[12] Niall Ferguson, Colossus: The Rise and Fall of the American Empire (London 2004: Penguin): 170.

[13] Ibid.: 178, 198.