In the wake of the Trump Administration’s dismantlement of USAID, I find myself struggling to hold (without necessarily seeking to resolve) various tensions.

On the one hand, the utter contempt with which the administration has treated the decades of hard work, the dedication, and impressive depth of knowledge of so many tens of thousands of aid workers, contractors, university-based researchers, and expert program evaluators is despicable. The countless stories of hardship associated with the abrupt (and most likely illegal) termination of almost all the agency’s programs and initiatives are by now ubiquitous on social media, as are anecdotes hinting at the tremendous humanitarian consequences of the suspensions of public health campaigns, peacebuilding efforts, education projects, and more around the world. Untold lives around the world will be lost as a direct result of these actions, and US influence in the world’s poorest countries diminished as well, all to save a tiny pittance of the US’s annual budget.

And yet, so many of us in the HDP (humanitarianism, development, and peacebuilding) space have — whether from without or within — long complained about various aspects of USAID and, indeed, the development industry as a whole, of which USAID was emblematic. Problems ranged from bureaucratic inefficiency, to the generation of moral hazard for host governments, to the support for otherwise economically inefficient US agricultural subsidies under the guise of “food aid”, to the tautological “demand” for aid from local AID staff themselves (a phenomenon described by political sociologist Judith Tendler as “reverse vertical integration” of country-based AID officials into the host government), to the insidious creep of economic dependency, to the ways in which such dependencies were cynically leveraged to advance US foreign policy interests, and many more besides. Even very senior USAID administrators were known to lament in the confidence of private society that they were hard-pressed to change much about the way the organization operated: it simply had too many self-defense mechanisms in place.

Others have already proven, and will continue to prove, both more knowledgeable and more insightful than myself on this topic. But the present moment — so distressing and yet perhaps holding in its sheer destructiveness the seeds of a newly imagined creativity — may be an apt moment for me to introduce to the world for the first time the last work of heterodox development economist Alice Amsden, a singularly honest, brilliant, and ferocious voice for the betterment of the world’s poorest countries through industrialization.

Alice thought the aid industry practiced a form of fuzzy, “friendly” development that did more to advance the interests of the rich world than those of the poor. What the poor world needed, according to Amsden, was “fierce” development. For her, economic industrialization was the only force that had ever really succeeded in bringing large numbers of people out of poverty, not this loose constellation of namby-pamby, culturally appropriate, conflict- and gender- sensitive programs on everything from health education to gender-based violence awareness to “poverty alleviation”. But industrialization was just the sort of socially jarring and even violent process that the world’s development actors didn’t have the stomach for.

Prof Amsden was on my doctoral committee at MIT and, at one point in 2011 (I think), forwarded to me for my comments the first chapter of the book she had been working on. In typical Alice Amsden fashion, she had used alliteration brilliantly in the title: From Blood Hounds to Bleeding Hearts: The Power Shift in Developing Countries. (Two previous books were The Rise of the Rest and The End of Empire.)

Prof Amsden never finished the book and the text she did finish has never, to my knowledge, seen the light of day. I don’t know that I am the right person to share her work with the world. Indeed, I may wind up taking this post down if I think better (or worse) of it. But at present, I am buoyed by twin thoughts. First, Alice Amsden’s sister, Myra Strober (an impressive economist in her own right at Stanford), at one point gave permission to me and my colleague at American University, Daniel Esser, to publish this chapter in a theoretical edited volume that we had conceived of as a tribute to Alice Amsden’s intellectual legacy. And second, the alternative is that these lines might never otherwise have a chance to resonate as deeply as they have with me.

So without further ado, I give you the first (and, to my knowledge, only finished) chapter of Alice Amsden’s…

From Blood Hounds to Bleeding Hearts

The Power Shift in Developing Countries.

By Alice Amsden

Chapter 1:  Introduction

Two takes on economic development, one “fierce” and the other “friendly,” now vie for preeminence in the poor countries of the developing world.  The age-old battle between state and market continues, but the cries are heard only in the distance.  The World Bank and International Monetary Fund remain on the scene, but less visible, as alternative sources of private funding crowd them out.  Instead, a tension has arisen between two views about how to eradicate poverty, both left of center, one hard and top down, the other soft and grass roots—the blood hounds, hunting for national wealth and security, and the bleeding hearts, ministering to the poor.

The terms “fierce” and “friendly” are the inspiration of Amartya Sen, a Nobel Laureate in Economics, who unabashedly favors friendliness over ferocity, including market friendliness.  But his idea of a friend is very broad, and instead of the traditional meaning of development, focused on economic growth, his unorthodox meaning is more eclectic and all-encompassing.  It includes championing democracy, protecting the environment, ensuring property rights, promoting the rule of law, and generally enriching “civil society.”  Even the language of development has become more elevated, from government to “governance,” from individual to “agent,” from free lunch to “moral hazard.”

The friendly and ferocious models are rivalrous, so it is surprising that both lie somewhere on the Left.  But both emphasize the importance of institutions and deemphasize market values.  Both are concerned with re-distribution and reform.  The adherents of both probably share a dislike of the World Trade Organization and the armtwisting of the US Treasury.  But even inside the same foxhole, clutching each other when under fire, the two demonstrate the infinite differentiability of the human mind, leading to fresh debates in the classroom and sharp disagreements in the policy sphere about how scarce resources should be spent.

Two sets of people, both from the Eighteenth century, carry the seeds of these differences  within them, and show that today’s debate between friendly and fierce is of long historical standing.  The first couple to represent the divide is Thomas Jefferson and Alexander Hamilton.  Jefferson, the third President of the United States, was a slave owner but stood for democracy, the small entrepreneur, a simple agrarian and artisanal lifestyle, and the virtues of civil society.   His adversary, Alexander Hamilton, first Secretary of the Treasury under George Washington, struggled for a strong central government, a national bank, urbanization, financial deepening and industrialization, until killed in a duel by Aaron Burr, a politician and adventurer who served under Jefferson.

The second couple is Pierre-Joseph Proudhon and Karl Marx, both writing in the 1840s.  Proudhon, a workingman and anarchist, is best known for his quip, “property is theft,” meaning that the property of the landlord and capitalist is stolen from the workers.  Proudhon also wrote “property is democracy,” meaning that the output of the farm laborer and artisan, as well as the tools of their trade, fall under private property rights, something Jefferson might have said.  Marx, as is well known, saw this petty capitalism as a pathetic pipedream.  He imagined capitalism growing into a system with huge concentrations of capital and power.  When the 1848 revolution broke out in France, Proudhon opposed it and Marx supported it with his Communist Manifesto.  The two men fell out when Proudhon published The Philosophy of Poverty, to which Marx replied a year later with The Poverty of Philosophy.

What is interesting about these fierce and friendly couples for the current debate in economic development is who wins and who loses.  Jefferson is a big winner;  his body lies in a grand monument overlooking the Potomac River, whereas Hamilton’s remains are in a modest grave in Trinity Church in downtown Manhattan (nearly destroyed by 9/11). Jefferson’s beliefs provide the backbone of American ideology:  democracy, small government and the virtues of the small producer.  But Hamilton’s ideas are the reality, and grow more so every day:  big business, big money, and a nation in a constant state of global expansion.  While few have heard of Proudhon, his ideas are eternally agreeable, while those of Marx, communism and the central planning it inspired, are vilified.  Yet Marx hit it on the head when he wrote that laborers would soon fall under the power of big corporations enjoying huge economies of scale, with strong ties to the likes of the White House and Wall Street.  Hamilton and Marx are unpopular, but they capture the essence of how the world works, if not how it should work. Hamilton’s policies are directly associated with America’s early and breathtaking economic expansion.

The friendly and fierce models of today’s developing economies roughly follow the pattern set by Jefferson, Hamilton, Proudhon and Marx.  The friendly approach has far more friends than the fierce one, infinitely more.  Students see hope in focusing on the poor rather than on the petrochemical industry. Professors are rejuvenated by a louder voice for democracy.  Journalists see a rare chance to write something that makes people feel good.

Still, the fierce approach is no slouch when it comes to securing popular support.  For it, economic development means creating jobs, first and foremost.  Output must rise to generate the jobs people crave, even bad ones, however created, by means of government-owned development banks, the rise of big national corporations (if a developing country is lucky), the repulsion and attraction of foreign investment, struggles over wages, and corruption.  Development means growth in output, income, and productivity—different names for the same phenomenon.  “More jobs” rather than fairer “civil society” are what is urgent for national unity and global survival, and tough guys–the engineers and politicians who brought billions of people out of poverty and left millions in it—don’t even know what “civil society” is all about.

The developing world’s economies experienced three distinct phases after World War II, although the growth momentum of East Asia, begun in the 1960s, has been more or less continuous.  Which approach, friendly or fierce, has had a larger hand in determining reality?  Which is responsible for the Third World’s Golden Age of economic development, from 1950 to 1980, when even the poorest countries built modest industries to house, clothe, and feed masses of people.  Beer brewing, flour milling, and  sugar refining were commercialized, creating large demands for agricultural inputs.  Which theory can take credit for the East Asian miracle, and then the “emerging economies” like Brazil, Mexico and Iran, encompassing the great majority of the developing world’s population, if not number of countries?  Was it friendliness or ferocity that lay behind the growth of China and India, and the dramatic declines in their poverty rates (especially in China)?  Weren’t Hamiltonian-type measures responsible for all this, but didn’t Jeffersonian measures pick up the pieces, harboring millions of people who fell into an “informal sector,” where “jobs” amounted to any activity that averted starvation, no taxes paid?  Is Proudhon’s ghost responsible for the Indian government’s friendly policy to reserve a share of modern industry for small- and medium-size enterprises, keeping out big business, a disaster in the electronics sector—home to the greatest American hightech start-ups and employer of millions of people in Korea, Taiwan and Singapore, which overtook India in one of the most competitive and labor-intensive industries?, What does the textile industry teach, the greatest employer of all, where democratic India lost its lead to East Asia by failing to modernize textiles in order to protect the jobs of its impoverished handloom weavers?

If good jobs in professionally managed national firms are the goal of the fierce approach, then democracy is the goal of friendliness. Pathbreaking work in bringing democracy back into development is again attributable to Amartya Sen, who, with Jean Dreze, has shown that famine has never occurred in a country under democratic rule.  Since the essence of “development” is the absence of starvation, democracy must be top priority to avoid despotic disasters like famines.  Once this priority is accepted, political democracy itself, according to Sen,  will drive economic development:

…freedom is not only the basis of the evaluation of success and failure (of economic development), but it is also a principal determinant of individual initiative and social effectiveness.  Greater freedom enhances the ability of people to help themselves and to influence the world, and these matters are central to the process of development (this is the “agency aspect” of the individual) (Sen 2000).

But does this make sense?  Can individual initiative create development in the absence of government policies, modern businesses, banks and traders, to tease “shy” capital out of the woodwork?   Can individual initiative substitute for the professionally managed companies that pay the taxes to support municipal sanitation and waterworks?

The antagonists of fierce and friendly approaches to development have quibbled for centuries over whether democracy is the mother of economic development, or economic development is the mother of democracy.  Maybe famines never occur in democracies, if this in fact is the case, because people have a voice, and hold politicians accountable.  Or maybe it is the other way around, most democracies are rich, usually “developed” countries, and have efficient distribution systems to avert famines.  Looking at things this way, getting rich precedes getting freedom, if it is a matter of having enough to eat.

The struggle for democracy in poor countries is usually grounded in the urban middle class, which is the outcome of investments in industry and education.  Korea finally gained democracy in 1987 following massive student unrest. India’s democracy came at the hands of an educated and entrepreneurial elite (Ghandi was a lawyer) struggling against colonialism.  Democracy in Pakistan was recently restored by lawyers, not ordinary individuals, although mass support was key. Some poor undemocratic countries have even rebelled against foreign pressure to become democratic, viewing it as destabilizing.  This is despite despotic horrors, as in the case of Malawi’s famine in 200203, when a minister is believed to have cleaned out an aid-financed granary for personal gain (Bearak 2003).

The bleeding hearts of the friendly approach embody democracy insofar as they value it, think about it, and actively work to achieve it, organizing people for better health care and conflict resolution after disasters. Out of sheer neglect or ineptitude, the heavy hand of the central government may not reach down to the grass roots, stifling democracy–although regional and municipal “governance” is often the captive of traditional elites.  But the blood hounds are not entirely shorn of democratic ideals, or as paternalistic as the bleeding hearts.  When workers have jobs, they can choose how to spend their money, to marry or not, to provide for their old age or piddle away their wages.

Ideally, fierce and friendly models should cooperate, one responsible for fomenting growth, the other for fighting poverty.  But amity is not how it worked for Jefferson and Hamilton, or for Proudhon and Marx, and it is not how it is working today.  When resources are scarce, including administrative capabilities, there is a struggle over allocation.  Although both approaches are on the Left, they represent deep political differences and unnerve each other—petrochemical plants or giant dams, even equipped with modern technology, are accused of destroying farm lands, with few trickle-down effects except environmental degradation.  Mandatory quotas on banks, to lend 30 percent of their capital to small firms (as in Korea), reduce profitable investment.  Conflict is worsened by deep differences within each approach, lessening mutual understanding.  Third World Network, an NGO (non-government organization), is devoted to monitoring the World Trade Organization on a daily basis, reporting factually in newsletters and emails what occurs behind closed doors. It provides an indispensable service to poor countries that can’t afford their own representations in big international organizations. Compare this with NGOs that emerged around street demonstrations against the WTO in Seattle and Porto Alegre, with different motives and methods than Third World Network, and a shorter life-span.  What, exactly, is an NGO becomes a bewildering question for officials in the Ministry of Finance or Economic Planning Board, who are highly educated people, chosen on the basis of meritocracy (throughout Asia), based on a rigorous and democratic exam system.

Ironically, today it is the bullies, the big businesses, the blood hounds following the scent of growth—not the softies—that are being discredited, that are under attack.  Popular culture has shifted against them, much as it shifted against Hamilton and Marx.  The fierce and the friendly no longer protect each other in the trenches.  The developmental state that orchestrated a Golden Age is being dismantled under pressure from within and without.  Cynically, the United States, Europe and Japan act against it on the political conviction that jobs in the South are a threat to jobs in the North.  No longer are Korea and Taiwan the role models for poor countries to follow—they can’t follow them even if they tried.  Instead, Mauritius and Costa Rica are upheld as teachers, with their fast growth, emphasis on (plantation) agriculture, friendliness to foreign investment and, above all, robust democracy.

Can the new soft culture create sustained economic development?  Is it hardy enough to do the work of the fierce nationalists and engineers who created unprecedented wealth after defeating colonialism, even if they ignored the rise of appalling slums?

I don’t think the new culture is capable of creating sustained development, whether in the richest or poorest developing countries, or among the richest or poorest people, although this conclusion is hard to defend definitively. There are not many theoretical guideposts.  But as Hamilton and Marx envision, tough guys are the reality, and the reason they win the day is because they have a clear goal in mind, profits and jobs, and empower themselves by carefully and unscrupulously planning step by step how to strengthen their economies on the basis of science and knowledge about the world, not about local communities, their ultimate objective being to protect the nation against foreign aggrandizement.

If the developing world is to continue to grow, if the poorest countries are to begin to prosper, the soft approach must become harder, protecting the rights of the poor, enriching their lives, but selectively learning the lessons of the most successful and toughest developing countries.  This message, however, will never win a Nobel Prize, so it must be carried by other mediums.